MoneyGram Customers Can Soon Convert Cash to USDC
The partnership will provide customers with the ability to convert cash to USDC and vice versa.
- As of Wednesday, USDC has a market capitalization of $32.4 billion, up 1110% from $2.68 billion on the year-ago date, according to CoinMarketCap data
- The partnership is expected to roll out in select markets in 2021 and hit international markets for 2022
Financial payments service company MoneyGram is partnering with the Stellar Development Foundation (SDF) to integrate its network with the Stellar blockchain and Circle’s USD Coin (USDC), the company said.
The partnership will provide customers with the ability to convert cash to USDC and vice versa. Additionally, the conversion of cash into Circle’s USDC will increase utility and liquidity of digital assets while helping more consumers participate in the digital economy, the company said.
“[This partnership] highlights how much more opportunity there is to improve interoperability between traditional and digital financial rails. We believe blockchain on and off ramps offer the right solution,” said Denelle Dixon, CEO and executive director of SDF in an email to Blockworks. “Together, we’re showing how blockchain and innovations like stablecoins can connect to traditional rails to provide new economic opportunities for previously underserved groups,” she added.
The USDC is a digital dollar stablecoin issued by regulated financial institutions, backed by fully reserved assets and redeemable at a ratio of 1:1 for US dollars, according to Circle’s website.
As of Wednesday, USDC has a market capitalization of $32.4 billion, up 1110% from $2.68 billion on the year-ago date, according to CoinMarketCap data.
MoneyGram has helped around 150 million people transfer money to others in the past five years across over 400,000 locations. Stellar’s network has increased to over 5 million accounts since it launched in 2014, according to its website.
In regards to the partnership, Dallas-based United Texas Bank will serve as a settlement bank between Circle and MoneyGram, it said. The partnership is expected to roll out in select markets in 2021 and hit international markets for 2022, the company said.
Businesses like MoneyGram and Western Union are facing competition from Bitcoin technology-based payment services like Strike, which offers instant payments globally at close to no cost. While MoneyGram’s transfers start at no cost, or $0, a transfer fee and currency exchange rate can apply, according to its website.
This partnership is the latest effort by a traditional financial service company to adapt to the ever-changing world of digital assets. But, some think that these money transfer companies should stick to their traditional industries, rather than competing in new digital asset spaces.
“If I was the CEO of those companies I would stay focused on doing what they do well and try to optimize it. Crypto is an entirely new industry and they will have difficulty adapting,” said Charlie Silver, CEO of Permission.io.
In general, there are many industries that have little to no growth but are still successful like book stores, print magazines, network and cable TV and so on, Silver said. “Although they have a shrinking market, they can still be successful,” Silver added.
Separately, in mid-July, Asia-based cryptocurrency exchange platform Liquid Group, Inc. also announced a joint venture with SDF to provide USDC with Stellar’s network, Blockworks previously reported. Similar to MoneyGram, Liquid Group said that providing USDC would give users faster and cheaper transactions.
Stablecoin usage is especially high in East Asia due to the Chinese government’s ban in 2017 of direct exchanges of Chinese yuan for cryptocurrency. About 33% of trading activity in 2020 was attributed to stablecoin transactions, according to a report by Chainalysis.
Are you a UK or EU reader that can’t get enough investor-focused content on digital assets? Join us in London on November 15th and 16th for the Digital Asset Summit (DAS) London. Use code ARTICLE for £75 off your ticket. Buy it now.