You've got a good plan in place. I think part of the trust that we're bringing to the stable coin market is around Ripple's brand. They're proven ability to withstand pressures that occur, and certainly the balance sheet that Ripple has I think will provide a lot of confidence and stability sure into the issuance of that.
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It's great, it's great, a lot of positive energy here, a beautiful place. Always nice to be in Miami. What's not to like?
Have you gotten any beach time in by any chance?
I jumped in the ocean quickly yesterday and tried this morning, and the towels weren't out yet, and so I didn't want to run through the lobby soaking wet, so I held off. I'll get back in though, oh for sure.
Well lucky you, because I'm not going to have any time. I have to get out of here by tomorrow. But anyway, Jack, we've spoken over the years. Your title is s VP of stable Coins at Ripple, and very timely, very on topic because r l U s d H is around the corner to be launched.
Tell us about the r l U s d stable coin.
Well, it's a dollar back stable coin. Really right down the middle of the fairway in terms of the attributes. UH. In terms of how we're bringing it, it's a heavily regulated UH. It will be once approved, heavily reg regulated stable coin backed very conservatively by US dollar and dollar equivalent. So we can talk a little bit more about that monthly at testations by third party audit firm, highly credible partners in terms of the reserve management, the banking partners
we're working with. We're launching it on both the ethereum and XRPL ledger, which is a big deal, which we're quite excited about, sure and uh really eager to get going. We've been testing for for some time, and i'd say, and I'm been sure testing phase both internally and then more recently with third parties. So we're excut.
You mentioned the XRP ledger and etherorem. One of the things that we see other competitors are doing is launching an other blockchain. So are their plans to expand eventually to other blockchains that have more interoopability.
Yeah, I think the fact that we launched a one not only the XRPL but also in Etheroeum tells you that we recognize that there are other ones that the market will want to utilize, and we want to be supportive and collaborative there. So it's not a winner take all either with just one stable point out there or just one chain. So my sense is that we will launch on other chains over time. That's certainly in our product roadmap. We are quite excited about the opportunity to
launch this on the XRPL for obvious reasons. We feel like it's a very advantageous one from a cost, from a speed, from a security stability standpoint, and there are a lot of native use cases within the XRPL ecosystem that are eager for a stable cooin on that chain, So we're excited about what opportunities exist there.
So, speaking of native.
Demand, your current clients, whether it be payment companies or banks, are you planning to Are they planning to leverage this of in talks you probably can't name names and so.
Forth, but are they planning to leverage it to move money?
Yeah? I mean we've been historically a pretty large mentor of stable coins in our payments business. We had a panel earlier this morning. We talked about one of the real world use cases for stable coins specifically as cross border payments, remittances, etc. And that's been a core kind of bedrock or foundational piece of Ripples business from you know, over the past twelve years, and so we've borne witness to the use case within payments that has evolved over
time with stable coins. And while we won't exclusively use r O USD in the payments business, we do think that it will over the near term be the default stable coin being used along with others, but we'll certainly use that there. And we've been speaking to our partners our clients about that, hearing pain points that may exist with other stables, or more constructively, kind of a wish list of attributes or features that a stable coin would have. A lot of that has to do with the regulatory
footprint that we're bringing to bear. Part of that has to do with the costs associated with it as well, the lack of friction, the speed. There's a number of I think really positive use cases and just being part of that flywheel that will get created, you know, with the different market participants of interest to people.
Sure tell us a bit about the reserves will that consists of US treasuries and what are some of the steps you're going to take to avoid any type of deep pegging situations like what happened with Silbrigate Bank and USDC.
We say boring is the new sexy around here. So that the reserves are going to be again very conservatively constructed as part of our application process of submitted a reserve management policy document. There's going to be a healthy balance of cash in the reserves. Cash cash and everything else is a US dollar dollar equivalent, so it could be money market funds or treasury bills, but that's it.
