Upcoming U.S. Stablecoin Regulations Could Be a Tailwind for XRP

XRP community researcher SMQKE has outlined how upcoming U.S. stablecoin regulations could boost XRP's adoption, utility, and market value.

The upcoming U.S. stablecoin regulations, part of the broader GENIUS Act, could significantly boost the adoption, utility, and market value of XRP, community researcher SMQKE argues.

According to the analysis by SMQKE, which was shared with The Crypto Basic community, Ripple’s USD stablecoin, RLUSD, will benefit from the new regulatory framework. This, in turn, will drive increased usage of the XRP Ledger and demand for XRP.

The GENIUS Act, which stands for "Growth Engine Network, Jobs Impact, U.S. Leadership, and Services," will mandate reserve requirements, audits, and licensing for stablecoins. It also aims to create a new class of "digital asset banks" to handle digital asset custody and banking services.

However, experts say that the Act’s scope is limited, as it will only place federal oversight on stablecoins with over $10 billion in market value.

Currently, RLUSD is well under the $10 billion cap, meaning it can opt for state-level regulation if it meets federal standards.

If it chooses the state route, RLUSD will still need to comply with the new requirements outlined in the GENIUS Act. This includes maintaining full backing with liquid assets, undergoing regular audits by independent accounting firms, and being licensed and supervised by state or federal agencies.

Greater Institutional Interest In RLUSD

As a result of the new regulatory clarity, there could be greater institutional interest in RLUSD.

This is because institutional investors typically prefer assets that are compliant with regulations and have a clear legal standing.

The increased usage of RLUSD, in turn, will benefit XRP.

Every time RLUSD is transacted, a small XRP-denominated fee is charged, which is then burned. This helps to reduce the total supply of XRP in circulation.

As the volume of RLUSD transactions grows, especially for use cases like cross-border payments and remittances, the demand for XRP as a bridge asset will increase. This, in essence, will push the value of XRP up.

Soldifoying XRP's Legal Status

Moreover, the regulatory clarity provided by the GENIUS Act will also help to solidify the legal status of XRP.

While XRP is not a stablecoin, its operation within a regulated framework will further strengthen its position as a utility token rather than a security. This will provide greater legal certainty for investors, businesses, and financial institutions.

Positioning RLUSD Against CBDCs

Another major advantage is the positioning of RLUSD against Central Bank Digital Currencies (CBDCs).

The U.S. government has banned the creation of a federal CBDC, and President Trump’s executive order highlighted the importance of USD stablecoins in promoting the dollar’s dominance.

The GENIUS Act aligns with this priority by focusing on the regulation and integration of stablecoins into the existing financial system.

In contrast, the new legislation does not place any direct regulatory measures on CBDCs. This suggests that the focus is on establishing clear rules for the existing classes of digital assets.

In essence, SMQKE’s commentary suggests that the regulatory changes brought about by the GENIUS Act could usher in a new era for XRP, even though the coin itself is not a stablecoin.