Money transfer firm MoneyGram has partnered with the Stellar Development Foundation to enable pay-outs in local currencies for its users using stablecoins.
MoneyGram will use US payments firm Circle's USDC stablecoin to settle payments and convert them to user’s local currencies.
Stablecoins are cryptocurrencies where the price is designed to be anchored to fiat money – for example, the US dollar - or to exchange-traded commodities such as gold.
MoneyGram, based in Dallas, is one of the world’s largest money transfer firms and currently has a market value of around $704 million.
The San Francisco-based Stellar Development Foundation, founded in 2014, provides an opensource platform which allows organisation to transfer money via different cryptocurrencies.
Until March 2021, MoneyGram had previously had a partnership with distributed ledger company Ripple, which has currently been facing scrutiny from the Securities Exchange Commission (SEC) in the US
The new partnership is set to launch at the end of 2021 in some regions, with an international rollout scheduled for 2022.
United Texas Bank will act as the settlement bank for the project.
The adoption of Stablecoins for international payments is receiving increased scrutiny from regulators.
The Committee on Payments and Market Infrastructures (CPMI) and the International Organization of Securities Commissions (IOSCO) recently published preliminary guidance for public consultation which suggests stablecoins should observe international standards for payment, clearing, and settlement systems. LINK
“As crypto and digital currencies rise in prominence, we’re especially optimistic about the potential of stablecoins as a method to streamline cross-border payments," said chairman and chief executive at MoneyGram Alex Holmes.
“A new segment of cash users will be able to convert their cash into and out of USDC, giving them access to fast and affordable digital asset services that may have previously been out of reach,” said Denelle Dixon, chief executive and executive director of the Stellar Development Foundation.
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