Ripple Labs has secured a major milestone in its mission to reshape the stablecoin landscape. The New York Department of Financial Services (NYDFS) has granted approval for Ripple’s stablecoin, RLUSD, signaling a new era of regulatory compliance in the crypto world. CEO Brad Garlinghouse confirmed the news yesterday, ending months of speculation and positioning RLUSD as a strong contender in the stablecoin market. Crypto expert Vincent Van Code believes RLUSD’s regulatory compliance sets it apart from competitors like Tether (USDT) and USD Coin (USDC).
Why RLUSD Stands Out
The NYDFS approval brings a critical layer of trust to RLUSD, assuring investors that it meets the stringent standards required by one of the U.S.’s most respected regulatory bodies. This approval helps RLUSD establish credibility in a market that has seen increased scrutiny over stablecoins’ operations. Van Code highlights RLUSD’s adherence to four key U.S. financial regulations: US GAAP, Basel III, FDIC and Federal Reserve rules, and the Dodd-Frank Act. These regulations ensure that RLUSD operates with utmost transparency and accountability, offering users a stable, trustworthy digital asset.
US banks can hold #RLUSD on the XRPL/ETH ledger, and why USDC and USDT cannot.
— Vincent Van Code (@vincent_vancode) December 11, 2024
Here's an explanation of why RLUSD is so special and why it took years to get approved… READ ON
Regulations Summary:
U.S. GAAP/IFRS: Assets must have clear value, reliable measurement, and meet…
Backed by U.S. Assets for Stability
RLUSD’s unique selling point lies in its backing by U.S. Treasury bonds and other onshore assets. This guarantees that RLUSD holds intrinsic value, with the backing required to meet both US GAAP and Basel III standards. Real-time audits will be conducted to ensure the coin maintains its value and transparency, a key feature that many crypto investors have been clamoring for in a market that has seen its fair share of volatile and risky assets.
How RLUSD Meets U.S. Regulatory Standards
Ripple’s attention to detail in complying with U.S. regulations is what truly sets RLUSD apart from other stablecoins. Here’s how RLUSD meets some of the strictest financial regulations:
- US GAAP: Ripple’s compliance with U.S. Generally Accepted Accounting Principles (GAAP) ensures that RLUSD’s value is transparent, and its assets pass rigorous impairment tests.
- Basel III: RLUSD follows the liquidity and risk management guidelines established post-2007 financial crisis. These rules ensure that RLUSD remains a stable and low-risk asset.
- FDIC and Federal Reserve Rules: By storing its assets in regulated financial institutions, RLUSD adheres to the guidelines set forth by the FDIC and the Federal Reserve, ensuring secure custody for its reserves.
- Dodd-Frank Act: Ripple’s commitment to transparency is solidified by its adherence to the Dodd-Frank Act, which was introduced after the 2007 financial crisis to protect consumers and improve financial market transparency.
Van Code points out several key shortcomings in other stablecoins like USDT and USDC. USDT, in particular, fails to meet audit requirements and does not comply with US GAAP or Basel III standards. This leaves the coin vulnerable, as its reserves may include illiquid or high-risk assets. Although USDC offers more transparency, it operates partially offshore, which limits its ability to fully comply with U.S. regulations—leaving it at a disadvantage in the U.S. market.
Also Read: Ripple Secures Approval for RLUSD Stablecoin: What This Means for XRP’s Future and Market Potential
Ripple’s RLUSD stablecoin represents a significant leap forward for regulatory compliance in the crypto world. With the NYDFS approval, RLUSD sets itself apart from competitors by offering transparency, stability, and trust, backed by U.S. assets and adhering to stringent U.S. regulations. As the cryptocurrency industry continues to evolve, RLUSD’s unique position may make it the go-to choice for investors seeking a reliable and compliant stablecoin.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
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