There are no other assets beyond cash equivalent highly liquid UH and you know to be there for the purposes of meeting any redemptions. You know they come through where users want to swap out their stable and get their dollar back, and so feel very good about that. Again, very very conservative from a deep pegging standpoint. We run a number of different analysis such would that you've got a good plan in place. I think part of the trust that we're bringing to the stable coin market is
around Ripple's brand. They're proven ability to withstand UH pressures, you know that that occur, and certainly the balance sheet that Ripple has I think will provide a lot of confidence and stability sure into the issuance of that. When the other reserve banks failed a couple of years ago. I think there were a number of lessons learned the end of the day, and DFS has guidance around the types of banks that are suitable in terms of custing reserves.
You know, we're into ultimately the too big to fail. Is there a scenario where you know, all banks can fail theoretically along the continuum possible? I guess the answers yes, But you and I don't want to be there, and I think we're going to have bigger problems when that happens. But we've chosen very robust partners to work with, and so again it's one of the aspects that I mentioned at first. You know, we're judged by the company we keep.
We want to partner with the best and the brightest out there from an institutional standpoint, and all of our stablecoin business is institutional, so it's really a B to B. Some of our institutional distribution partners will support more retail use cases, but our direct relationship with distributors and other ecosystem partners are all institutional.
Now, on that note of having these banking partners. So will the reserves be spread across different banking partners, maybe some of which you already have to mitigate any type of centralized failing situation like a silvergate.
That's right, and over time we expect that there are scenarios where we could have multiple banks holding reserves, and that will evolve over time. I think also as we expand the geographic footprint, you know, there are many jurisdictions that will be able to operate in with our current
regulatory portfolio if you will. And I think there are other jurisdictions where over time will seek other licenses, and those different regional jurisdictions may have requirements to house reserves in different places, so that we'll have a knock on effect and a positive way of distributing any risk from a bank counter party standpoint.
There, gotcha, this is something I've been thinking about over the years. And you may not be able to tank to this, But do you eventually see stable coin issues like Ripple having to plug in directly to the US Treasury at some point?
I don't know.
I was thinking about that after the Silvigate situation, but or we're too far away from that.
Well, we're not there yet. And again, you know, I think different geographic jurisdictions may have different requirements. Sometimes, you know, banks will have access to the FED window if you're a depository institution. Most of the stable coins that are issued today are either not regulated, the largest falling into
that camp. Others are regulated out of money transmitter licenses and a subset of minority in the US elise are issued through trust companies, and so Standard Custody, which is the applicant for the stable coin license, is a limited purpose trust company. As such, we don't have direct access
to the FED window today. That could change over time if we were to either expand the license footprint and what we could do as a depository, But today we're not depository through the trust company license that we have. And then, for that matter, no other issue that I'm aware of in the industry as a direct access to the or other central bank.
What's your plan for market penetration. There's obviously some established players in the market, and the stable coin wars, if you want to call it, that is heating up. But let's say into markets, let's ham in South America, what is plans there?
What are your plans there?
The answer is yes, we're going to penetrate the markets. One of the benefits of doing this from Ripple is a twelve year infrastructure of partnerships that they've built out really across the globe. There's a corresponding portfolio of licenses that we get to slipstream behind. In many cases where there's already a regulatory framework set in place in certain corridors where the legacy Ripple Payments business already as well established, it's mature and so there is a native demand already
in those marketplaces. So not going into specifics, what we'll
be launching is the issuer out of the US. We've got a very global mind frame in terms of how we're going to bring this to market, distributed both in concert with some of our existing partnerships, existing rails that we have our corridors on the payment side, or with exchanges that we work with for the payments, and also some new use cases frankly that have come to mind since we've been talking about it internally over the last six months and really educated our sales and client management
teams or new use cases that are coming naturally as part of a conversation when those customers and partners and clients are engaged in a conversation where they say, hey, here's another opportunity or another use case that may have not existed in the past and would be perfect for a stable coin. And so I think the past isn't necessarily our future in terms of where we see stable coins being used.
