Ripple CTO Warns About RLUSD Stablecoin Supply Shortage Upon December Launch

• Ripple’s CTO raised concerns about the RLUSD supply shortage immediately after its launch. 

• RLUSD is Ripple’s U.S. dollar-pegged stablecoin that was initially introduced in April. 

• On Monday, Ripple confirmed that the stablecoin would launch globally on December 17. 

Ripple’s chief technology officer (CTO), David Schwartz, recently raised concerns that the company’s U.S. dollar-pegged stablecoin might face “supply shortages” in the early days of its launch. 

The enterprise-focused blockchain service introduced the stablecoin, Ripple USD (RLUSD), in April this year to further what it touted as part of its “on-demand liquidity product,” which seeks to settle transactions faster between banks and other financial institutions using XRP as a bridge currency. Ripple explained that the stablecoin would be backed 1-to-1 by U.S. dollar deposits, U.S. government bonds, and cash equivalents held in its reserve. 

Ripple CEO Brad Garlinghouse announced on December 11 that RLUSD had secured its final approval from the New York Department of Financial Service (NYDFS), paving the way for an official launch that was confirmed Monday. 

Ripple CTO Predicts RLUSD Shortage 

In a recent X post, Schwartz said that RLUSD might experience outsized volatility immediately after its launch, caused by several large orders for the token despite its “stable” 1:1 parity with the U.S. dollar. 

Schwartz raised the concerns in response to a report that claimed RLUSD’s pre-launch price had surged to $1,200 per token in the Xaman XRP wallet, raising eyebrows across the crypto community. Per the report, 1 RLUSD was exchanging hands for 511 XRP. 

“There actually is someone willing to pay $1,200/RLUSD for a tiny fraction of one RLUSD. Tools will show you the highest price anyone is willing to pay, even if it's just for a tiny bit. Maybe someone wants the "honor" of buying the first bit of RLUSD on the DEX.” Schwartz wrote. 

Seeking to reassure the XRP community, Schwartz explained that the RLUSD stablecoin price “will come back very close to $1” once the market stabilizes. “If it doesn't, something is very seriously wrong,” he cautioned. 

According to the CTO, short-term price changes in stablecoin prices due to shortages of supply or demand are common post-launch but shouldn’t last long as arbitrages rapidly correct the market. 

“If you want to spend a lot of money to get a tiny bit of RLUSD before anyone else does, you can. But please don't expect the price to stay over $1 once things stabilize, which I expect they will do very quickly.” Schwartz added. 

Schwartz’s concerns came barely a day before Ripple confirmed RLUSD’s stablecoin launch. 

RLUSD Stablecoin Launch 

On Monday, Ripple announced that the RLUSD would launch globally on December 17 as an enterprise-grade stablecoin built with trust, utility, and compliance at its core. The token is issued on the Ethereum blockchain and XRP Ledger, enabling users to initially access it on Uphold, Bitso, MoonPay, Archax, and CoinMENA. 

According to the press release, Ripple is keen to list RLUSD on other global platforms, including Bitstamp, Zero Hash, Mercado Bitcoin, Bullish, and the Independent Reserve, and publish monthly, third-party attestations to prove the stablecoin’s reserve assets. 

“As the U.S. moves toward clearer regulations, we expect to see greater adoption of stablecoins like RLUSD, which offer real utility and are backed by years of trust and expertise in the industry,” Garlinghouse noted. 

Ripple reiterated that it had secured key partners, including global crypto exchanges, market makers, and payment service providers, to help drive RLUSD usage and adoption across the Americas, Asia-Pacific, UK, and Middle East regions. 

In addition to facilitating “instant” settlement of cross-border payments, RLUSD will allow users to access liquidity for remittances and treasury operations, as well as decentralized finance (DeFi) protocols. The stablecoin will also bridge traditional fit currencies and the digital asset ecosystem while providing collateralization for trading tokenized real world assets (RWAs) like commodities, treasuries, and securities, Ripple said in the statement. 

To support the stablecoin’s stability and growth, Ripple has tapped Raghuram Rajan, former Governor of the Reserve Bank of India, and Kenneth Montgomery, former First Vice President, to join the RLUSD advisory board. The board will provide strategic regulatory, financial, and operational guidance. 

Ripple’s move to launch RLUSD on December 17 pits the company against stablecoin giants like Tether, which issues the largest stablecoin by market cap, USDT. At the time of writing, USDT’s market cap stood at $140.25 billion, accounting for the lion’s share of the $211 billion stablecoin market, CoinMarketCap data shows. Circle’s USDC ranks behind USDT with $42.2 billion in market cap.