Major money transfer company, MoneyGram, has announced plans to add stablecoin USDC to its money transfer services. This will enable users to transfer money overseas. The partnership between MoneyGram and Stellar Lumens blockchain will allow users to convert stablecoins to fiat at MoneyGram outlets. Customers will be able to convert their holdings on Stellar into stablecoin USDC and fiat.
“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,” said MoneyGram CEO, Alex Holmes.
Implications to the Crypto Industry
This is huge news for crypto fans and also those looking forward to moving away from traditional financial systems. The service by MoneyGram, one of the world’s largest cross border transfer services, is also likely to help spread crypto usage in emerging markets. While the company has already provided bitcoin services to clients, it is now eyeing stablecoins. The partnership first came in October 2021 when MoneyGram announced it will utilise the world’s second-largest stablecoin, USD Coin (USDC).
“Crypto is obviously here to stay, and it’s going to be here for a long time despite recent selloffs and volatility. Adopting it, bringing it into the mainstream is important,” said Holmes.
Stablecoins – Are they Safe After Terra Debacle?
The move comes at a time when money transfers have become more popular. However, stablecoins have once again come under scrutiny after the de-pegging of TerraUSD (UST). The crash in Terra’s algorithmic stablecoin, UST, and token LUNA earlier in May also sent a ripple effect across the entire industry, leading to a crash in the crypto market. UST lost its peg and is currently trading at around $0.03. The crash put a bad light on stablecoins and triggered market instability, raising concerns that other stablecoins could lose their peg too. However, a de-pegging is unlikely to happen with USDC since the currency has equivalent fiat reserves as backing.
“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,” said Chief Strategy Officer for Circle, Dante Disparte.
Bitcoin (BTC) is currently trading at USD 30,657, a 21% drop in a month. Ethereum (ETH) is down 32.5% in a month currently trading at USD 1,905.
Despite the fears around crypto, Holmes says he still sees hope in stablecoins as a way to get around what he termed as a lack of compatibility between crypto and fiat currencies like the dollar. In recent years, major companies have been eyeing ways to add crypto into their operations. The companies want the benefits of blockchain without incurring any liability, hence they’re venturing into crypto – and they are more than welcome.
Vincent Munene is a freelance writer and a great blockchain enthusiast. Blockchain has changed his life in terms of financial freedom and in return, he likes to educate people and keep them up to date on everything blockchain. He is a Biochemist by profession and also loves to play the piano.