Ripple's legal disputes end
After successfully resolving the regulatory dispute with the U.S. Securities and Exchange Commission (SEC), Ripple Labs CEO Brad Garlinghouse seems to have been revitalized.
On July 2, Ripple announced that it has applied for a federal banking license from the Office of the Comptroller of the Currency (OCC), striving to become the second company to receive this honor after Anchorage Digital. Additionally, its regulated custodian service provider in New York, Standard Custody and Trust Company, is also working to become the first cryptocurrency company to obtain a Federal Reserve Master Account, allowing it to hold reserve deposits supporting its $469 million stablecoin RLUSD directly at the Federal Reserve.
'In line with our consistent compliance spirit, Ripple is applying for a national bank charter from the OCC,' Garlinghouse stated in a tweet on July 2. 'If approved, we will be regulated both at the state level (through the New York State Department of Financial Services NYDFS) and federally, setting a new (and unique) benchmark of trust in the stablecoin market.'
Meanwhile, Ripple is continuously improving the infrastructure of RLUSD. The company announced a partnership with AMINA Bank, headquartered in Switzerland, and is collaborating with OpenPayd in London to establish a payment network using stablecoins.
And that's not all; since November 1 of last year, the native token XRP primarily held by Ripple Labs has surged by 347%. Additionally, XRP may see the first spot exchange-traded fund (ETF) in the U.S. later this year. Nevertheless, the price of XRP has remained largely stagnant over the past six months.
Despite many uncertainties surrounding the future of Ripple Labs, XRP Ledger (XRPL), and its stablecoins, the biggest suspense still revolves around its native token XRP.
As Ripple seems to be shifting its focus more towards the stablecoin market, some believe that if the scale of RLUSD truly expands, it may eat into the potential demand Ripple has tried to create for XRP over the years.
For Ripple, this is indeed a brand new starting point, but old issues still persist for this blockchain company. Certain key factors may need to change to drive the price of XRP into the next growth phase. Here are two major challenges to watch.
The actual application of XRP remains limited
As early as March 2024, I published an article titled 'The Rise of Crypto’s Billion Dollar Zombies' in Forbes. In writing that report, I decided to focus on XRP Ledger (XRPL) as the main subject of exploration.
I wrote in the article: 'From the perspective of global capital flow, Ripple Labs' current situation is lackluster, and hardly anyone believes it can disrupt the Belgium-based banking cooperative known as SWIFT, which processes up to $50 trillion in interbank transfers daily. Despite failing to achieve its core objectives, Ripple's blockchain—a ledger recording XRP transactions—continues to operate normally. However, it is basically useless, while the market cap of the XRP token is as high as $36 billion, making it the sixth-largest cryptocurrency.'
Such a description is evidently quite harsh, but in the article, I pointed out that despite XRPL's market cap reaching $36 billion at the time, its fee revenue in 2023 was only $583,000. This amounts to a staggering price-to-sales ratio of 61,690. More notably, by that time, Ripple had already been established for 12 years, and it was not a startup. In my view, this data indicates that XRP is seen more as a 'memecoin' rather than an asset with practical use.
So what has changed for XRPL since then? In 2024, XRPL's fee revenue grew to $1.15 million, an increase of only $567,000 from the previous year. Meanwhile, its market cap increased from $33.32 billion at the beginning of 2024 to over $80 billion, reaching an astonishing 103,826 times price-to-sales ratio.
This set of data once again highlights the core issue facing XRP: despite its market capitalization continuously climbing, its actual application and economic benefits remain limited, making it difficult to support its high market valuation.
According to data from Messari, the activity on XRPL is not sufficient to support the rise in its price. The daily trading volume of its flagship decentralized exchange (DEX) is usually below $100,000. In contrast, the market leader PancakeSwap has a daily spot trading volume exceeding $1 billion, not to mention the rapidly growing derivatives DEX sector, where two major exchanges, Binance and Hyperliquid, handle transaction volumes reaching trillions of dollars monthly.
In the field of non-fungible tokens (NFTs), XRPL is clearly lagging behind. Data from Messari shows that in 2024, XRPL had only about 550 NFT traders on average per day. Even in the current overall downturn of the NFT market, Ethereum still has about 5,000 active traders daily.
Additionally, XRPL seems to be struggling to introduce native smart contract functionality. As its focus on payments gradually expands, smart contract capabilities have become a 'basic configuration' for blockchains. However, as of June 30, Ripple Labs launched an EVM-compatible sidechain in collaboration with Axelar, attempting to fill this gap. XRP will serve as the gas token and native asset for this new chain, creating potential sources of demand beyond payment functionality for the token.
Nevertheless, Ripple still needs to make significant efforts to create real, non-speculative user demand for XRP through this new direction.
