MoneyGram partners with Stellar to build a stablecoin-fiat transfer platform

MoneyGram partners with Stellar to build a stablecoin-fiat transfer platform

By Sam Grant - min read
  • The US-based financial service company is intent on capitalising on emerging market’s potential as most remittance recipients are out of the country
  • The growth in demand for stablecoins matched with the increase in supply over the past year could be a likelihood of success

The cross-border payments and money transfer giant MoneyGram has revealed its ambition to bridge the gap existing between traditional finance and crypto by providing money transfer services. The firm announced on Sunday a strategic partnership with the Stellar blockchain to build a platform that will allow users of the Stellar wallet to send the USD Coin to other users who can then cash out in fiat.

This stablecoin-based platform provides users an avenue to convert stablecoins to fiat currencies. In an interview with Bloomberg, the company’s chief executive Alex Holmes emphasised that the crypto world and fiat-defined world are incompatible.

MoneyGram’s adoption of stablecoins is a show of confidence in crypto

The recent turbulence in the crypto market has left many investors concerned and equally worried about the future. Massive liquidation figures have been reported this month – a reflection of losses being incurred by traders. The total market capitalisation has shrunk to $1.3 trillion at the time of writing from a peak of $1.8 trillion recorded in the first week of March.

This slump has, however, not deterred institutions that see potential in these assets from investing in the untapped potential. In an interview with Bloomberg, Holmes expressed confidence in digital currencies despite the recent volatility, vowing to adopt and take them mainstream. 

The partnership between MoneyGram and Stellar could also boost revenues flowing into the firm’s coffers as more countries adopt digital assets as a medium of exchange.

Terra’s recent collapse raises uncertainty for stablecoins adoption

Granted, the partnership between MoneyGram and Stellar couldn’t come at a worse time. There has been heightened regulatory scrutiny after Terra’s algorithmic stablecoin, UST, depegged dragging with one of its collateral assets, LUNA.

UST’s collapse also called into question the stability of the so-called stablecoins. Some users around the world have since expressed reluctance to adopt stablecoins, with some harbouring concerns that the same fate could befall other stablecoin projects.