Ripple (XRP) and Stablecoins: 4 Things Investors Need to Know

Key Points

• Ripple, which issues XRP, launched its Ripple USD stablecoin last year to serve clients who want to transfer digital dollars.

• Since June, it has partnered with USDC issuer Circle and bought Rail, a stablecoin payments platform.

• These moves should bring more activity to the XRP blockchain, but they could also affect its role as a bridge currency.

• 10 stocks we like better than XRP ›

Stablecoin adoption is growing rapidly this year. The total stablecoin market, led by U.S. dollar coins Tether and USDC (CRYPTO: USDC), is now worth over $280 billion. The U.S. passed crypto legislation covering stablecoins last month with the Genius Act, and major financial institutions are exploring the possibility of launching their own stablecoins.

Ripple, the issuer of XRP (CRYPTO: XRP), is one of the blockchain companies that has been making a big push into stablecoins. If you're an XRP investor, here's what you should know about Ripple's recent moves and how they could affect its flagship cryptocurrency.

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1. Ripple launched its first stablecoin last year

Ripple received regulatory approval for its first stablecoin, Ripple USD (CRYPTO: RLUSD), in December 2024. The U.S. dollar stablecoin is fully backed by cash and cash equivalents.

Ripple Chief Executive Officer Brad Garlinghouse said that Ripple specifically chose to launch the stablecoin under the New York State Department of Financial Services (NYDFS) limited purpose trust company charter because of its premier regulatory standards. This was a wise move, because Ripple USD is now expected to be in compliance with the reserve and audit requirements established by the Genius Act.

The stablecoin could serve a key role on Ripple's payment network, which is designed to offer fast cross-border payments with low fees. Clients who want to send or receive digital dollars can do so with Ripple USD. But adoption will need to increase, as it only has a market cap of about $670 million (as of Aug. 16).

2. It partnered with Circle in June

Circle is the company that issues USDC, one of the most popular stablecoins. On June 12, Ripple and Circle announced a partnership to bring USDC to the XRP Ledger (XRPL), the underlying blockchain that powers XRP and Ripple's payment network.

The integration of USDC should attract more developers and bring more liquidity to the XRPL. USDC is currently worth about $68 billion, making it over 100 times larger than Ripple USD. While the Ripple team is undoubtedly hoping to improve adoption of its own stablecoin, USDC provides an alternative that's already widely used.

3. It just acquired a stablecoin payments platform

On Aug. 7, Ripple made another move related to stablecoins when it agreed to buy Rail, a stablecoin payments platform, for $200 million. Rail allows businesses to move money internationally using stablecoin technology, without needing to hold crypto on their balance sheets. It converts payments from fiat currency to stablecoins for fast, efficient transfers, and then back into the fiat currency of the client's choice.

Rail recently reported that its platform accounts for more than 10% of all global business-to-business (B2B) stablecoin volume. That's more than $3.6 billion in annual volume, based on an annualized run rate of $36 billion as of early 2025.

It's still very early, but Rail seems like a natural fit for Ripple, since they both provide infrastructure designed to work with traditional financial companies and facilitate international payments. With Rail's established B2B services, this acquisition should help increase Ripple's enterprise adoption.

4. There's concern about stablecoins reducing XRP usage

XRP is the native cryptocurrency on the XRPL and is used to pay transaction fees on that blockchain. It's also a bridge currency on Ripple's payment network as part of its on-demand liquidity (ODL) service. Financial institutions making cross-border payments can use XRP to instantly convert one currency into another, instead of needing to have multiple fiat currencies at their disposal.

Ripple's push into stablecoins has potential upsides and risks for XRP investors. The glass-half-full view is that Ripple USD and USDC will bring more activity to the XRPL. That's beneficial for XRP, since it's needed to pay transaction fees.

However, transaction fees on the XRPL are extremely small, starting at only 0.00001 XRP. The real value in XRP is its role on Ripple's payment network, and stablecoins may affect it there. Ripple USD could work as a bridge currency just as well or better than XRP.

I still think XRP is one of the better crypto investments currently available. It's in Ripple's best interest to continue integrating XRP into its services, since the company owns nearly half the XRP token supply. XRP and Ripple USD could coexist, with the former being a bridge currency for international transactions and the latter being used when the sender and receiver both want to use U.S. dollars.

The growth of stablecoins on Ripple may end up being a net positive for XRP. That said, XRP is risky and volatile. It should only be a small part of your investment portfolio, at most, for that reason.

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Lyle Daly has positions in Tether and USDC. The Motley Fool has positions in and recommends XRP. The Motley Fool has a disclosure policy.