Global payments company MoneyGram International Inc. announced Wednesday that it’s working with the Stellar Development Foundation, the nonprofit that supports the Stellar blockchain, to allow customers to send money instantly using Circle’s USD Coin stablecoin.
A stablecoin is a type of cryptocurrency that is “pegged” to a traditional currency in the case of USDC, the U.S. dollar. This means that there is no volatility risk when exchanging between USDC and dollars.
According to the two companies, by incorporating Stellar’s blockchain, settlements across MoneyGram’s network will occur in near-real time using USDC and thus improve efficiency. Customers will now also be able to exchange currency for USDC and vice versa at MoneyGram retail outlets.
.@MoneyGram announces innovative agreement with the Stellar Development Foundation to utilize blockchain technology, providing a bridge between digital assets and local currencies for consumers https://t.co/E7NdfJctik
— Stellar (@StellarOrg) October 6, 2021
A pilot program is planned for the fourth quarter of this year with a gradual rollout for cross-border payments internationally to happen through 2022.
“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, chief executive of MoneyGram. “Given our expertise in global payments, blockchain, and compliance, we are extremely well-positioned to continue to be the leader in building bridges to connect digital currencies with local fiat currencies.”
MoneyGram is no stranger to using cryptocurrencies for payment settlements for international transfers having previously partnered with Ripple Labs Inc. in 2019. However, that partnership was ended after the Securities and Exchange Commission filed suit against Ripple in December, claiming its native cryptocurrency, XRP, was an unregistered security.
In order to provide regulatory compliance, the United Texas Bank will serve as the settlement bank between Circle and MoneyGram for USDC settlements.
“The launch of this partnership speaks to the power of digital currencies like USDC to create fast, secure and seamless settlement for the digital economy,” said Jeremy Allaire, co-founder and chief executive of Circle. “Together, we’re at the forefront of innovation, demonstrating how we can reimagine financial services that benefit and better serve global users.”