CTO of Ripple reveals the truth about stablecoin and the utility of XRP

Ripple's Chief Technology Officer, David Schwartz, stated that the rising wave of stablecoin issuance does not threaten Ripple's or XRP's position in the digital asset market. Instead, he emphasized that stablecoins are a supplement to the ecosystem and can enhance the utility of XRP by strengthening the demand for cross-asset liquidity. His remarks were made in a recent interview published by CB Insights and highlighted by technical analyst AllinCrypto in a tweet emphasizing Schwartz's position. Stablecoins increase liquidity, not competition. When asked whether Ripple is being sidelined by the rise of stablecoins - including recent launches by major financial institutions - Schwartz directly replied that stablecoins are "really useful." He explained that while stablecoins provide a relatively stable form of value compared to highly volatile cryptocurrencies, they still do not eliminate the fundamental requirement for liquidity across different assets and sectors. According to Schwartz, stablecoins help users easily hold digital assets, especially when volatility poses challenges. However, he makes it clear that "you still need liquidity," especially among different stablecoins. He noted that even dollar-backed stablecoins, such as those issued by JPMorgan and Circle, do not comprehensively address the issue. For example, if a person is not in the United States, a coin pegged to the dollar may not necessarily be stable due to exchange rates and geopolitical considerations. The limitation of authority reinforces the demand for a neutral asset. A major issue identified by Schwartz is the legal nature of stablecoin issuance. Each stablecoin has a counterpart bound by a specific legal framework. Schwartz states, "There is no common counterpart that everyone in the world can access equally." This leads to fragmentation in the stablecoin market, as each coin is tied to a specific region or governance system. Therefore, the lack of a widely accessible payment mechanism means that cross-border and cross-asset transfers still require a neutral intermediary. This is where Schwartz identifies the unique advantage of XRP. He compares the role of XRP to the function of the dollar in aggregating demand from smaller currencies. Just as the US dollar serves as a global reserve and intermediary currency, XRP can serve a similar purpose in the digital ecosystem comprising various stablecoins with limited interoperability. XRP is a permissionless payment digital asset. Schwartz further explained how XRP can facilitate payments between regional hubs. He stated, "You need something neutral. You need something that has no authority if you want to have an open participatory ecosystem." Unlike stablecoins, which are issued and controlled by centralized entities under specific legal frameworks, XRP operates in a decentralized manner. This makes it suitable for situations that require neutrality, speed, and borderless access. According to Schwartz, the openness of XRP is what makes it an effective payment mechanism. He describes the current trajectory of the digital asset market as one that is likely to involve "dozens of stablecoins" and "hundreds of markets." In such an environment, XRP can help centralize liquidity and reduce the inefficiencies caused by the fragmentation of stablecoins.