Ripple crossed a regulatory threshold in Japan this week that comes with an awkward asterisk. SBI VC Trade, the crypto arm of the $11 billion Japanese financial giant SBI Holdings, listed Ripple's dollar-pegged stablecoin for trading as the country's first "Type 4 electronic payment instrument" under Japan's revised Payment Services Act. The catch: only RLUSD tokens issued on Ethereum qualify. XRPL-based RLUSD will not be accepted for deposit or withdrawal.
The irony cuts both ways. Ethereum is the primary competitor of the XRP Ledger, the blockchain Ripple built and controls. Yet here Ripple needed its rival's rails to unlock a regulator's blessing.
The regulatory bucket that caught RLUSD
Japan's 2023 amendments to the Payment Services Act created a four-tier classification for digital assets. Type 1 and Type 2 cover currency-denominated value and instantly exchangeable instruments. Type 3 covers assets with specific trust beneficiary rights (this is where Circle's USDC sits in Japan, approved since March 2025). Type 4 is the catch-all. It's the slot regulators reach for when an instrument doesn't fit neatly into the first three categories.
RLUSD landed in Type 4 because it didn't claim trust beneficiary rights under US law, yet SBI and Ripple convinced Japanese authorities of its financial equivalency to the US dollar. Standard Custody & Trust Company, a New York-chartered Ripple subsidiary, backs RLUSD with dollar deposits and short-term Treasuries, subject to monthly third-party attestations. That pedigree was enough. The Ethereum chain was the vehicle.
Cap and timeline matter. Japanese traders can deposit or withdraw a maximum of roughly $6,200 per transaction (1 million yen), matching SBI VC Trade's standard limit. Regulators did not specify when or whether other blockchains might earn approval.
Where most RLUSD already lives
The Ethereum preference wasn't forced on Ripple by surprise. As of mid-June, around $879 million of RLUSD in circulation sat on Ethereum, compared to roughly $760 million on the XRP Ledger, according to Protos. That gap was wider earlier in the cycle. In October 2025, Ethereum held close to 88 percent of total RLUSD supply.
Coin listing sites like CoinMarketCap point to the ERC-20 contract address as RLUSD's primary issuance, not the XRP Ledger version. Ethereum's DeFi depth, its mature venues like Aave and Curve, and its larger base of dollar-stablecoin users all made it the natural choice for an exchange seeking faster liquidity and a cleaner approval path.
Ripple executives and SBI VC Trade's leadership framed the listing as a win. Jack McDonald, Ripple's senior vice president for stablecoins, praised Japan's regulatory clarity and called out the asset's potential to link Japanese institutions with global liquidity. He didn't name which blockchain was doing the linking.
Social media users and observers flagged the fine print. "They launched this one on ETHEREUM," one account posted in response to celebratory coverage. The detail mattered because RLUSD is a Ripple project intended to drive adoption of the XRP Ledger. Instead, the Japanese regulator's green light arrived with Ethereum's signature underneath.