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XRP Ledger Can Help Banks Create Stablecoins, Ripple CTO States

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Sat, 01/09/2021 - 09:06
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Yuri Molchan
Ripple CTO explains how the XRP ledger can help banks and other institutions create their own stablecoins using a new tool
XRP Ledger Can Help Banks Create Stablecoins, Ripple CTO States
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In a recent article on the Ripple website, the company’s CTO David Schwartz shared how a new feature on the XRP ledger can help institutions emit stablecoins backed by deposits.

XRP
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Emitting stablecoins on XRP Ledger

In the article David Schwartz reminded the community about the decision of the OCC made last summer about allowing banks to hold cryptocurrencies for their customers and provide services to crypto businesses.

Another step towards crypto regulation and legalization made by the OCC recently was the permission to banks to run nodes for public blockchains that support stablecoins and use USD-based stablecoins for payments.

The Ripple CTO says that financial institutions can use the XRP ledger for issuing their own stablecoins and the new platform called “Issued Currencies” can help them do it.

New tool for launchuing digital assets on XRPL

"Issued Currencies" is a functionality that can be used for emitting and managing any digital asset, as well as aforementioned stablecoins.

To do that, an issuer has to set up an account, select the configuration options they need to create a particular stablecoin. The Ripple CTO promises that stablecoins can be created in an easy and secure manner and will low business risks.

To create a stablecoin, a bank needs to connect to an XRPL node on-premises or using the bank’s cloud infrastructure. The issuer needs to set up a wallet, choose the desired stablecoin settings and submit a configuration transaction to the XRP ledger from the managing account.

Related
XRP Can Support Direct Exchange of CBDCs: Ripple

XRPL-based DEX for exchanging XRP to/from stablecoins

The article also mentions an XRPL-based DEX which enables its users to exchange digital assets, such as XRP, to digital assets created via “Issued currencies”, including stablecoins, without any counterparties.

The DEX also offers payment interoperability for minimizing transaction fees and for sufficient liquidity.

XRP can support direct exchange of CBDCs

Earlier, Ripple also stated that its native token XRP can be used as a bridge currency for direct exchange of various CBDCs (central bank digital currencies).

Ripple believes that in the future CBDCs will be widely used for settling cross-border payments between banks and that banks will be needing a neutral asset to bridge transactions where different stablecoins will be used.

XRP lives up to the multiple requirements for that asset, Ripple stated.

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About the author

Yuri is a crypto journalist interested in technology and technical innovations. He has been in crypto since 2017. Believes that blockchain and cryptocurrencies have a potential to transform the world in the future in many of its aspects. ‘Hodls’ major cryptocurrencies and has written for multiple crypto media outlets. 

His articles have been quoted by such crypto influencers as Tyler Winklevoss, John McAfee, CZ Binance, Max Keiser, etc.

Currently Yuri is a news writer at U.Today and can be contacted at yuri.molchan@u.today.