In a research report by River, they made a case for how Bitcoin can be used for global payments. However, one core issue with Bitcoin is that it is highly volatile. And so, the organization or the platform that enables the Fiat remittance using BTC rails can suffer a loss due to price fluctuations. Just recently, on Aug 18th, 2023, BTC’s price collapsed by about 9% within 24hrs. Stablecoins such as USDC, on the other hand, reliably hold at $1 dollar when backed by reserves. They are more reliable and, when on Ethereum layer-2 or other layer-1 chains, enable faster transfers than Bitcoin. However, the unfamiliarity and perceived complexity deter many from traditional finance. Our research shows projects are easing this transition. For example, Hedera's collaboration with banks could present stablecoin wallets as regular 'checking accounts'. Furthermore at Coinchange, we believe this could even become a ‘Savings Account’ where the user earns yield on their stablecoin holdings.
Let’s look at two separate proof-of-concept (PoC) pilots by Hedera related to stablecoin international remittances.
Stablecoin International Remittance PoC Pilot-1 by Hedera
Objective: Test the issuance and distribution of stablecoins for international remittances using Hedera Token Service (HTS) and Hedera Consensus Service (HCS).
Institutions Involved: Shinhan Bank and Standard Bank.
Stablecoin Remittance proof-of-concept (PoC) Pilot-2 by Hedera
Objective: Achieve real-time settlement and FX rate integration for remittances across multiple currencies using Hedera's blockchain technology.
Institutions Involved: Shinhan Bank, SCB TechX, and a large financial institution in Taiwan.
As the global remittance market nears $1 trillion by 2026, Circle partners with key financial institutions worldwide. Here's a snapshot:
SAP & Circle Test USDC for Cross-border Payments
SAP, a German software company, collaborates with Circle testing USDC on Ethereum's test network. The aim? Streamlining international transactions using USDC and EUROC, enhancing efficiency, cost-saving, and transparency. This test is a glimpse into SAP’s upcoming Digital Currency Hub.
Airtm, Circle & Stellar Team Up for Cross-Border Payments
Airtm, a globally connected digital dollar account, adopts USDC for its global retail account, tapping into Web 3.0. Leveraging Stellar, it facilitates speedy, cost-effective cross-border payments to over 100 countries without traditional banking constraints. Airtm offers over 400 local payment connections, promising transactions in under 6 minutes with below 5% fees.
TBD & Circle Collaborate on Global Remittances
TBD, a subsidiary of Jack Dorsey’s Block, partners with Circle to enhance stablecoin protocols, focusing on corridors like U.S.-Mexican remittances. Benefits? Fast USDC remittance receptions, zero fees within Circle accounts, significantly lower transaction costs, and no minimums. Circle’s Native USDC spans multiple chains, ensuring easy bridging without third parties, and enabling interoperability through their CCTP.
The Ethereum Enterprise Alliance (EEA) promotes Ethereum blockchain's use in business as an open standard. Coinchange, part of this global community, includes Fortune 500 companies, startups, and Ethereum experts like Microsoft and JP Morgan. During our research for this report, we received great help from the EEA team to gather a list of the members that are currently experimenting with the Stablecoin Remittance use case.
Members engaged in Stablecoin Remittances:
Collaborated with Mitsubishi UFJ Trust and Soramitsu for transfers between stablecoins and digital currencies.
MUFG, Japan's premier bank, worked with Soramitsu and Datachain for stablecoin interoperability on Progmat Coin, powered by Hyperledger Iroha.
Num Finance issues regional stablecoins on Polygon, aiming at the $10 billion remittance market. Additionally, BTG Pactual, a leading Latin American investment bank, introduced its stablecoin on this network.
A Korean startup focusing on blockchain remittance solutions. After securing $2 million in seed funding, including from major bank Shinhan Bank, it emphasizes cross-border remittance on its LinkedIn profile.
Tata Consultancy Services Limited (TCS)
TCS upgraded its Quartz solution to support Central Bank Digital Currencies. It also launched the Quartz Cross Border Remittances solution, connecting banks to blockchain payment networks like RippleNet.
Read more about stablecoins and their remittance use case in our latest research report Stablecoin Landscape and the Remittance Use Case, co-authored by The Hedera Network, Myna, UnoCoin, Glo Dollar, Brale and Ethereum Enterprise Alliance.
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