Ripple’s CEO Brad Garlinghouse is convinced Japan will see strong demand for a yen stablecoin. He didn’t make any promises about Ripple launching one just yet, though.
In an interview with Bloomberg’s The China Show, Brad said:
“People will want to hold yen stablecoins, and I think that is only a matter of time.”
Brad praised Japan’s regulatory clarity on stablecoins and cryptocurrencies, which he believes has been a key factor in the country’s thriving crypto scene.
He mentioned that Japan has been ahead of the curve compared to countries like the US, UK, and Switzerland. But again, not for Ripple. At least not right now. Brad emphasized that:
“We will first issue it in the US, but we think there is opportunity for stablecoins globally, and certainly in Japan.”
Yen stands strong
Meanwhile, the yen is still gaining strength against major currencies, especially the US dollar. The USD/JPY exchange rate dropped to 142.27 yen, down from 143.38 on September 6. This is largely due to speculation that the Federal Reserve might cut interest rates.
The Bank of Japan (BOJ) is also considering policy adjustments, with Governor Kazuo Ueda saying they may hike rates if their economic outlook holds.
Additionally, fears of a US recession are making safe-haven currencies like the yen and Swiss franc more attractive to investors.
The USD/JPY pair has a volatile history, peaking at 358.44 in January 1971. Predictions from Trading Economics says the exchange rate could trade around 144.49 by the end of this quarter and hit 148.51 within 12 months.
The yen carry trade unwind led to market volatility in early August, but economists are hopeful for a market recovery in October.
Japan is also dealing with low inflation, with its core inflation rate sitting at 2%, much lower than in the US.
Stablecoin market sees massive growth
The overall stablecoin market has been growing steadily. The total supply has reached $162.1 billion, a 3% increase since August, despite the broader crypto market downturn.
Tether (USDT) continues to dominate the market with a $119 billion market cap, making up more than 73% of the total stablecoin supply.
USD Coin (USDC) follows with a $33.5 billion market cap, and DAI holds third place with $5.3 billion.
Ripple is moving ahead with plans to launch RLUSD, a USD-pegged stablecoin for institutional investors.
RLUSD won’t be available for retail investors at first, much like USDC and USDT are restricted when it comes to direct purchases by individuals.
Tether has been expanding its portfolio. The company recently invested $102 million in an agricultural business in Argentina. This is part of its strategy to diversify its assets, which already include huge holdings in gold and Bitcoin.
Amidst it all, investors have moved nearly $4.7 billion into stablecoins. This has led to a 25% reduction in open interest within the crypto derivatives market between July and September.
Stablecoins’ growth shows no signs of slowing down. Major financial institutions like JPMorgan, VanEck, and even PayPal have and are developing their own stablecoins.
Regulatory frameworks like the European Union’s MiCA are coming into play, shaping the future of the market. The introduction of a yen stablecoin could drive the next phase of stablecoin innovation.
Could stablecoins save the global economy?
Stablecoins are built to keep a stable value by being tied to a reserve, like fiat currencies.
This makes them super useful for things like payments and sending money across borders because they aren’t as unpredictable as regular cryptocurrencies. If a yen stablecoin comes out, it’ll work the same way.
Stablecoins bring stability, making them reliable for storing value. They can also run smart contracts and automate transactions in decentralized finance (DeFi).
One of their biggest advantages is how they improve payments by cutting down costs and speeding up transactions, especially for cross-border payments. This is a game-changer in areas where traditional banking is lacking.
Stablecoins also help include more people in the financial system. They make it easier for those without access to banks to make stable and secure transactions.
This can drive growth in developing countries and allow more people to engage in the global economy.
On top of that, stablecoins simplify international trade by cutting out the need for currency conversions and reducing reliance on banks.
Small businesses benefit from faster transactions with lower fees, giving them a leg up in global markets.
Plus, stablecoins allow for the tokenization of assets, which means things like real estate and stocks can be traded more easily, boosting liquidity and opening up more investment options.
A yen stablecoin could help tokenize Japanese assets, increasing liquidity in both local and global markets.
