Despite LUNA woes, MoneyGram to use stablecoin in remittances
US money-transfer company MoneyGram is set to launch a new service that enables consumers to send money using USD Coin (USDC) and convert directly to and from fiat.
In a recent interview with Bloomberg, MoneyGram CEO Alex Holmes said the company will allow crypto wallets connected to the Stellar Network to access its global retail platform. Working alongside Circle, Stellar blockchain will enable users to convert their holdings into its popular stablecoin and then cash out through MoneyGram. The combined effort also offers a near-instant backend settlement, account funding and local fiat withdrawals.
The partnership is expected to launch soon in select jurisdictions, possibly starting with El Salvador, which adopted bitcoin as legal tender in 2021, with an expanded international rollout planned in the future.
“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. 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,” Holmes said.
“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,” he added.
A vote of confidence in stablecoins
The move came as financial services giants, including PayPal and Square, have been increasingly making moves in the crypto space.
MoneyGram’s recent initiative came barely a year after it officially cut ties with Ripple Labs in light of the ongoing legal fight with the US Securities & Exchange Commission. The two firms put their tie-up, which dates back to 2018, on hold after the SEC charged Ripple with conducting a $1.3 billion illegal securities offering.
Alongside a partnership to pilot Ripple’s XRP in cross-border payments, the token issuer bought a $30 million stake in MoneyGram in 2019. The Nasdaq-listed firm revealed it netted more than $60 million in fees from using XRP transfers as an alternative source of revenues in both payment and settlement services
The move also comes even as the meltdown of Terra’s token, which once ranked among the top 10 most valuable cryptocurrencies, has shaken confidence in other stablecoins, and the broader cryptocurrency markets miserably collapsed.
LUNA tanked to virtually zero a couple of hours ago after having peaked close to $120 last month, as per data from CoinMarketCap. Additionally, its sister stablecoin TerraUSD, or UST, lost its dollar peg before the collapse.