MoneyGram and Stellar partner to offer stablecoin remittance
MoneyGram International and Stellar blockchain have come together to allow its users to send UDC stablecoin and turn them into fiat currency
By Shashank Bhardwaj
MoneyGram International Inc., one of the largest money-transfer services in the United States, is getting ready to launch a service in collaboration with the Stellar blockchain that will allow its users to send stablecoins and easily convert them to fiat currency using MoneyGram's network.
Alex Holmes, the CEO of MoneyGram, believes that the cryptocurrency sector is here to stay and grow despite all the recent slump and volatility. He said, “The world of crypto and the world of fiat are not really compatible today. We’re trying to be a bridge from the crypto world to the fiat world.”
When the service becomes fully operational, users with Stellar blockchain digital wallets will be able to convert their holdings into Circle internet financial's USDC stablecoin. While the company already provides clients with Bitcoin services, it is now looking to extend its services to stablecoins.
The collaboration will enable users to conduct USDC remittances. The move comes amidst crypto remittances becoming more popular in emerging markets and, conversely, stablecoins (digital assets designed to maintain a one-to-one relationship with a fiat currency such as the US dollar) facing increased scrutiny post the Terra-UST debacle.
The crash of Terra's algorithmic stablecoin TerraUSD and its sister token LUNA earlier in May triggered a larger cryptocurrency market meltdown. The loss of USDT's peg to the dollar, and the ensuing death spiral (it fell 97 percent to near zero), eroded trust in stablecoins in general. Despite the recent 'selloff and volatility,' MoneyGram's CEO is optimistic about the company's future. He predicted that it would remain a key feature of the financial network for a long time.
MoneyGram's new Stellar-powered service could also help spread cryptocurrency adoption in emerging markets. Remittances to low and middle-income countries increased to $589 billion last year and are expected to rise further this year. Remittances form a significant percentage of a country’s GDP. For instance, remittances account for more than 20 percent of the gross domestic product in countries such as El Salvador, which made Bitcoin legal tender last year. If remittances are rendered via cryptos, it will surely help spread their adoption.
According to Holmes, ''If a country like El Salvador is going to make Bitcoin seamless with US dollars in the country, I think that consumers, through MoneyGram, should be able to transfer Bitcoin to El Salvador or transfer dollars and convert them to Bitcoin. If that’s where the world is going, let’s participate in that world, and let’s see how we can help fulfill that opportunity.''
MoneyGram was courted by private equity firm Advent International and Stellar Development Foundation in July. It is a nonprofit that manages the Stellar blockchain. In October, the company collaborated with Stellar to create a cryptocurrency remittance service.
The writer is the founder at yMedia. He ventured into crypto in 2013 and is an ETH maximalist. Twitter: @bhardwajshash