With this, MoneyGram will be able to leverage the native
version of Circle's USDC on the Stellar blockchain to move funds
internationally much more quickly.
As per the announcement, United Texas Bank will serve as a
settlement bank, filling the missing link. The use of Stellar Blockchain in the
process also ensures very low fees for the consumer and access to physical
locations to convert USDC to cash and vice versa.
The integration is expected to launch in a handful of
markets by the end of this year, with an international rollout planned in 2022,
if things work out well. For now, there's been no comment on pricing and such.
The collaboration arrives within months of MoneyGram
announcing that consumers could now be able to withdraw cryptocurrency for cash
at their kiosks in the US.
What is a stablecoin?
A stablecoin is essentially a type of cryptocurrency that is
linked to a specific currency. USDC, in this case, is linked to the U.S.
dollar. The reason why it is referred to as 'stable' is that there is no risk
of volatility when exchanging USDC for dollars.
“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 Alex Holmes, chairman and CEO of
MoneyGram.
MoneyGram isn't a stranger to the use of blockchain for the
fluidity of payments. Back in 2019, the Dallas-based company partnered with
Ripple, an open-source distributed ledger system, and adopted its On-Demand
Liquidity (ODL) solution for foreign exchange that uses the XRP cryptocurrency
as an intermediate coin.
The deal also involved a $50 million investment from Ripple
at the time, but the collaboration fell through in a few months on grounds of
uncertainty after the U.S. Securities and Exchange Commission filed a lawsuit
against Ripple.