Stablecoins are having a moment, but is there room for Ripple’s new RLUSD coin?

The crowded stablecoin space is getting busier with Ripple’s recent approval from the New York State Department of Finance for RLUSD, a dollar-pegged token set to be listed on exchanges “soon.” The timing of the coin’s debut makes sense: stablecoins are gaining more mainstream attention, Ripple is on a victory lap, and its XRP token has been on a tear, rising nearly 300% this year. And of course, the crypto regulatory environment is on course to become clearer (and friendlier) with the new administration.

Stablecoins are a type of crypto pegged to an asset, generally fiat currency like the dollar, though they can also be pegged to a commodity like gold. They aim to minimize volatility and, well, be “stable.”

While there’s an increasing appetite for stablecoins and enormous enthusiasm for RLUSD, the competition is fierce. Many players want to be part of the rapidly growing space, and whether a challenger can carve out a significant market share for itself remains to be seen.

Numbers speak for themselves: the stablecoin market crossed $200 billion for the first time on December 11, CoinDesk reported. BitWise predicts that “stablecoin assets will double to $400 billion as the US passes long-awaited stablecoin legislation.”

Sure, RLUSD has room to grow, but some established players, like Tether’s USDT and Circle’s USDC, have been dominating the space, and several newcomers seem to be having trouble finding their footing.

“RLUSD can become unique in the market and find its place, mainly if Ripple focuses on developing its global partnerships and the use cases for cross-border payments,” Patrick Gruhn, former head of the now defunct FTX Europe and founder of Perpetuals.com, told Sherwood News. He added, however, that entering a market led by Tether and Circle is complex and requires a clear differentiator regarding features, legal aspects, and use. 

“The success of RLUSD will depend on it providing better features such as lower charges, faster clearance, or better compliance,” Gruhn said. 

With a $140.5 billion market cap, USDT is the largest stablecoin, followed by USDC, which has a $41.6 billion market cap, per CoinGecko. 

Another one to watch is Ethena’s USDe, which CryptoRank reported became the third-largest stablecoin by supply on December 9.

Meanwhile, PayPal’s dollar-pegged stablecoin, PYUSD, initially had a meteoric rise when it launched last year, but is now lagging far behind the pack with just a $494 million market cap.

“PYUSD’s uphill battle against incumbents is yet more evidence that those like Ripple will also find the competition to be rather stiff,” said Brian D. Evans, CEO and founder of BDE Ventures, a venture firm focusing on digital assets and artificial intelligence.

While USDT and USDC’s dominance could shift, dethroning them would require time and effort. As Token Terminal said, USDT, with a 70% market share, is “one of the most battle-tested stablecoins in the market, having met redemptions of over 10% of its reserves in the week following the Terra/Luna collapse.”

Yaël Bizouati-Kennedy is a financial journalist who’s written for Dow Jones, The Financial Times Group, and Business Insider, among others.