Ripple to buy stablecoin platform Rail for $200 million

Ripple will buy stablecoin payments platform Rail for $200 million, the company said on Thursday, weeks after U.S. President Donald Trump signed a law that raised expectations cryptocurrency tokens are about to enter the mainstream.

Ripple, a crypto company that is closely associated with the token XRP and issues its own stablecoin called RLUSD, has invested heavily in stablecoin infrastructure in recent months.

The acquisition - which will close in the fourth quarter of this year pending regulatory approvals - will enable Ripple and Rail to "deliver the most comprehensive stablecoin payments solution available in the market," it said.

It will also add virtual accounts and automated back-office processes to Ripple's existing payments capabilities, the company said in a release.

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"As regulations become more clear and the space has grown and matured, this opportunity for stablecoin payments is really ripe, and the acquisition of Rail just really solidifies our market leadership in stablecoin payments," said Monica Long, president of Ripple in an interview. 

Toronto-based Rail, backed by Galaxy Ventures and Accomplice, uses stablecoins to deploy cross-border payments. It says its transactions are cheaper and can clear in just hours, compared to longer settlement times for fiat payments. 

Rail says on its website that the company is responsible for 10 per cent of all global stablecoin-based payment activity. 

Trump in July signed a bill into law to create a federal regulatory regime for stablecoins, which analysts said could allow digital assets to become an everyday way to make payments and move money.

Stablecoins are designed to maintain a constant value, usually a 1:1 U.S. dollar peg, and their use has exploded, notably by crypto traders moving funds between tokens.

Ripple said in April that it would also buy multi-asset prime broker Hidden Road in a $1.25 billion deal, one of its largest acquisitions yet, which it said would enhance RLUSD's utility.

Ripple launched RLUSD, a stablecoin pegged to the U.S. dollar, last year, as it sought to disrupt the market dominated by Tether and Circle's USDC.

According to crypto data provider CoinGecko, RLUSD has a market capitalization of more than $611 million, compared to Tether's market capitalization of more than $164 billion.