Investment follows passing of so-called Genius Act to regulate stablecoins in the US
Cryptocurrency group Ripple has agreed to buy a stablecoin platform for $200mn as investment in the digital token sector accelerates thanks to US government support.
The San Francisco-based company said on Thursday that it had agreed to acquire Rail, a stablecoin infrastructure company, in a move that will bolster Ripple’s stablecoin ambitions and follows the passing of landmark US rules for the stablecoin market.
Last month, the US Congress passed the so-called Genius Act to regulate stablecoins, paving the way for investors and traditional financial institutions to be more involved with the tokens. The heads of Wall Street banks such as JPMorgan Chase, Citigroup and Bank of America have all expressed enthusiasm for stablecoins, with some saying they plan to launch their own. The $279bn market is dominated by Tether and Circle, while Ripple also has its own stablecoin called RLUSD.
Stablecoins are a type of digital token pegged to a sovereign currency such as the US dollar and are typically backed one-to-one with safe assets such as Treasuries. Traders use them to quickly move between crypto tokens and traditional currencies, while large companies are exploring using them to manage cross-border payments. Proponents say that stablecoins allow payments to be made more quickly and cheaply than traditional payment methods.
Donald Trump’s administration has supported the digital asset sector and last week the top US regulator laid out “Project Crypto”, a plan to help the industry flourish. The US president has promoted several crypto businesses himself, including one called World Liberty Financial, which is run by his sons and has its own stablecoin, USD1.
Founded in 2021, Rail is backed by Investors including billionaire Mike Novogratz’s Galaxy Digital. It has banking partnerships and compliance infrastructure to help institutional customers use and manage their stablecoin and traditional currency payments.
Monica Long, president of Ripple, said the deal “underscores our commitment to helping our global customer base to move money wherever and whenever they need”. The deal is expected to close by the end of the year.
It marks the latest acquisition by Ripple, which in April bought crypto prime broker Hidden Road for $1.25bn.