Now, some of the partners you mentioned, I know there were some exchange partners that were announced today.
Tell us about those and how they'll be integrating our LUSD.
Yeah, so today we announced a number of day one partners, some exchanges, you know, the bit Stamps, the Upholds of the World, Bullish, We announced some market makers B two C two, key Rock. We announced some on and off ramp partners as well, Moonpay being one of them. Trying to think it was in a release because we have another partners who are signed on that we haven't announced yet or in the process of coming over, and so
that will evolve over time. When we do get regulatory approval and when we do actually launch, we'll announce other partnerships, and so it's really a broad and diverse approach to bringing it to market. Obviously, it has to be made
available and that's where the exchanges come in. The market makers provide really requisite liquidity to the marketplace in many cases, and depending upon the application, someone like moonpay twenty two million wallets that exist out there, they provide a key piece of infrastructure or zero hash or others that help us connect with other ecosystem partners who might go that last mile, whether it's a payment rail, whether it's a
you know, consumer application, et cetera. And again, all of our direct customer relationships are all institutional, but we do have partnerships that will help us get our USD you know, into more use cases. Frankly, we also, in addition to those third parties, as I referenced earlier, have a number of native use cases. I think it's one of those aspects that sets Ripple apart, isn't Issuer. So not only do we have the regulatory compliant footprint, the licensed approach
that we're doing it with. Not only do we have the balance sheet and the brand recognition and the reputation for trust, but we also have these native use cases
around custody. Through the medical acquisition that Ripple made a year and a half ago, there's some really interesting r WA tokenization opportunities with Ripple custody that we're excited about some opportunities within the pain business, which you've already spoken about, some opportunities with Ripple Impact and some of the pilanthropic X you know, opportunities that Ripple has has been promoting, and so quite excited to be doing it from this platform.
So Jack, not to get ahead of ourselves. Obviously excited for our l USD once that's up and running and in the wild, is there going.
To be an rl EU are Yeah, a common question if I were to close my eyes and open them, you know, three years from now. I think the answer to that is yes, And I think there will be other FIAT backed stable coins that have a role to play, and certainly Ripple's global footprint supports that. And there's an opportunity to leverage infrastructure, leverage, licenses, leverage partners we have
in different jurisdictions to bring that to Baron. We've already been speaking to some of the of our partners around that. I think today the fact that I don't know if it's ninety five percent or something like that of demand for sable coins is for US dollar back stable coins, yeah, and so we want to address that market need first, and I would say we're certainly watching and ready and poised to capitalize on the growth where we see inklings or early signals growth, and I think that will happen.
I'm very bullish, as you might suspect on the broader growth story for stable coins generally speaking, and I don't think in the future they're all going to be a US dollar back. So it's just a little premature outside the US dollar back today and we've got job number one is to get our all usd launched and growing, and we'll focus on other featback stable coins after that.
Sure.
Well, yeah, to your point, I mean US dollar will reserve currency. Everybody wants a dollar, and especially in countries where they're handling hyperinflation and dealing with all that craziness, they want US dollars. So it would be awesome to have a stable coin backed by the US dollar. Do you feel that's the killer use case of blockchain right now? Is going to be more, but stable coins are the seems to be the game right Well, it's.
In my title, so I've got to be stable coin first. But I think the other big exciting theme, and it's resonant here in a lot of the conversations and the panel discussions that SWELL is tokenization and real world assets, and I think the two go hand in hand, even if you think about stable coins being an on and off ramp into investing in our w A and tokenization, and so a lot of the issuers and exchanges and infrastructure providers for tokenization and r w A that we've
been working with we're having corresponding conversations around stable coins as well. So I think those two thematically are probably the most exciting, and both I think lend themselves to the the use cases that really I think help open people's eyes to the benefits of crypto and digital assets who may have been more skeptical or who can look at a bitcoin or excerpt pay your eth and say
it's just a speculative investment. Here are examples where particularly stable coin is, given the kind of bridge they sit between, you know, trad fying and web three, how it can make sense to people, particularly when you get into financial inclusion and remittances and you know there are stores of value. So I think I think it's a really exciting time for stables and tokenization.
