Traditional cross-border funds giant MoneyGram is working with the Stellar blockchain network to create instant money transfers using Circle’s USDC stablecoin, the companies announced Wednesday.
The companies will start a pilot this year adopted by a gradual rollout in early 2022.
The companies will begin with a pilot in the fourth quarter of this year. Early 2022 will see a gradual rollout of the ledger-based stablecoin bridge between crypto and local currencies with a view toward connecting MoneyGram’s 150 million or so customers.
“Working with MoneyGram allows end consumers to have on- and off-ramps everywhere that MoneyGram’s vast agent community helps this. So that is simply transformational by way of having the ability to change crypto for fiat and fiat for crypto,” Denelle Dixon, CEO and executive director of the Stellar Growth Foundation said in an interview. “We’re trying to go as big as we can.”
The information will come as a slap in the face for Ripple, the cryptocurrency funds community whose longstanding relationship with MoneyGram wound down after the U.S. Securities and Exchange Commission (SEC) filed suit against Ripple in December 2020, saying the agency violated federal securities laws.
Alex Holmes, MoneyGram’s chairman and CEO, identified the partnership with Stellar as a completely different animal from the relationship MoneyGram had with Ripple, which leveraged the crypto firm’s on-demand liquidity (ODL) to facilitate foreign exchange (FX) trading.
In response to Holmes, working with Stellar is larger in scope because it instantly touches on consumer payments.
Leaving aside the question of whether Ripple’s native currency XRP is a safety or not in the eyes of the law, the imaginative and prescient the companies have been working on had certain limitations.
“The method labored,” mentioned Holmes in an interview. “The problem was we have been attempting to create an FX market in a unique world. It actually wanted much more time to convey that to life and make it work. The other challenge was that because we have been trading XRP, that, unfortunately, has volatility associated with it.”
Banks have typically been skittish about getting hands-on with cryptocurrencies. United Texas Bank, which is able to serve as a settlement bank between Circle and MoneyGram, advantages from having a progressive strategy, as does Texas as a state, mentioned Holmes.
“Texas has a reasonably proactive stance on crypto and the governor has made a few feedback,” Holmes mentioned. “United Texas bank is an established bank here and really focused on the alternatives within the crypto area. Not each bank is willing to step into the crypto world, and I think it says quite a bit about how progressive that bank is attempting to be.”
“I’m quite used to regulation,” Holmes mentioned, “and sadly, a variety of regulation ends up being a glance back. I feel the blockchain world and digital asset world have actually accelerated and now I see a variety of regulators trying to catch up.”