Ripple's Institutional-Grade Stablecoin Challenges Tether's Custody Gap

Ripple has launched a new stablecoin, Ripple USD (RLUSD), designed to compete with Tether’s USDT. The stablecoin, issued on Ripple’s XRP Ledger (XRPL) and also available on the Ethereum blockchain, is backed by U.S. dollars held in reserve by Standard Custody & Trust Company, a subsidiary of Ripple Labs. The initiative aligns with Ripple’s broader strategy to expand its footprint in institutional and cross-border payments. In July 2025, Ripple announced a $75 million credit facility with Gemini, a U.S.-based crypto exchange, underlining the stablecoin’s growing institutional traction [1].

The RLUSD is already seeing adoption in major financial transactions. Most recently, Bullish, a cryptocurrency exchange, used RLUSD as part of the settlement process for its $1.15 billion IPO. The stablecoin was minted on the XRP Ledger and played a role alongside other stablecoins such as Circle’s USDC, Paxos’ PYUSD, and others. The IPO closed at $37 per share, exceeding initial projections and giving the firm a market valuation of $5.4 billion [2]. This development demonstrates how stablecoins are increasingly being integrated into traditional financial infrastructure, offering faster and more transparent settlement processes compared to conventional systems.

Ripple’s entry into the stablecoin market is also bolstered by regulatory clarity and strategic partnerships. In April 2025, the firm announced a $1.25 billion acquisition of Hidden Road, a multi-asset prime brokerage, to enhance RLUSD’s clearing and financing capabilities. Additionally, Ripple selected BNY Mellon to custody its RLUSD reserves, a move that has been highlighted by crypto lawyer Bill Morgan as a key differentiator compared to Tether, which does not use an independent third-party custodian for its reserves [5]. This institutional-grade security may attract more institutional investors and traditional finance players seeking compliance-focused digital assets.

The U.S. Office of the Comptroller of the Currency (OCC) recently announced that community banks can now partner with stablecoin firms, a regulatory shift expected to benefit Ripple’s RLUSD. The firm is also pursuing a U.S. banking license to further integrate its stablecoin into the traditional financial system [5]. Meanwhile, Tether, the largest stablecoin issuer, is responding by expanding its own U.S. operations, having recently hired Bo Hines, former White House crypto adviser and key architect of the GENIUS Act, to lead its U.S. strategy [4]. Hines’ appointment underscores the growing importance of regulatory alignment and government relations in the stablecoin space.

RLUSD has seen significant market traction, with its market share increasing by 26% over the past month to $666 million [5]. Ripple’s stablecoin is also expanding its technological capabilities, integrating Chainlink’s pricing standard and enabling cross-border payments in over 31 currencies through MetaComp’s StableX. These integrations, combined with its focus on institutional users rather than retail, position RLUSD as a serious contender in a rapidly evolving stablecoin landscape. As the U.S. moves to establish clearer regulatory guardrails, stablecoins like RLUSD and USDT are expected to play an increasingly central role in global financial infrastructure [2].

Source:

[1] Ripple USD, Chart, & Supply Details - RLUSD Price - Gemini (https://www.gemini.com/prices/ripple-usd)

[2] Ripple's RLUSD gains institutional traction in Bullish IPO ... (https://cryptoslate.com/ripples-rlusd-and-donald-trump-linked-usd1-used-in-bullishs-1-1-billion-ipo-settlement/)

[3] Tether hires Trump's top crypto official Bo Hines to help ... (https://fortune.com/crypto/2025/08/19/trump-bo-hines-tether-crypto-white-house-stablecoins/)

[4] Former White House cryptocurrency adviser Bo Hines joins ... (https://finance.yahoo.com/news/former-white-house-cryptocurrency-adviser-bo-hines-joins-tether-134729416.html)

[5] Crypto Lawyer Reveals Key Drawback with Tether's USDT ... (https://coingape.com/crypto-lawyer-reveals-key-drawback-with-tether-sdt-rlusd-better/)