New York Regulators Approve Ripple's RLUSD Stablecoin, But XRP and Bitcoin Are Not Accepted as Collateral

After a lengthy regulatory process, the New York State Department of Financial Services (NYDFS) has officially approved Ripple's RLUSD stablecoin.

The New York State Department of Financial Services (NYDFS) has officially approved Ripple’s RLUSD stablecoin, completing a lengthy regulatory process.

This marks a significant development in the cryptocurrency space, highlighting the growing institutional adoption and regulatory landscape for stablecoins.

Prominent cryptocurrency figure Vincent Van Code (@vincent_vancode) recently shared details on the stablecoin’s approval. According to Van Code, the NYDFS approval specifies that “RLUSD requires cash or cash equivalent backing, like Treasury bills, bonds, or cash.”

This regulatory mandate ensures that RLUSD maintains its peg to the U.S. dollar, fostering trust and transparency in its operations. Ripple had earlier stated that RLUSD would be backed 1:1 by cash or cash equivalents.

The NYDFS approval further reinforces trust in Ripple’s commitments. Notably, digital assets like XRP and Bitcoin are currently not acceptable to back RLUSD under NYDFS guidelines.

“XRP or any digital asset (including BTC) are currently NOT approved as cash equivalent to back RLUSD,” van Code pointed out. There were rumors that Ripple might custody its escrowed XRP as a reserve for RLUSD.

However, experts quickly debunked this possibility, stating that regulators would not accept digital assets to back the stablecoin.

Despite this, van Code speculated that such assets might be considered in the future if they meet stringent requirements. He also noted that the digital assets backing the stablecoins would need to be over-collateralized in case their prices drop.

This scenario could allow digital assets to participate in RLUSD’s collateral structure, although this remains speculative and would require extensive regulatory approval and mechanisms to mitigate the volatility of digital assets.

Addressing questions about potential obstacles delaying RLUSD’s launch, van Code clarified that the asset has met all regulatory requirements.

“NYDFS approved it. Now they are turning it all on. It takes a fair bit of time,” he stated, adding that the implementation process involves creating demand for the stablecoin.

Ripple’s stablecoin has already generated a lot of buzz in the community, with many trustlines being created in anticipation of its debut. While the community is excited about RLUSD’s potential to drive adoption and utility, van Code expects its impact on XRP to be minimal.

“The impact on XRP price won’t be immediate,” he noted. According to van Code, creating demand and utility takes time. He also stated that any price trend at this point is more a result of enthusiasm than sustained utility-driven demand.