PayPal and Ripple Stablecoins Remain Below 1 Percent Market Share Despite Hype

Summary

• Hyped but Hindered: Despite positive media and regulatory shifts suggesting a “stablecoin gold rush,” PayPal’s PYUSD and Ripple’s RLUSD are failing to gain significant market share, staying below 1% adoption.

• RLUSD’s Slow Enterprise Start: Ripple’s “enterprise-ready” stablecoin, RLUSD, has struggled to attract businesses and capture market share, facing early price stability questions.

• PYUSD’s Limited Traction Despite Integration: PayPal’s PYUSD, despite being integrated across PayPal’s platforms and third-party apps, is also facing slow adoption, with established stablecoins dominating the market.

Leading financial publications such as the Wall Street Journal and the Financial Times have recently expressed optimism about stablecoins, even announcing a potential “stablecoin gold rush” in response to new political conditions.

Factors cited include a perceived softening stance from the Securities and Exchange Commission (SEC), a US Commerce Secretary considered favorable to Tether, and the Office of the Comptroller of the Currency’s (OCC) rollback of restrictive banking rules affecting crypto. These shifts seemingly cultivate an ideal landscape for stablecoin expansion in the current year.

However, reality paints a less exuberant picture for specific entrants. Despite this seemingly fertile political climate and widespread positive media attention, neither PayPal’s PYUSD nor Ripple’s RLUSD has managed to capture even a minuscule fraction of their intended market share—remaining significantly below the 1% threshold.

PYUSD and RLUSD Failed to Raise The Stablecoin Market

Ripple introduced RLUSD in December, marketing it as a premier “enterprise-ready stablecoin” operating on its XRP Ledger (XRPL).

The market response, however, has been lukewarm at best, indicating enterprise adoption has fallen far short of expectations.

Almost three months post-launch, RLUSD has chipped away at less than 0.7% of its competitors’ combined market dominance, signaling a distinct lack of initial traction.

Adding to early concerns, RLUSD experienced an unusual price spike immediately after launch, raising questions about its capacity to consistently maintain its intended $1 peg.

While noteworthy, it is also important to acknowledge that the stablecoin has since stabilized and currently trades at the targeted $1 value, suggesting initial volatility was addressed.

Gaining significant traction for its PYUSD stablecoin is also a challenging task for PayPal. Even with deep integration across PayPal’s own suite of applications and incorporation into numerous third-party platforms, adoption remains sluggish.

While PayPal remains committed to its proprietary digital currency and publicly dismisses potential repercussions from a subpoena issued during the Biden administration, prevailing market dynamics continue to stifle PYUSD’s forward momentum and broader market penetration.

Ultimately, and in contrast to predictions of a US-dominated stablecoin resurgence fueled by pro-crypto political signals, established and internationally entrenched stablecoins like Tether’s USDT, Sky’s USDS, Ethena’s USDE, and Maker’s DAI continue to assert their overwhelming command over the stablecoin market.

These long-standing players maintain a firm grip, illustrating the significant challenge new entrants face in dislodging established market leaders despite perceived favorable conditions.

Also Read: PayPal’s PYUSD Advances in Stablecoin Competition

PayPal’s PYUSD, backed by US dollar reserves, has gained significant interest in the stablecoin market, despite its small size. In Q3 2024, stablecoins’ market dominance increased by 3%, with USDT and USDC solidifying their dominance. Despite being smaller than USDT and USDC, PYUSD experienced a 57% increase in dominance. PayPal became the first financial technology company to introduce a US dollar-backed stablecoin in August 2021. PYUSD achieved a $1 billion market cap in just 383 days, nearly twice as rapidly as USDC and three times faster than USDT. The stablecoin’s potential for institutional adoption has improved its outlook for Q4 2024 and the upcoming … [Read More]

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