Blockchain payments giant Ripple is eyeing the launch of a stablecoin backed 1:1 by the United States Dollar. The assets backing the stablecoin will include U.S. government bonds, low-risk investments, and, of course, U.S. dollar deposits. According to the official announcement, the firm wants to introduce a more trustworthy alternative asset to compete with Circle and Tether for a piece of the $150 billion stablecoin market.

The stablecoin reserves will be regularly audited, and monthly attestation reports will be provided to the public. However, the announcement did not mention which auditing firm would be involved in the process. In a statement to CNBC, Ripple CEO Brad Garlighouse said:

This market will look different [in future], certainly based on size.

Garlinghouse added that the current stablecoin market leaders have “some uncertainty.” While he did not mention any names, he argued that Ripple’s stablecoin would provide a better alternative as it is a regulated institution in New York, Ireland, Singapore, etc.

Ripple expects the stablecoin market to hit $2 trillion by 2028. Speaking to the media, Ripple’s chief technology officer (CTO), David Schwartz, noted that while the stablecoin market is already quite substantial, there’s still room for another player.

We think it will be over $2 trillion by 2028, and there’s only two market leaders. We don’t think it’s a winner-take-all-all ecosystem, particularly on the DeFi side,” Schwartz said.

The CTO added that the firm aims to focus primarily on complying with regulations over anything else. He exemplified Circle’s USDC and its focus on compliance, adding that Ripple’s stablecoin will be “directly competing against USDC.”

While discussing the new stablecoin’s backing reserves, Schwartz asserted that Ripple is not looking to “finesse a couple of extra decimal points.” He added that the firm has no intention of taking risks with “other people’s money,” possibly recalling the collapse of Terra’s UST stablecoin that collapsed in May 2022.

Schwartz recalled the concerns around Tether’s reserves when it first launched, hinting that Ripple’s stablecoin could also be facing such difficulties. As such, the new stablecoin would be reliant on the foundation of Ripple’s credibility and proven track record in the sector over the years.

The stablecoin from Ripple will initially be launched in the U.S. However, Ripple hasn’t ruled out the possibility of offering the stablecoin to the Asian and European markets. The stablecoin will also be multichain and will be available on both the Ethereum blockchain and its own XRP ledger.