MoneyGram Partners With Stellar for Stablecoin Remittances, El Salvador Targeted

June 02, 2022, 10:45 AM AEST - 4 weeks ago

International cross-border remittances company MoneyGram is partnering with the Stellar blockchain to allow Stellar wallet users to transfer USDC stablecoins redeemable for fiat currency through MoneyGram:

Reducing the Cost of Remittances

In an attempt to drive down remittance costs, Stellar and MoneyGram seek to enable speedy low-cost transfers with a sleek user experience.

Currently, most international remittances are expensive and inconvenient. MoneyGram’s partnership with Stellar aims to reduce both the costs and friction of remittances by granting Stellar wallet holders the ability to receive USDC stablecoins that can then be converted into fiat currency worldwide.

Speaking to Bloomberg, MoneyGram CEO Alex Holmes shared his optimistic view of the crypto sector:

It [crypto] is here to stay and it’s going to be here for a long time despite recent selloffs and volatility.

Alex Holmes, MoneyGram CEO

MoneyGram Opts for Asset-Backed Stablecoin

Notably, the company has opted for an asset-backed stablecoin in the form of USDC, not an algorithmic one such as USDT, which recently imploded. In fact, Circle, the company behind USDC, has come out publicly amid the USDT/LUNA fiasco and assured that a depegging of its stablecoin is highly unlikely as it is fully backed by safe liquid assets:

We’re not taking the dollar and putting it in the reserves and then lending it out. Instead, the reserves are strictly cash and US Treasuries.

Dante Disparte, CSO, Circle 

El Salvador a Potential Market

In the interview with Bloomberg, Holmes commented on El Salvador’s move to adopt bitcoin as legal tender, saying he was working with authorities to drive adoption:

If a country like El Salvador is going to make Bitcoin seamless with US dollars in 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.

Alex Holmes, CEO, MoneyGram

Few would argue that the world needs cheaper and faster remittance technology. Recipients are often those who can least afford the exorbitant fees, often as high as 20 percent if one takes into account the minimum amount required to be sent.

The key question, however, is whether the Stellar blockchain is the most secure and stable long-term solution. Bitcoiners would argue not, since the newly introduced Taro protocol already allows for stablecoins to be sent on Bitcoin’s Lightning Network.

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