Confusion has circulated within the XRP community regarding the role of RLUSD, amid rumors that Ripple Labs’ new digital dollar might challenge or even replace XRP. Crypto researcher SMQKE addressed this misconception in a recent video analysis, directly contrasting the fundamental purposes and mechanisms of both RLUSD and XRP.
Distinct roles for RLUSD and XRP
Ripple Labs is a US-based company known for developing global payment solutions, primarily through the XRP Ledger and its native cryptocurrency, XRP. The company introduced RLUSD as a regulated dollar-backed stablecoin, designed to function alongside XRP rather than in opposition to it.
Ripple’s official documentation confirms that XRP’s primary role is to serve as the bridge asset on the XRP Ledger, facilitating seamless currency conversions and enabling fast cross-border transactions. RLUSD, on the other hand, carries value and is pegged one-to-one with the US dollar, fully backed by cash reserves held at regulated financial institutions.
Monica Long, president of Ripple, emphasized before RLUSD’s launch that the stablecoin brings value to the XRP ecosystem: “Its integration is both additive and complementary to XRP.” She noted that each asset enhances the other’s utility rather than competing for dominance.
RLUSD holds the value. XRP moves the value. Each one expands what the other can do. Stablecoins create the traffic. The traffic creates the need for the bridge.
The impact and scale of stablecoins
Stablecoins have emerged as a driving force within the digital asset industry. Data released by the Bank for International Settlements shows that in 2025, three leading dollar-backed stablecoins processed more than 141 million transactions worldwide.
These stablecoins reached a combined on-chain transfer volume of $46 trillion over the year, nearly triple Visa’s payment volume during the same period. RLUSD itself accumulated $1 billion in circulation within 11 months of its launch, signaling swift adoption and significant market demand.
In the context of the XRP Ledger, every account holding RLUSD is required to maintain an XRP reserve. Additionally, each RLUSD transaction pays a fee through a small XRP burn. When users convert dollars to other currencies, the ledger can route transactions using XRP as an intermediary asset.
| Metric | Stablecoins (incl. RLUSD) | Visa |
|---|---|---|
| 2025 Transfer Volume | $46 trillion | $16 trillion |
| RLUSD Circulation (after 11 months) | $1 billion | N/A |
Expansion to Ethereum and network efficiency
To capture liquidity and reach new enterprise users, Ripple launched RLUSD not only on the XRP Ledger but also on the Ethereum blockchain. SMQKE explained that large pools of stablecoin capital were already present within the Ethereum ecosystem, making it a strategic entry point for RLUSD to attract mainstream institutional adoption.
The XRP Ledger offers instant settlements in three to four seconds at transaction costs below one cent. Its automated market maker system provides fast, efficient trading compared to traditional Ethereum-based solutions. SMQKE noted that this efficiency is encouraging liquidity to move toward the XRP Ledger, allowing RLUSD to deepen its utility as adoption increases.
Mini dictionary: RLUSD – Ripple’s regulated, dollar-backed stablecoin. It is designed to function across multiple blockchains and maintain a one-to-one value with the US dollar, fully backed by cash reserves held in trust at regulated institutions.
Institutional partnerships and infrastructure
Major financial institutions are supporting both RLUSD and XRP. BNY, a leading global custodian with $63.4 trillion in assets under custody and administration, maintains RLUSD reserves and also provides institutional support for XRP. In October 2026, BNY expanded its custodial services to cover both assets simultaneously.
Moody’s, a well-known credit rating agency, assigned RLUSD an investment-grade rating, making it the first stablecoin to receive such recognition, according to Ripple. The Ripple Prime platform now allows trading firms to use RLUSD for collateral when trading XRP, underscoring the assets’ complementary relationship.
Summing up the relationship between the assets, SMQKE concluded that the rise of stablecoins like RLUSD generates transaction flow, while XRP remains a vital bridge asset within the ecosystem.
Stablecoins create the traffic. The traffic creates the need for the bridge.
