Will Donald Trump's CBDC Ban Negatively Impact XRP Or RLUSD?

Bittime - President Donald Trump's decision to ban central bank digital assets (CBDCs) has raised concerns among the crypto community, particularly regarding its impact on XRP and RLUSD, US dollar-based stablecoins. 

However, it is important to note that this executive order (EO) does not directly affect these two digital assets.

Trump's Big Move

Trump has just started his term in office, but has already taken major steps in US economic and financial policy by signing an EO entitled "Strengthening American Leadership In Digital Financial Technology." 

This policy prohibits the development and promotion of CBDCs both domestically and abroad and stops all ongoing initiatives in this regard.

Read also: Trump World Liberty Financial (WLFI) Crypto Project Buy 10 Million TRX

Impact of CBDC Ban on XRP and RLUSD

This CBDC ban has no negative impact on XRP and RLUSD. This is because the EO only applies to digital currencies issued by central banks. XRP and RLUSD have significant differences compared to CBDC.

XRP is a digital asset that does not depend on fiat currency or banking institutions, while RLUSD is a stablecoin backed by a physical asset based on US dollars. Thus, these two assets remain outside the scope of CBDC regulations.

Comparison of XRP and CBDC

XRP is a decentralized digital asset that operates on top of the XRP Ledger (XRPL) public blockchain. 

There is no central authority controlling the network, although there is debate regarding Ripple's influence on the XRPL ecosystem due to its significant token holdings. 

However, XRP is designed for fast, efficient and cheap cross-border transactions, targeted at financial institutions such as banks and payment service providers.

Due to its decentralized nature, XRP is not affected by CBDC bans and remains outside the scope of strict regulations as applied to traditional financial assets.

Read also: Donald Trump Signs Executive Order for Bitcoin Reserve

Comparison of RLUSD and CBDC

RLUSD is a stablecoin that runs on the XRPL and Ethereum networks. This stablecoin uses XRP for transaction fees, which are then burned to maintain XRPL's deflationary mechanism.

RLUSD's reliability comes from the backing of physical assets such as segregated US dollar deposits, US government bonds, and cash equities. RLUSD has no connection to CBDC because it is issued by a private entity and not by a central bank.

Conclusion

The CBDC ban imposed by the Trump administration has no direct impact on XRP or RLUSD. 

XRP remains a digital asset independent of the traditional banking system, while RLUSD maintains its stability through the support of physical assets. Thus, these two assets are not affected by the new policies regarding CBDC in the US.

FAQ

What Does a CBDC Do?

Central Bank Digital Currency (CBDC) or Digital Rupiah is a form of digital money issued and regulated directly by the central bank. 

What Coins Include CBDC?

SEach country that develops a CBDC will have a different name.  Some examples of CBDCs that have been developed or are in the development stage include: Digital Yuan (China), e-Naira (Nigeria), Sand Dollar (Bahama)

How Does a CBDC Work?

The way CBDC works is generally similar to other electronic payment systems. CBDC is issued directly by the central bank, so it has full support from the government.

Most CBDCs use blockchain technology to record all transactions and ensure data security. People can access CBDC through their bank accounts CBDC transactions can be carried out in real-time, making it faster and more efficient than conventional payment systems.

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Reference

Giancarlo Perlas, Will Trump’s CBDC Ban Negatively Affect XRP Or RLUSD?, accessed January 25, 2025.

Author: SD