World’s second-largest traditional money transfer firm, MoneyGram, has signed an agreement with Stellar Development Foundation to create local currency payouts using Circle’s USDC stable coin.
Per the announcement on Wednesday, the partnership will kick off in Q4 of 2021. It will commence with a pilot test while a phased rollout will follow early in 2022.
According to MoneyGram’s CEO, Alex Holmes, the company is very interested in exploring stablecoins for settling international payments.
He remarked, “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.”
In the new deal, MoneyGram will use Circle’s USDC to settle payments and enable exchange between crypto payouts and users’ local currency. MoneyGram’s network will be connected to the Stellar blockchain to settle USDC payments, while the United Texas Bank will be the settlement bank between MoneyGram and Circle.
The new deal comes after MoneyGram ended its long-term partnership with Ripple in March following a suit filed by the SEC. Holmes noted the new partnership is unlike the previous one with Ripple which involved the use of crypto in the foreign exchange market. Also, he asserted that working with Stellar is larger in scope, and directly impacts on customers.
Commenting on the partnership, Danelle Dixon, CEO and Executive Director of Stellar Development Foundation, said, “Working with MoneyGram allows end consumers to have on and off-ramps everywhere that MoneyGram’s vast agent network supports.” Dixon believes being able to exchange local and virtual currencies is transformational.
Bank Regulations Don’t Unfaze MoneyGram
Despite the prospects of stablecoins in settling cross-border transactions, US regulators are scrutinising the dollar-pegged tokens more. Chairman of the SEC, Gary Gensler recently compared stablecoins to poker chips in cryptocurrency’s ‘Wild West casinos’.
Acting Comptroller Michael Hsu also noted he thinks of stablecoin issuers in the same way as the U.S.’s wildcat banking era. Circle also got subpoenaed by the SEC recently.
However, MoneyGram’s CEO remains unfazed by the regulations. “I’m quite used to regulations, and unfortunately a lot of regulation ends up being a look back,” he affirmed.
MoneyGram’s use of stablecoins is but an extension of its foray into digital currency usage. The firm began accepting bitcoin as a means of payment after partnering with crypto exchange Coinme.
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