MoneyGram launches non-custodial wallet for cross-border transactions.

MoneyGram launches non-custodial wallet for cross-border transactions.

MoneyGram Launches Non-Custodial Wallet to Connect Crypto and Fiat

MoneyGram International, a global leader in peer-to-peer payments and money transfers, has recently announced its plans to launch a non-custodial wallet that will bridge the gap between cryptocurrencies and traditional fiat currencies. The wallet will allow users to seamlessly exchange funds between fiat currency and the USDC stablecoin.

This move by MoneyGram is a clear indication of the payment company’s growing interest in the world of cryptocurrency. According to MoneyGram’s CEO, Alex Holmes, the new wallet is part of the company’s exploration of blockchain technology as a means to facilitate the movement of funds across borders. The objective is to enable fiat transfers using blockchain technology without requiring users to deal with cryptocurrencies directly.

Currently, MoneyGram’s services require users to select a specific destination for their funds. This means that users cannot pause the transfer and hold funds in a particular fiat currency before sending them. However, with the introduction of the non-custodial wallet, this limitation will be overcome. Users will have the freedom to deposit cash and hold it as USDC within the wallet until they are ready to transfer it to their preferred fiat currency.

The MoneyGram non-custodial wallet operates differently from most wallets in the market. Unlike traditional wallets that are compatible with various crypto assets, MoneyGram wallets will only be compatible with each other. Although this limits the functionality and interaction with the broader crypto market, it also helps MoneyGram avoid potential regulatory challenges.

Using the USDC stablecoin for remittances has another advantage – it helps reduce cross-border transaction fees. MoneyGram transactions typically cost customers around 3%, which is lower than the World Bank’s industry average of 6.3%. However, MoneyGram aims to further decrease these fees to less than 1%, aligning with the lower costs typically associated with digital transactions.

To ensure compliance with regulatory requirements, MoneyGram plans to initially restrict wallet access to approximately 40 countries capable of facilitating the digital know-your-customer (KYC) process. This approach allows the company to redefine traditional notions of moving money between fiat currencies, effectively transforming MoneyGram into a global ATM concept using blockchain, as noted by Holmes.

This isn’t MoneyGram’s first foray into the world of cryptocurrencies. Last month, the cross-border payments platform Stellar made a strategic investment in MoneyGram, making Stellar a minority holder. Stellar’s investment aims to support MoneyGram in areas such as blockchain technology research, digital businesses, and finding innovative solutions for handling money.

Additionally, in November, MoneyGram introduced crypto trading capabilities to its app through a strategic investment in Coinme, a Seattle-based crypto and cash exchange firm. Users can now buy, sell, and hold several cryptocurrencies, including Bitcoin, Ethereum, Chainlink, Stellar Lumens, Dogecoin, and Polygon through MoneyGram’s platform. However, this service is currently only available in all US states except New York, Idaho, Hawaii, and the District of Columbia.

It’s worth noting that in 2019, MoneyGram entered into a partnership with Ripple to use XRP for cross-border transactions and international settlements. Unfortunately, this agreement faced challenges when the United States Securities and Exchange Commission (SEC) sued Ripple. As a result, the partnership was suspended and eventually terminated in 2021, as officially announced by Ripple CEO Brad Garlinghouse.

MoneyGram’s foray into the world of blockchain and cryptocurrencies demonstrates the growing interest of traditional financial institutions in leveraging the potential of this technology. By embracing blockchain-based solutions, MoneyGram aims to streamline international money transfers, reduce fees, and provide users with more flexibility in managing their funds. As the industry continues to evolve, it will be fascinating to see how MoneyGram’s non-custodial wallet and other crypto endeavors shape the future of global financial transactions.