Ripple CEO Brad Garlinghouse believes the stablecoin sector is poised for explosive growth, predicting the market could grow from its current capitalization of $250 billion to $2 trillion in the near future.
Speaking on CNBC's 'Squawk Box' on Wednesday, Garlinghouse described this expansion as 'profound', viewing the growing institutional and regulatory momentum as key drivers.
Garlinghouse noted that Ripple entered the stablecoin market late, largely because the company had been leveraging third-party stablecoins in its enterprise payment flow.
Ripple Bets on RLUSD to Compete in the Stablecoin Race
RLUSD, Ripple's USD-pegged stablecoin, has provided the company with an opportunity to compete thanks to its existing institutional framework and focus on regulatory compliance.
Garlinghouse stated, 'Many believe it will reach $1 to $2 trillion in the next few years,' adding that Ripple is well-positioned to benefit from that trajectory.
He also announced that BNY Mellon will act as the custodian for RLUSD, a currency that surpassed a market capitalization of $500 million this week.
Voices in the industry also seem to agree with Ripple's optimism. Henrik Andersson, CIO at Apollo Capital, told Cointelegraph that this forecast aligns with their internal projections.
He stated, 'We are witnessing fintech companies, banks, social networks, and major retailers all launching their own stablecoins,' pointing to increasing competition and adoption across various sectors.
Andersson also emphasized the success of market leaders like Tether, which has turned its dominance into huge profits.
Looking ahead, he noted that the GENIUS Act, a bill that would grant stablecoins legal tender status in the U.S., could be a major driving force.
The bill was passed by the Senate in June and is expected to be enacted by the end of this month.
Nick Ruck, a director at LVRG Research, added that a friendlier regulatory stance from the SEC could facilitate exponential growth in the stablecoin market, potentially reaching $2 trillion within a few years.
Ripple is also tightening its relationship with traditional finance. Earlier this month, the company applied for a banking license with the Office of the Comptroller of the Currency (OCC) and the Federal Reserve's Financial Account.
Garlinghouse stated that this move aims to build 'a bridge between traditional finance and DeFi'.
Ripple's RLUSD is Attracting Attention
Meanwhile, RLUSD continues to attract attention as it has recently integrated with cryptocurrency payment provider Transak.
The increasing adoption of RLUSD comes as this stablecoin reaches a market capitalization of $500 million for the first time since it began trading less than seven months ago.
XRP, Ripple's cross-border payment token, rose 7% this week, trading at $2.42, its highest level in nearly two months.
Stablecoins have emerged as one of the rare success stories in cryptocurrency, attracting attention from both corporations and regulators.
Recent reports indicate that Amazon, Walmart, and other major companies are exploring stablecoin payment methods, creating a ripple effect in traditional finance, pushing stablecoin transaction volumes to surpass Visa briefly in 2024.
Frank Combay from Next Generation noted that regulatory clarity, particularly the EU's MiCA framework, has unlocked the growth potential of stablecoins by removing the biggest hurdle: uncertainty.
He believes that the stablecoin ecosystem could reduce transaction costs by over 90%, becoming increasingly attractive to both consumers and corporations.