Six Banks Plan To Use Stablecoins Under New IBM Payment Network, Based On Stellar Blockchain

Six Banks Plan To Use Stablecoins Under New IBM Payment Network, Based On Stellar Blockchain

Major tech giant IBM has been working to expand their dive into blockchain, which appears to now be including a little dip into cryptocurrency. The company recently announced on Monday that there are six international banks that have already signed letters of intent to use IBM’s payment network, World-Wire, to launch stablecoins.

World Wire uses the public blockchain from Stellar and promises that there will be faster and less costly remittance for the regulated institutions as they complete cross-border transactions. At this point, the only bank that has been named in the system is RCBC, which is based in the Philippines and will be issuing their own stablecoin that is backed by the Philippine Peso. The other banks are expected to be listed soon but will be pegging their stablecoins with digital versions of Euros, the Indonesian rupiah, the Korean won, and the Brazilian reals. However, IBM noted that these stablecoins still have “regulatory approvals and other reviews” that they are waiting on.

The whole network only went live on Monday, though there are still the pending regulatory approvals in each of these countries. Presently, there is a stablecoin on World Wire that is backed by the US dollar, having been created by a San Francisco startup called Stronghold. The head of blockchain for financial services with IBM, Jesse Lund, commented that the project is in “limited production.”

Right now, the USD-based coin from Stronghold is the on-ramp, considering that the US does not have any pay-in or pay-out locations at the moment. This has given IBM good favor with the US regulators. While the US is not the starting point for the markets the IBM targets, Lund commented that adding the US market “won’t be long,” and that it should be “sometime this year.”

There are payment locations for the World Wire platform in 72 countries, covering 48 currencies and 46 “banking endpoints” for the receipt and sending of cash. In addition to their own token launch, the use of the Stellar network creates the option of using the company’s lumens (XLM) as a “bridge” crypto asset, if it proves to be difficult to trade a fiat for another fiat. The company expressed that there is a chance that IBM’s network will eventually add other cryptocurrencies, but XLM will be the only crypto asset for now, due to the apprehension of financial institutions involving crypto volatility.

Lund has a much bigger vision than what the platform is presently bringing to market. Speaking with CoinDesk, he expressed that the company is working to expand the stablecoin ecosystem to involve more banks and fiat currencies, along with central bank issued digital currencies. Ultimately, all of the actions taken now are going to secure a place for IBM in the future of finance. They are working within the enterprise blockchain right now and pushing themselves into a new type of network and system that IBM “has never done before.”

While Stellar acts as the protocol level, IBM is the “network operator,” as Lund puts it. IBM has to maintain the core system software for the accounts and money flow of participants while maintaining the API for payment. With their relationships already established amongst banks around the world, they are considered the “most trusted validator on the public Stellar network today.” As such, Lund sees his firm as a “big anchor” in the Stellar dashboard.

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