During the Meridian 2023, Stellar’s annual conference, in Madrid, Spain, MoneyGram announced the launch of its non-custodial crypto wallet service .
The new service aims to connect fiat currencies with stablecoins, like Circle’s USDC, for seamless fund transfers between wallets and cash processing offices. It also plans to enhance security for users while complying with KYC regulations to avoid regulatory scrutiny.
The service is launching in partnership with Stellar, co-founded by Jed McCaleb, who also co-founded Ripple.
Available in over 180 countries around the world, MoneyGram is often the go-to platform for global remittances. A significant portion of the company’s customers often reside in developed nations and consistently send money back to family and other loved ones in developing nations.
MoneyGram aims to enhance the service and experience for its customers by utilizing blockchains and stablecoins, cryptocurrencies that peg their value to fiat currencies.
MoneyGram’s partnership with Stellar will be based on USDC, a stablecoin created by Circle, which is pegged to the US dollar.
According to Stellar’s website , users may “deposit or withdraw cash from their digital wallets via Stellar USDC without needing a bank account.”
Senders would only need to choose the amount of USDC to purchase on Stellar’s app, choose a location to deposit the fiat amount, and then the USDC amount simply shows up on the app.
To withdraw money, users will choose the amount of USDC to liquidate and the location where the fiat amount will be withdrawn.
MoneyGram and Stellar opted to apply KYC restrictions which would require users to provide personal information to attach to transfers. The move will disconnect the new service from the overall crypto ecosystem since it limits itself to MoneyGram’s customers. However, the company would, theoretically, shield itself from regulatory scrutiny created by governmental entities such as the US Securities and Exchange Commission.
Stellar is a creation of Jed McCaleb, who also co-founded Ripple Labs. McCaleb departed Ripple in 2014, leaving with his entire XRP stake, equivalent to approximately 9% of the total supply. Later that year, he co-founded rival payment protocol Stellar.
Ripple acquired a stake in Stellar worth millions of dollars. The partnership enabled MoneyGram to leverage Ripple’s XRP-powered solutions for cross-border payments and FX settlements.
However, in 2021, McCaleb began unloading his entire XRP vault, marking the conclusion of the partnership between Ripple and Stellar. Now, fittingly, Stellar is powering MoneyGram’s efforts to dominate the world’s remittance business which is rivaled by Ripple.