In the crypto arena, many giants are taking leaps into the profitable yet uncertain fintech sector. Taking the clue, IBM has also decided to take its customers a step closer to cryptocurrency. It was announced on Monday that six international banks have signed letters of intent for issuing Stablecoins, or tokens backed by fiat currency, on World-Wire.
World Wire is an IBM payment network that uses the Stellar public blockchain. The network aims to let regulated institutions move value along borders in terms of foreign exchange and remittances.
As of now, three banks have been locked for the initiation. They are Philippines-based RCBC, Brazil’s Banco Bradesco, and Bank Busan of South Korea. Other banks will also be added later. IBM said they would offer digital Euro and Indonesian Rupiah “pending regulatory approvals and other reviews.”
It should be noted that the network went live on Monday when banks were awaiting their regulators’ approval. The Stablecoin running on Word Wire now is a token created by Stronghold, a USD-backed token. “We say ‘limited production,’” said Jesse Lund, IBM’s head of blockchain for financial services, of the project’s status.
As Stronghold’s USD-backed coin currently operates as an on-ramp for greenbacks, there are no pay-in/pay-out locations in the U.S. Lund said that IBM had received a favorable response from American regulators.
“So we are starting with markets that are outside of the U.S., but it won’t be long before we add the U.S. as an operating endpoint. It will be sometime this year; we will get to it, third quarter, fourth quarter, something like that,” he said.
It should be noted that the World Wire platform serves payments in 72 countries, with 48 currencies and 46 “banking endpoints.” In addition to issuing their own tokens, the management would let the banks use lumens, the native token of the Stellar blockchain.
It can be used as a “bridge currency” when it seems to trade one type of fiat for another. Also, World-Wire could support other cryptos, but currently it is only supporting lumens as Financial institutions are not contended by the volatility of cryptocurrencies.
But as far as growing a bank-backed Stablecoin universe is concerned, Lund’s vision goes much further. He said, “As more Stablecoins come on board, the whole notion of FX changes over time. We are working very hard to expand the ecosystem of Stablecoins that will include many more banks and many more fiat currencies – so digital representations of fiat currencies – and even, eventually, the central bank issued digital currencies.”