Yeah, for sure.
So you envisioning that in the future, I'm not necessarily going to go from fiat to buying a tokenized version of a hotel in Miami Beach or something, but to a stable coin.
Or have that.
Well, it's having that option. Thinking about stables, you know they operate twenty four to seven. So if you decide to do it, you get woued at dinner on a Friday night and you want to buy a tokenized interest in the Faina hotel, That's tough to do when the banks are closed, yeah, Whereas if you have access to a stable coin, you know you can do that immediately and transfer that stable coin. So, I mean there's that
level of support. There's also just the reality of once you are actively investing in the space and tokenizer digital assets, keeping your fiat type reserves or assets in a stable coin allows you to save the on and off of going from stable to fiat and fiat back to stable to just keep it in stable, right, and then you are much more poised and ready to move that around to transfer it in its courts of ripples belief around you know, the exchange of value, exchange of wealth, right,
and so being able to do that through a digital asset, whether it's XRP or to the stable coin use case rl USD. I think both work very well in achieving that mission.
I don't know, let me rephrase this actually will ripple or do you have any partners who may be interested in offering yield with the stable coin? I know coin based offers offers some sort of yield with us DC.
Yeah, they do it through a rewards program, and I think I don't know exactly how that works. We've got a number of partners who run their own business, I mean in our worldview. If you will, you know the and this may evolve. It came up in a question
earlier today on the stable coin panel. There's certainly there have been other instances where stable coins with a yield component have been issued outside the US or all sorts of security laws that exist today that would govern how you would bring a interest bearing stable coin to market, and that's a well proven path. There aren't a lot of precedents around it. But I think the guidelines are pretty clear from the SEC and others in terms of
what that would look like. And so when I again close my eyes and open them three years from now, I think you will see more yield bearing stable coins and then maybe in different jurisdictions or here, but they'd be registered as a security. I think in the current form to your question, there are other partners who have similar sort of rewards programs or other incentives for folks
to hold it. Our stable coin is not a yield sharing a stable coin where you know, the end users of or holders the stable coin where participate in the yield.
Sure, So I guess it just depends on who creates whatever product, whatever third party, and if they want to offer.
It, that's right, and that would be up to them, and that would be you know, scrutinized as as appropriate by whatever product they have, whatever regulatory framework they operate in or don't, and whatever region they're in. So mark for me to answer that part of the question for sure.
Final item here, Over the years, we've spoken about grown adoption institutions.
You know, the herd was coming. They were saying, Now the herd is here.
Still here, the thundering herd, right, yeah.
And I mean, are you blown away?
But by all the things that happened this year ETFs, all the Wall Street tokenization is black rocks, custoding reserves for certain companies and so forth, what are your thoughts on all that.
Yeah, it can't come soon enough for big enough, and I think it is. You know, we've talked over the years, Tony about evolution, not revolution, and so I think what
we've seen this year is consistent. I think this has been a big year for digital assets writ large, and you touched upon a few, and I think Blackrock has been very credentializing for traditional finance to see what they've done in others and the Wisdom Trees of the World and Fidelity and other big names Aberdeen that are active in the space, and I think they will continue to
push the envelope. The volume isn't what we all expect it to be, but you have to start somewhere, and I think this crawl walk run phenomenon will play out. I think a year from now we'll see even more use cases, We'll see even more volume and higher levels of adoption. And so I'm quite excited about the progress you know, that we've seen and feel like we're very well positioned to take advantage of that and be a
proponent and a catalyst for more growth. As I said, people want to work with trusted parties who are well financed, who are regulated. Who you know come through the front door and operate their business, and so that's what we're focused on doing. That's our playbook and we think good things are going to come.
Well, Jack, I have to have a conversation with you in twenty twenty five.
Thanks progressed, Thank you so much.
Of course, thanks for having me