Western Union (NASDAQ: WU), one of the world’s largest money transfer companies, is testing stablecoin payments for its remittance service.
The Colorado-based company revealed that it has accelerated the development of its digital asset services over the past few months. Previously, it was cautious due to regulatory uncertainty, but the GENIUS Act has enabled it to explore integrating stablecoins to “enhance efficiency, reduce friction and improve customer experience.”
In its Q3 earnings call, where it revealed that half its transfer value now goes to digital wallets, Western Union announced that it’s actively testing its stablecoin solutions in treasury operations.
The company, estimated to have facilitated over $150 billion in cross-border remittances last year, says it’s turning to stablecoins to reduce its dependency on banks and other legacy financial rails.
Currently, Western Union still relies on correspondent banks in the 200+ countries it serves to settle transactions. It’s required to maintain local bank accounts in these markets to manage liquidity. With stablecoins, the transactions can be settled directly with the recipient, eliminating the costly intermediaries.
Beyond breaking ties with the banking system, Western Union also believes that stablecoins can improve efficiency and reduce settlement windows.
“We see significant opportunities for us to be able to move money faster with greater transparency and at lower cost without compromising compliance or customer trust,” it said.
The announcement follows a July statement by CEO Devin McGranaham, who said the company views stablecoins as “just one more opportunity to innovate.” He added that WU would not issue its stablecoin like major American banks. Instead, it would offer rails that enable stablecoin transfers and off-ramps.
Western Union is the largest cross-border remittance firm, with some reports claiming it commands 25% of the $700 billion market. The sector is expected to grow at a CAGR of 5.8% and is projected to hit $1.33 trillion by 2032.
Adopting stablecoins would have an even greater impact on Western Union clients in parts of the world worst hit by inflation and currency devaluation, the company says. In these economies, holding an asset denominated in the US dollar is a significant advantage.
With positive legislation like the GENIUS Act, stablecoins are emerging as strong contenders for the future of cross-border transfers. However, most networks still can’t scale, limiting the impact that stablecoins can have on global payments. BSV stands out as the only network that scales unbounded, and with the recent Teranode upgrade, it can now handle over a million transactions per second, making it the only real solution.
JPYC launches Japan’s first yen-pegged stablecoin
In other news, Japan now has its first stablecoin denominated in the local yen. Known as JPYC, it was launched this week by local fintech, JPYC Inc. The company also launched JPYC EX, a platform for token issuance and redemption.
JPYC launched on multiple blockchain networks and is backed 1:1 by reserves held in bank deposits and government bonds, the issuer says.
To acquire the new stablecoin, Japanese users must complete their KYC on the JPYC EX platform using the My Number card, the country’s national ID number. They must then transfer yen into a designated account number to receive the stablecoin on their registered wallet address. To redeem their tokens, users will need to send them to a designated wallet address to receive the yen in their bank accounts.
JPYC is one of the localized stablecoins emerging to challenge the dominance of U.S. dollar-pegged tokens. The greenback accounts for 99% of the $308 billion market, which the U.S. government projects will hit $2 trillion in three years.
“I believe this is one major turning point in the history of the Japanese currency, and we are pleased to be involved at its center,” commented CEO Noritaka Okabe.
JPYC’s success will hinge on whether local users can forego the convenience and global reach of USD tokens and turn to the local alternative. Already, some notable local companies have pledged to integrate the token.
One is Densan System, a local fintech firm that provides payment services at over 65,000 local stores. The company will use the stablecoin for B2C and B2B payments and for settlements within its divisions.
ASTERIA Warp, a no-code data integration service provider used by over 10,000 local companies, has also pledged to integrate JPYC into users’ workflows.
The new Japanese stablecoin comes a month after StraitsX launched XSGD, the first stablecoin pegged to the Singaporean dollar. Now, both countries have beaten Hong Kong to the punch, despite the city-state implementing the most comprehensive stablecoin regulatory framework in the region.
Watch | Cut Costs & Streamline Payments: The Case for Stablecoins
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Source: https://coingeek.com/wu-tests-stablecoins-to-reduce-legacy-finance-dependency/
