visa-becomes-first-major-payments-network-to-settle-transactions-in-usd-coin-(usdc)

Visa Becomes First Major Payments Network to Settle Transactions in USD Coin (USDC)

 

Today Visa announced a major industry first in bridging the worlds of digital and traditional fiat currencies: the use of USD Coin (USDC), a stablecoin backed by the US dollar, to settle a transaction with Visa over Ethereum — one of the most actively used open-source blockchains.[1] Visa is piloting the capability with Crypto.com, a Visa partner and one of the world’s largest crypto platforms, and plans to offer the USDC settlement capability to additional partners later this year.

Support for digital currencies as a new type of settlement currency marks an important step forward for Visa’s network of networks strategy, which is designed to enhance all forms of money movement, whether on the Visa network, or beyond. By harnessing its global presence, partnership approach, and trusted brand, Visa is focused on adding differentiated value to the ecosystem and making cryptocurrencies more secure, useful, and applicable for payments.

Visa has spent the last year establishing a pathway for digital currency settlement within Visa’s existing treasury infrastructure, a platform that moves billions of dollars each day across thousands of institutions in more than 200 markets and 160 currencies. Working with Anchorage, the first federally chartered digital asset bank and an exclusive Visa digital currency settlement partner, Visa has launched a pilot that allows Crypto.com to send USDC to Visa to settle a portion of its obligations for the Crypto.com Visa card program.

Visa’s standard settlement process requires partners to settle in a traditional fiat currency, which can add cost and complexity for businesses built with digital currencies. The ability to settle in USDC can ultimately help Crypto.com and other crypto native companies evaluate fundamentally new business models without the need for traditional fiat in their treasury and settlement workflows. Visa’s treasury upgrades and integration with Anchorage also strengthen Visa’s ability to directly support new central bank digital currency (CBDC) as they emerge in the future.

“Crypto-native fintechs want partners who understand their business and the complexities of digital currency form factors,” said Jack Forestell, executive vice president and chief product officer. “The announcement today marks a major milestone in our ability to address the needs of fintechs managing their business in a stablecoin or cryptocurrency, and it’s really an extension of what we do every day, securely facilitating payments in all different currencies all across the world.”

Kris Marszalek, Co-founder and CEO of Crypto.com said: “We’ve seen record-breaking growth in our business and the broader crypto ecosystem over the last year. To continue accelerating the world’s transition to cryptocurrency, we need partners who understand the opportunity and the tools that will help us get to market faster and more efficiently.  Having been a Visa partner for several years, we’re excited to deepen that relationship through our global agreement and to pioneer an exciting world-first in stablecoin payments.”

“Anchorage’s platform has been purposefully built for institutions like Visa to build new products in crypto. We’ve been with Visa every step of the way since 2019 and are extremely pleased to see these first stablecoin payment rails come to life through Anchorage APIs,” said Diogo Mónica, Co-Founder and President of Anchorage.

David Puth, CEO of Centre, which oversees the licensing of USDC, said: “Visa is leading the market with its innovative approach to payments in many forms. We are very impressed with their efforts. Having USDC on the Visa network is an outstanding next step in our mission to connect the world using stablecoins built on Centre standards, starting with USDC.”

“we’re-ready-for-decentralised-finance,”-claim-traditional-financial-service-institutions

“We’re ready for Decentralised Finance,” claim traditional financial service institutions

 

Decentralised finance (DeFi) is now being taken seriously by traditional finance. In a European-wide survey of financial institutions spanning across insurance, banking and trading, 86% are implementing or assessing services built on a DeFi framework.

Of those companies, 31% are reporting an enterprise-wide rollout or have deployed use cases of DeFi. Additionally, 58% of companies are concerned they will lose a competitive advantage by ignoring DeFi instruments.

From the companies implementing decentralised finance, 35% are collaborating with an existing consortium, platform, application or service. 24% are developing their own consortium or platform and 22% are going to collaborate with competitors because the current ecosystem is not compatible with their requirements.

The research, conducted by BCG Platinion (part of Boston Consulting Group) and Crypto.com, analyses the uptake of decentralised services amongst traditional financial institutions. From 400 companies across Europe, 71% with a turnover or balance sheet above £10bn assessed or implemented DeFi, compared with 51% of companies turning over less than £100m.

Of companies assessing or implementing the blockchain technology, 42% are pivoting to a more decentralised approach to asset management. 38% of companies are using it to facilitate faster, more secure, payment processing services, rising to 61% for the biggest companies.

Conversely, 70% believe security concerns over fraud is a challenge preventing company wide adoption of DeFi, and 15% of decision makers strongly believe that whilst decentralised finance is a threat, their companies are against its adoption.

The research also considered the impact DeFi will have on business and operating models and 59% of companies say they will have to implement a new governance structure. But 70% of companies say restructuring the business model or decoupling decentralised finance will increase the speed and lower the cost for financial transactions. 67% said it would open up new revenue streams and 61% said they believe smart contracts are an important business driver for considering or adopting DeFi as a way to execute financial services.

At the same time, a lack of regulation is a challenge for 61% of companies, increasing for companies with a larger turnover or more assets under management. That decentralised finance is over collateralized is also a concern for investment bankers and asset managers, more so than other areas of finance. And sharing their anxiety with a recent FCA announcement, 60% of companies are worried about a lack of recovery mechanisms.

Kris Marszalek, Co-founder and CEO of Crypto.com said, “The research shows that DeFi’s adoption is not limited to just the blockchain industry; traditional financial institutions of all sizes are viewing DeFi not as a competitive threat but rather as a valuable instrument to delivering more decentralized, efficient financial services. This is shown in their warming attitudes towards DeFi and its integral role in future plans for the vast majority of them.”

Kaj Burchardi, Managing Director of BCG Platinion, adds, “As markets evolve towards
decentralisation, there will be a growing demand for approaches like DeFi which can provide a
more efficient and more open way of banking, trading and investing. “It is encouraging to find that financial institutions are already seriously, and strategically, collaborating with the crypto community to begin building a new generation of governance and technologically resilient solutions that will make financial services more accessible.

However, there is still quite some progress to be made in order to bring DeFi into the mainstream especially in security and compliance.”

The survey was conducted by Sapio Research interviewing 411 decision makers with familiarity over decentralised finance and follows up a report highlighting the challenges and opportunities for financial institutions adopting decentralised finance. See more survey findings here.