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For years, XRP’s core institutional pitch was simple: banks and payment firms could use the token as a bridge asset for cross-border settlement, moving value between currencies without locking capital in pre-funded accounts. That thesis made XRP more than a speculative token. It gave the asset a role inside Ripple’s payments strategy.
But Ripple’s own stablecoin, RLUSD, has complicated that story.
A Reddit post reignited debate inside the XRP community after a user said they tested XRP’s investment thesis through Claude and DeepSeek. The conclusion was not comforting for XRP bulls. The AI tools flagged a structural concern that many investors have quietly debated for months: if Ripple can offer institutions a regulated, dollar-backed stablecoin for settlement, why would banks choose volatile XRP?
That question goes to the heart of XRP’s long-term value proposition. XRP may still have utility as a bridge asset, but RLUSD appears to target the same institutional pain point with a product that is easier for risk-sensitive financial firms to hold, understand, and use.
The original XRP use case was built around liquidity. Instead of holding multiple currencies across nostro accounts, institutions could briefly use XRP as a bridge between fiat pairs. In theory, this allowed faster, cheaper settlement without long-term exposure to the token.
That model made sense when Ripple’s strongest alternative was traditional banking infrastructure. But RLUSD changes the comparison. Ripple now offers a stablecoin designed to maintain a constant value of one US dollar, backed by cash and cash equivalents, redeemable 1:1 for dollars, and issued natively on both the XRP Ledger and Ethereum.
For banks, that matters. Institutions may accept blockchain settlement, but many still reject unnecessary FX or crypto volatility. RLUSD gives them a Ripple-issued asset that can move on-chain without exposing them to XRP’s price swings.
Furthermore, former SWIFT Chief Innovation Officer Tom Zschach said banks are unlikely to move transaction settlement entirely to public blockchains, arguing they lack the trust, governance, compliance, and legal certainty institutions require. As a result, banks will keep settlements on their own infrastructure.
That does not mean XRP has no role. XRP can still function as a bridge asset, liquidity route, and network token on XRPL. But RLUSD attacks XRP‘s most marketable institutional use case: cross-border settlement through Ripple rails.
The strongest evidence comes from RLUSD’s chain distribution.
Ripple launched RLUSD in December 2024 on both Ethereum and the XRP Ledger. Since then, the stablecoin has grown quickly, reaching roughly $1.63 billion in circulation. But the distribution raises a difficult question for XRP holders.
About $812 million of RLUSD currently sits on Ethereum, compared with roughly $785 million on the XRP Ledger. That gives Ethereum a 53% to 47% lead, despite Ripple positioning XRPL as a natural home for its stablecoin.
The trend has improved for XRPL. Around 88% of RLUSD supply reportedly sat on Ethereum, leaving only a small share on XRPL. By June 2026, XRPL had clawed back significant market share. Still, Ethereum remains ahead.
RLUSD activity on Ethereum does not create direct demand for XRP, as Ethereum-based lending, trading, and liquidity pools do not use XRP for routing or fees.
Even on the XRP Ledger, RLUSD’s impact on XRP is limited. While transaction fees burn small amounts of XRP, the effect is too minor to meaningfully reduce supply or increase demand.
RLUSD’s Ethereum lead is not accidental. Ethereum has deeper liquidity, a larger DeFi ecosystem, and more established venues for stablecoin activity.
RLUSD has integrations across platforms such as Aave, Curve, and Morpho, giving users places to lend, borrow, trade, and earn yield. That ecosystem matters because stablecoins grow where they can be used.
XRPL may offer speed and low fees, but Ethereum offers composability. For stablecoin adoption, composability often wins. A stablecoin becomes more valuable when users can plug it into lending markets, liquidity pools, and trading venues. That is exactly where Ethereum remains stronger.
In 2025, Ethereum solidified itself as the secure foundation for our growing digital civilization. From industry-leading adoption to new technology that reinforces protocol resilience, here are 12 themes that defined the past year:
1/ DeFi reinforced Ethereum's role as the…
— Ethereum (@ethereum) January 6, 2026
This creates a strategic tension for Ripple. The company wants RLUSD to grow, and Ethereum gives RLUSD access to the largest on-chain financial ecosystem. But the more RLUSD grows outside XRPL, the less that growth supports XRP.
That does not make Ripple’s strategy irrational. In fact, it may be commercially smart. Ripple can build a regulated stablecoin business across multiple chains without depending on XRP price appreciation. The problem is that Ripple’s business success and XRP holder upside may no longer be perfectly aligned.
The Reddit debate also raised a second concern: Ripple is not the only player trying to modernize global settlement.
SWIFT still serves more than 11,000 institutions worldwide and has explored blockchain connectivity through Chainlink‘s oracle infrastructure. That approach does not require banks to abandon existing rails. Instead, it lets legacy finance connect to tokenized assets and blockchain networks while preserving familiar systems.
This creates a competing model. Ripple offers new rails and its own assets. SWIFT and Chainlink offer blockchain connectivity layered onto existing infrastructure.
For institutions, the latter may feel less disruptive. Banks often prefer upgrades to replacements. If SWIFT can integrate blockchain functionality without forcing members into a new settlement asset, Ripple faces a harder adoption battle.
For XRP, that challenge becomes even sharper. If banks can choose between SWIFT-linked blockchain settlement, RLUSD-based stable settlement, or XRP bridge settlement, the volatile token must prove why it remains necessary.
The strongest XRP bull case is no longer simply that Ripple will onboard banks. RLUSD weakens that argument because Ripple can onboard institutions through a stablecoin instead.
The stronger XRP investment case now depends on whether the XRP Ledger becomes a major hub for tokenized assets, liquidity routing, and cross-asset settlement. If more assets launch on XRPL and use XRP within the network, the token could still gain meaningful utility.
RLUSD’s growth suggests Ripple has built a product institutions may prefer: a regulated, dollar-backed stablecoin designed for payments. That is precisely why XRP investors should watch its adoption closely.
Ripple’s stablecoin is not killing XRP outright. But it is eating into XRP’s cleanest institutional use case. Until RLUSD activity shifts decisively onto XRPL and creates measurable XRP demand, the burden of proof sits with XRP bulls.
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