Speculations Suggest Ripple Could Use XRP for Its RLUSD Reserve: Here’s What We Know

Rumors circulating within the XRP community suggest that Ripple could leverage its XRP holdings as reserves for its upcoming RLUSD stablecoin.

These rumors have made the rounds, particularly as Ripple nears regulatory approval for RLUSD. For context, FOX Business reporter Eleanor Terrett confirmed late last month that the New York Department of Financial Service (NYDFS) was on the verge of approving the stablecoin for launch.

Speculation Around RLUSD and XRP

Amid the anticipation, market commentator Luis “Del Crypto” Delgado has fueled the latest circulating speculation with his recent posts.

He suggested that Ripple might use its XRP escrow holdings to establish RLUSD’s initial reserves. Delgado proposed that this move would allow Ripple to mint RLUSD, sell it to On-Demand Liquidity (ODL) partners, and simultaneously unlock significant working capital for the company.

Notably, if true, this approach could inject massive liquidity into the XRP Ledger (XRPL), potentially boosting the ecosystem’s functionality. Furthermore, it could control XRP’s circulating supply, reducing its total availability and bolstering deflationary pressure on the token.

Delgado asserted that such a move might drive XRP’s price upward while enabling Ripple to provide liquidity without creating new tokens. Interestingly, these developments could have positive implications for Ripple and the XRP ecosystem.

XRP Recent Market Performance

XRP’s recent market performance has also contributed to these rumors. The asset recently surged past the $2 mark, peaking at $2.50 before stabilizing at $2.41. This rally boosted XRP’s market capitalization to $137 billion, placing it as the third-largest cryptocurrency, surpassing Solana and USDT.

This price surge has reignited discussions about XRP’s potential to reach new heights. Delgado suggested XRP could reach $1,000 if Ripple’s rumored strategy materializes.

Another community figure, Vincent Van Code, mentioned similar speculations in a separate disclosure. In a post on X, he highlighted the potential liquidity boost to XRPL and the benefits to Ripple’s operational capital.

I have heard #Ripple may custody all of it’s escrow and swap it for #RLUSD.

They can mint #RLUSD and sell them to their ODL (formerly) partners, so #Ripple gets working capital, the XRPL gets massive liquidity injection, and #XRP circulating price stays lower.

So now that you…

— Vincent Van Code (@vincent_vancode) December 2, 2024

Here’s What We Know

Despite the excitement, official disclosures suggest these speculations might not materialize. For instance, Ripple’s official announcement regarding RLUSD emphasized that the stablecoin would be backed entirely by USD deposits, short-term U.S. government treasuries, and cash equivalents.

WrathofKahneman (WOK), a notable figure in the XRP community, highlighted this disclosure and urged caution regarding unsubstantiated rumors.

Be careful! This unsubstantiated escrow rumor flies directly in the face of Ripple’s #RLUSD announcement the token “will be 100% backed by USD deposits, short-term US government treasuries, and other cash equivalents.” Regulators would not like #RLUSD backed with #XRP. https://t.co/nVzkNvnta1 pic.twitter.com/qKv7kp6C2V

— WrathofKahneman (@WKahneman) December 2, 2024

WOK argued that regulators might oppose RLUSD being backed by XRP due to its less conventional collateral status than cash or treasuries. Another community member supported this view, pointing out that regulators prefer well-established forms of collateral over cryptocurrency, even if over-collateralized.

However, he proposed a compromise where tokenized versions of cash-backed RLUSD could coexist with XRP-backed reserves on the XRPL. Such an approach could balance regulatory compliance with the benefits of leveraging XRP’s liquidity.