Speculation suggests that Ripple could use XRP for its RLUSD reserve: this is what we know

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

These rumors have been making the rounds, especially 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 close to approving the launch of the stablecoin.

Speculation around RLUSD and XRP

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

He recommended this ripple could use its XRP escrow holdings to form RLUSD’s initial reserves. Delgado suggested that this move would allow Ripple to mint RLUSD, sell it to On-Demand Liquidity (ODL) partners and at the same time Free up significant working capital for the company.

In particular, this approach, if true, could provide massive liquidity to the XRP Ledger (XRPL), potentially increasing the functionality of the ecosystem. Additionally, it could control the circulating supply of XRP, reducing its overall availability and increasing deflationary pressure on the token.

Delgado claimed that such a move could boost the price of XRP while allowing Ripple to provide liquidity without creating new tokens. Interestingly, these developments could have a positive impact on Ripple and that XRP ecosystem.

XRP Current market development

XRP’s recent market performance has also contributed to these rumors. The asset recently rose above the $2 mark and reached a high of $2.50 before stabilizing at $2.41. This rally increased XRP’s market capitalization to $137 billion, placing it in the highest position 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 becomes a reality.

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

I heard #ripple can hold the entire escrow account and exchange it for it #RLUSD.

You can shape #RLUSD and sell them to their (former) ODL partners, so #ripple receives working capital, the XRPL receives a massive injection of liquidity and #XRP The circulation price remains lower.

Now that you…

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

We know that

Despite the excitement, official revelations suggest that these speculations may not come true. For example, Ripple’s official announcement regarding RLUSD emphasized that the stablecoin is fully backed by USD deposits, short-term US treasuries and cash equivalents.

WrathofKahneman (WOK), a well-known figure in the XRP community, highlighted this disclosure and urged caution regarding unfounded rumors.

Be careful! This unfounded escrow rumor is in direct contradiction to Ripple’s opinion #RLUSD announced that the token “will be 100% backed by USD deposits, short-term U.S. Treasury securities and other cash equivalents.” Regulators don’t want to #RLUSD secured with #XRP. https://t.co/nVzkNvnta1 pic.twitter.com/qKv7kp6C2V

– WrathofKahneman (@WKahneman) December 2, 2024

WOK argued that regulators may reject XRP’s support of RLUSD due to its less conventional collateral status as Cash or government bonds. Another community member supports He takes this view and points out that regulators prefer established forms of security over cryptocurrencies, even if they are over-collateralized.

However, he suggested 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.