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Stablecoins’ Offer ‘Always-On’ Payments to Consumers Whose Needs Don’t Fit Within Banker’s Hours

Stablecoins have been grabbing headlines amid increased scrutiny from the Treasury Department and calls on Congress for stricter regulation — with no shortage of other financial services watchdogs weighing in too.

What gets lost in the debate, said Circle’s Dante Disparte, is how cryptocurrency — in particular, stablecoins, which are pegged to currencies like the U.S. dollar — can help financially underserved communities, giving them access to stable payment mechanisms and banking done at the speed of the internet.

See also: SEC’s Gensler Urges Cryptos to Work with Regulators for ‘Market Integrity’

Disparte, chief strategy officer and head of global policy at Circle, told PYMNTS that cryptocurrencies hold promise for millions of people worldwide who are on the margins of the financial system because they don’t have access to brick-and-mortar bank locations or fixed-line infrastructure. Increasingly in the digital age, he said, these “unbanked” customers are leapfrogging over antiquated infrastructure that doesn’t serve their needs. And trusted digital currencies, including the U.S. Dollar Coin (USDC) that undergirds Circle’s business model, “propose a completely new financial model for people around the world.”

Not Operating Within Bankers’ Hours

Stablecoins enable transactions to occur at the speed and scale of the internet, backed by cash reserves held in banks, with liquidity built into the system. Disparte noted that the amount of USDC in circulation has grown from $4 billion at the beginning of the year to $30 billion at present, driven by the need for faster settlement speeds and velocity of payments.

Disparte added that individuals’ financial needs do not conform to bankers’ hours; thus, they need “always-on” options to meet those needs. Stablecoins offer a unit of measure and “an instrument for native payments that are lower-cost, highly trusted and low-friction.”

With a nod toward the technology underpinning stablecoins’ issuance and maintenance, blockchain-powered solutions “enable people to have more control and more optionality with how they send, spend, save and secure their money,” said Disparte.

This is also critically important for cross-border payments, such as remittances. Disparte pointed to blockchain wallet provider Stellar’s partnership with money movement firm MoneyGram, an effort that could lower the cost of sending remittances around the world. Under the partnership, MoneyGram locations serve as on- and off-ramps where Stellar users can convert digital currencies into cash and vice versa.

Disparte said stablecoins can prove particularly valuable in nations where the currency is unstable, noting that as much as 50% of the world’s population lives in economies plagued by hyperinflation.

“Connecting trusted digital currencies like USDC to global remittance corridors is one pathway of ensuring that people can get faster receipts of hard currencies” that are relatively stable, such as the U.S. dollar, he said.

Tokenizing a U.S. dollar onto a public blockchain allows it to move around the world, while keeping the care, custody and control of dollar reserves inside the U.S.-regulated banking system.

“Importing that dollar onto the internet and creating that very close approximation in terms of price parity has enabled us to extend not only a trusted form of payments, but also to import the monetary policy and other policies of the United States and that trust onto the internet,” Disparte explained.

Such flexibility only hints at the flexibility stablecoins could offer in the future, he said.

Looking ahead, Disparte said, “so much of what blockchain means for financial services is a core foundational layer for how financial services and trust can be conveyed on the internet. When you think about all the areas of the global financial system, where the burden of trust and the burden of proof is placed on consumers’ market businesses — when that trust can be enshrined in code, and when the technology fades into the deep background — that will unlock this concept of an ‘internet of value.’”

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