Ripple, a cryptocurrency company based in San Francisco, has acquired Toronto’s stablecoin payments infrastructure startup Rail for $200 million USD ($275 million CAD) through cash and equity. Originally founded as Layer2 Financial in 2021 by CEO Bhanu Kohli and CTO Tarun Mistry, Rail started by developing financial infrastructure for digital assets, later shifting focus to global money transfers for standard currencies and stablecoins. Ripple stated that Rail’s virtual accounts and automated back-office services will enhance its offerings.
Ripple explains that virtual accounts simplify transactions by allowing digital asset dealings without the need for dedicated crypto accounts or wallets on centralized exchanges. Rail projects processing over 10% of the global $36-billion business-to-business stablecoin payments this year.
“With Rail, we are uniquely positioned to drive the next phase of innovation and adoption of stablecoins and blockchain in global payments,” said Monica Long, Ripple president.
Previously, Rail raised $10.7 million in a Series A round led by Galaxy Ventures in July 2024 to improve its product, broaden its market presence, and hire new talent. This rebranding from Layer2 in October reflects its dedication to instant international payments. Rail anticipates handling over 10% of the $36 billion in global stablecoin business-to-business payments this year.
Stablecoins, cryptocurrencies linked to a stable asset like the US dollar, face the risk of “depegging.” Chainalysis estimates 63% of $40.9 billion in illicit crypto activity worldwide involves stablecoins.
Under President Donald Trump, crypto has gained renewed interest, bolstered by Trump’s signing of the GENIUS Act, requiring stablecoins to be backed by liquid assets.
Ripple faced a 2020 lawsuit from the US SEC over unregistered offering of the XRP cryptocurrency. This past March, under Trump, the SEC announced it would drop the lawsuit, allowing Ripple to pursue strategic initiatives.
In December, Ripple launched RLUSD, a US Dollar-pegged stablecoin, and spent $1.25 billion in April acquiring Hidden Road, a multi-asset prime broker, to support RLUSD. CEO Brad Garlinghouse stated the US market is now effectively open post-Biden-era SEC policies.
While the US SEC hesitates to classify cryptocurrencies as securities, Canada maintains strict regulations on them. Industry leaders, such as former BlackBerry co-CEO Jim Balsillie and Coinbase Canada CEO Lucas Matheson, advocate for Canada to expedite stablecoin adoption to avoid reliance on foreign infrastructure and preserve the Canadian dollar’s role in daily transactions.
Recently, Shopify began supporting USDC stablecoin transactions, and Coinbase invested in Toronto-based Stablecorp to establish a Canadian dollar-pegged stablecoin.
Ripple’s expansion through mergers and acquisitions has surpassed $3 billion, with the Rail acquisition expected to conclude in Q4 2025.