BNY will safeguard funds backing Ripple Labs’ RLUSD, serving as the XRP-linked stablecoin’s primary custodian, according to a press release. The bank, which manages $43 trillion in assets, described RLUSD as distinct compared to most consumer-facing stablecoins. Ripple’s product, which debuted late last year, has been “purpose-built for enterprise utility,” with institutions’ needs in mind, BNY Melon said.
With a market capitalization of $500 million, RLUSD is much smaller than Tether’s $158 billion USDT or Circle’s $62 billion USDC, according to crypto data provider CoinGecko. But with stablecoin legislation progressing on Capitol Hill, Ripple now has a legacy financial institution backing its dollar-pegged token that’s also committed to fostering its growth.
Under the arrangement with Ripple, BNY said that it will provide “leading transaction banking services” to power RLUSD, while developing integrated solutions. Over three years ago, Circle announced that BNY would serve as USDC’s primary custodian. On CNBC’s “Squawk Box,” Ripple CEO Brad Garlinghouse said on Wednesday that the firm’s tie-up with BNY Mellon should be seen as a positive development, reflecting institutions’ newfound willingness to work with stablecoin issuers and regulatory tailwinds for the industry.
“Working with the most trusted, well-regulated, and even the best capitalized partners, is a way to continue to build trust in this system,” he said. “We think it’s indicative of the shift of tide, where we’ve had headwinds for this industry.” Ripple was recently changing hands around $2.38, a 4% increase over the past 24 hours. Over the past year, the asset’s price has soared roughly 450%, largely due to the fact that XRP no longer faces existential threats from regulators, analysts say.
Last week, Garlinghouse said Ripple would drop its cross appeal in its years-long legal battle with the U.S. Securities and Exchange Commission. It followed a federal judge’s refusal to cut a $125 million penalty against Ripple or modify an injunction imposed on the firm last year. Although BNY is over 240-years old, the bank was among the first to support the digital assets sector in 2021, according to Caroline Butler, the bank’s global head of digital assets. In a pre-submitted statement to Congress, she said stablecoins embody innovation. “How money is managed and moved is transforming,” she wrote. “Blockchain technology has the potential to serve as an additional payment rail, complementing the basket of existing payment options we offer our clients.”
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