- The Stellar Development Foundation and MoneyGram plan on jointly launching a fiat-USDC conversion and remittance service.
- The news comes amid the UST stablecoin fiasco, which Alex Holmes says does not deter their confidence in the project.
Leading money transfer company MoneyGram has partnered with the Stellar Development Foundation to foster further adoption of cryptocurrencies. The two plan on jointly launching a service that allows users to convert their stablecoins to fiat.
Speaking to Bloomberg, MoneyGram CEO Alex Holmes said the move would reduce the divide between traditional and crypto finance systems.
The world of crypto and the world of fiat are not compatible today. We’re trying to be a bridge from the crypto world to the fiat world.
MoneyGram and Stellar collaborate for crypto and Fiat service
Remittance services have come in high demand, especially in emerging market economies. Cryptocurrencies’ increased adoption has also made it necessary to integrate many traditional money services with digital currencies. This is the niche Stellar (XLM) and MoneyGram are looking to fill, according to Holmes.
More specifically, users will be able to convert the crypto holdings in their stellar blockchain wallets to USDC. They can then cash out the stablecoin in fiat through MoneyGram.
The partnership between MoneyGram and the Stellar Development Foundation (the non-profit behind Stellar), spans back to October last year. The payments company had just ended its business relationship with Ripple after it was sued by a US regulator.
Last year, the two talked of jointly initiating fiat and crypto services in select locations. They also made plans to broaden to an international scope this year. The pair now mark progress with the upcoming launch of the service.
Uncertainties surround Stablecoins
However, the market’s reaction and reception to the development remains to be seen. Controversy and uncertainty have brewed in the crypto industry following the carnage of the multi-billion-dollar Terra (LUNA) ecosystem. The network’s algorithmic stablecoin de-pegged from the US dollar and down spiraled to $0. Its fall made many questions whether other popular stablecoins would follow a similar route.
To provide further clarity to onlookers, Tether (USDT), USDC and MakerDAO have pointed out the difference between them and UST. While UST marketed itself as an algorithmic stablecoin backed by LUNA, the others say they have dollar-equivalent reserves.
Dante Disparte, the chief strategy officer and head of global policy for Circle – the firm behind USDC noted:
In the case of USDC, de-pegging is not in its nearest chapters as it is fully backed by 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.
Nonetheless, MoneyGram’s Holmes is still confident in crypto and the project between it and Stellar. The founder of the Stellar Global Discord platform posted a video showing how the new service can be used.