After ending its partnership with Ripple, due to its tussle with the Securities and Exchange Commission (SEC), MoneyGram has partnered with Steller and USD Coin (USDC). The companies will begin the pilot by 2022.
International remittance service provider, MoneyGram has partnered Steller and USDC, according to Cision PR Newswire.
MoneyGram would be using their resources to carry out cross border transfers.
This partnership comes in the wake of MoneyGram ending its relationship with Ripple, due to the latter’s regulatory woes.
End of the Ripple-MoneyGram Alliance
In 2019, Ripple and MoneyGram signed a 4-year deal wherein Ripple would help MoneyGram to channelize cross-border transfers. It had reduced the foreign exchange risk by offering almost real-time settlements.
Ripple even bought a $30 million stake in the cross-border payments giant.
In an SEC filing, MoneyGram had revealed that it used to receive XRP from Ripple as compensation for using Ripple’s On-Demand Liquidity (ODL) platform to facilitate cross-border payments. Reportedly, It used to sell XRP as soon as possible after receiving it.
In 2020, the remittance service provider received $38 million in net market development fees from Ripple, constituting around 15% of the company’s adjusted earnings before interest, taxes, depreciation and amortization (EBITDA), according to a Wall Street Journal report.
Things went downhill when the US SEC sued Ripple over allegations that Ripple’s cryptocurrency, XRP, is an unregistered financial security. Consequently, US crypto exchanges began delisting XRP after the SEC began its proceedings.
The troubles led both the companies to terminate their partnership on March 8.
MoneyGram’s New partners Steller and USDC
The cross-border payment facilitator has found a second wind by teaming up with the Stellar Development Foundation and the USDC.
Stellar Development Foundation, a non-profit organization that supports the development of Stellar, is a blockchain network that facilitates cross-border transactions. The Stellar network utilizes the XLM coin to operate, currently priced at $0.36 with an $8.6 billion market capitalization; USDC also runs on Steller.
United Texas Bank will serve as the settlement bank between Circle (USDC issuer) and MoneyGram.
The partnership will allow MoneyGram to seamlessly convert USDC to cash, or cash to USDC, enabling cash funding and payout in local currency for consumers.
“As crypto and digital currencies rise in prominence, we’re especially optimistic about the potential of stablecoins as a method to streamline cross-border payments. Given our expertise in global payments, blockchain, and compliance, we are extremely well-positioned to continue to be the leader in building bridges to connect digital currencies with local fiat currencies.”Alex Holmes, MoneyGram Chairman and CEO
The partnership will go live in select markets by year-end, with the further international rollout planned in 2022.
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