MoneyGram has launched its own dollar stablecoin, MGUSD, on the Stellar blockchain. The move has been framed as a defection from Ripple, but the reality is more nuanced. The MGUSD stablecoin is a dollar-pegged token that allows for non-custodial wallets and smart contracts handled by M0, with wallet security provided by Fireblocks. The pilot launch is currently available in the United States, with plans for a global rollout across MoneyGram’s network of approximately 500,000 cash-in and cash-out locations.
Background on the Partnership
MoneyGram and Ripple previously partnered from 2019 to 2021, with Ripple investing around $50 million in MoneyGram. The partnership integrated Ripple’s On-Demand Liquidity service, which used XRP as a bridge asset for cross-border payments. However, the partnership ended in 2021 due to Ripple’s ongoing legal battle with the United States Securities and Exchange Commission.
Impact on XRP
The launch of MGUSD on Stellar has been seen as a loss for XRP, but the impact may be smaller than initially thought. MoneyGram had already stopped using XRP for payments in 2021, and the company’s decision to launch its own stablecoin is driven by a desire to earn yield on user balances. The stablecoin issuer holds reserves against the tokens in circulation, earning interest on these reserves.
Strategic Implications
The launch of MGUSD is part of a broader strategy by MoneyGram to bridge digital dollars and physical cash. The stablecoin allows for fast and efficient transfers, with the recipient able to collect local currency at a counter. This combination of digital and physical infrastructure is the key to MoneyGram’s strategy, rather than the choice of blockchain.
Conclusion
The launch of MGUSD on Stellar is a significant development, but its impact on XRP may be limited. MoneyGram’s decision to launch its own stablecoin is driven by a desire to earn yield on user balances, rather than a rejection of XRP. As the payments industry continues to evolve, it will be interesting to see how different companies approach the use of stablecoins and blockchain technology
Based on reporting from crypto.news.