The world’s largest payments processor, Visa, is now pioneering transaction settlements in stablecoin on the Ethereum blockchain. This is a monumental step in marrying the worlds of digital and traditional fiat currency. Visa will be piloting this new ability via its established partner and leading crypto platform, crypto.com.
The stablecoin USD was co-founded by Circle and Coinbase and it is managed by Centre Consortium. The currency gets its name from having a 1:1 correlation with the USD (1 USD = 1 USDC) which is what makes it “stable”. Its stability is ensured by USDC partners having USD in their bank accounts for every new token issued, making sure that there are always equal amounts of both on hand to balance. Stablecoins have gained relevance by providing flexibility in sending, receiving, and storing value. Owners of stablecoin don’t need bank accounts to support legacy systems, integrate with traditional institutions, or pay transaction fees to outside financial institutions.
Today, there are many businesses who operate with and store mostly digital currency. Where, in the past, Visa settlements were required to be settled in fiat currency, this provided a major hurdle to the new generation of businesses. Creating the ability to instead settle in stablecoin comes as a major relief to them as well as being a big nod from the payments giant on the validity of cryptocurrency as part of finance’s future. This move is also in line with Visa’s network strategy mission, which is to enhance all forms of money movement, whether on the Visa network, or beyond. This new ability will allow crypto.com and its fellow crypto-native companies pursue new business models without having to keep a reserve of fiat currency unnecessarily.
To enable settlements in USDC, Visa will be partnering with Anchorage, a company that recently was green-lighted by regulators. Speaking on this, Diogo Mónica, Co-Founder and President of Anchorage said, “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.” With its new federal banking charter, Anchorage can now position itself as a digital asset bank making it the perfect partner for Visa’s new digital focus. With this new partnership, crypto.com can send USDC directly to Visa’s Ethereum wallet address at Anchorage to settle the transaction.
This is a pioneering and exciting step for Visa, which already processes 160 currencies. Confirming this, Jack Forestell, Executive Vice President and Chief Product Officer at Visa said, “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.”