How is RLUSD doing?
Moreover, XRP holders need to consider how Ripple Labs' launched stablecoin RLUSD will affect the demand for XRP. After all, XRP was originally designed to serve as a bridge currency, helping banks complete currency conversions at lower costs and higher efficiencies. However, some viewpoints suggest that launching stablecoins may directly conflict with this goal, especially as the promotion of RLUSD could further consolidate the dollar's dominance. This not only aligns with the U.S.'s intent to maintain dollar hegemony but could also extend to countries and regions with inadequate dollar coverage.
According to CoinGecko data, the stablecoin market is growing at a rocket-like pace. Currently, the total supply of stablecoins has reached $254.79 billion, and the entire industry is still digesting Circle's highly successful IPO last month. Meanwhile, the U.S. government is gradually approaching the passage of the GENIUS Act, which will become the first piece of legislation related to cryptocurrency and establish rules for the future development of stablecoins. With a large influx of funds into this sector and favorable regulatory developments, many people are beginning to believe that stablecoins, rather than XRP, represent the future of payments.
Despite this, I can still imagine a world where both coexist. After all, unless some emerging markets emulate El Salvador by adopting the dollar as their official currency, the demand for currency conversion remains. However, some believe that stablecoins, due to their lower volatility, are more suitable as bridge currencies compared to XRP.
This view on the demand for both tokens is also echoed by Ripple Labs CTO David Schwartz. During an interview last spring surrounding the launch of the RLUSD stablecoin, he stated: 'Providing customers with multiple pathways to enhance their experience means you can attract more customers. If we solely relied on XRP, then in places where XRP is unavailable, we can only tell customers 'no.' However, compared to when Ripple Labs was founded in 2012, the potential market size for XRP may have shrunk.'
In addition to the overall rise of stablecoins, another possible reason for Ripple launching RLUSD is the 'red letter' shadow cast over XRP due to the SEC's enforcement action against Ripple Labs. Owen Lau, an executive director at Oppenheimer & Co., stated in an interview with Forbes in April 2024: 'Ripple may feel it has no choice but to issue a stablecoin to persuade banks and other financial institutions to cooperate with it. These institutions may be unwilling to hold or use XRP due to its price volatility and regulatory risks associated with the SEC lawsuit.'
However, for RLUSD to achieve breakthrough growth and possibly return value to XRP, Ripple must act swiftly. It is well known that the stablecoin market is currently dominated by two industry giants: Tether (with a market cap of $15.83 billion) and Circle (with a market cap of $6.2 billion). Ripple's best strategy may be to drive the use and value of RLUSD through its new sidechain, for instance, by encouraging RLUSD adoption through incentives, thereby increasing demand for XRP to pay gas fees. But this remains a highly uncertain hypothesis.
Currently, Circle and Tether and their tokens have achieved broad market distribution and are working to expand their ecosystems. Tether not only dominates the trading space but has also announced that its tokens can be used to pay gas fees on a new blockchain called Stable. Circle has established a high-profile partnership with Coinbase to promote the use of USDC on its Base blockchain and partnered with Shopify to enable merchants to accept USDC as payment.
Despite the significant attention on stablecoins, this is certainly not a 'blue ocean market' for RLUSD.
Circle and Tether and their stablecoins have achieved large-scale distribution and are striving to expand their respective ecosystems. Tether dominates the trading space and recently announced that its tokens will be usable for paying gas fees on a new blockchain called Stable. Meanwhile, Circle is promoting the use of USDC on its Base blockchain through a high-profile partnership with Coinbase, and collaborating with Shopify to allow merchants to accept USDC as payment.
Despite the significant attention on the stablecoin market, this is certainly not a 'blue ocean market' for Ripple's RLUSD.
Ripple's trump card
If Ripple Labs has a trump card, it is that it may be one of the most capital-rich cryptocurrency companies in the world. According to its Q1 2025 financial report, the company holds 4.56 million XRP in its wallets, valued at approximately $10.27 billion. Moreover, the company also has 371 million XRP in custody accounts, worth up to $83.5 billion, which will be gradually unlocked over the coming years.
Although it is unlikely that if the company attempted to sell off all XRP at once, it could fully recoup such a massive amount of funds, Ripple is nearly impossible to face the risk of running out of funds.
For XRP holders, this means Ripple has unlimited resources to drive demand for its newly launched EVM sidechain while also being able to support RLUSD or expand partnerships and use cases for XRP.
However, all of this may not matter much to XRP holders. After all, despite limited user growth in the XRPL ledger in recent years, the price of XRP has still been 'soaring against the trend', not significantly affected.
This article is a collaborative reprint from: Deep Tide
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