Stellar Lumens Crypto Strikes a Deal With MoneyGram International

Mark Hake

It's rare that a major remittance company, much less one with a market value of over $633 million decides to cut a deal with a top 20 ranked cryptocurrency.

That is what happened on Oct. 6 when MoneyGram Int'l (NASDAQ: MGI) signed a partnership with the Stellar Development Foundation. As a result, MoneyGram will use Stellar (XLM-USD) crypto to "enable cash funding and payout in local currency for consumers using USDC."

Stellar is the 22nd largest crypto with a market capitalization of $9.1 billion, according to Coinmarketcap. The agreement will allow Stellar to act as a payments bridge that streamlines money transfers using USDC.

USDC (USDC-USD) is a "stablecoin," which means it keeps its price at $1.00. It has a market value of $32.3 billion. It is the 10th largest cryptocurrency according to Coinmarketcap.

For consumers, the partnership will provide the ability to seamlessly convert USDC to cash, or cash to USDC. USDC can be exchanged for US dollars in most crypto exchanges, including Coinbae Global (NASDAQ: COIN).

Previous Take Over Talk

Now the Stellar network will have access to a global money retail transfer program. This is also a big deal for MoneyGram as it will allow "near-instant backend settlement" of transfers at any amounts, large or small. MoneyGram originally had a deal with Ripple Labs, but it backed out of that agreement when Ripple was sued by the SEC.

News reports surfaced in July that the Stellar Development Foundation was interested in acquiring MoneyGram. The deal would have occurred along with a private equity fund named Advent International, according to Bloomberg News.

The deal never went through, probably partly out of concern whether regulators would approve it. This recent cooperation deal probably resulted as a result of the talks between the companies.

What This Means for Stellar

The MoneyGram partnership deal is very important for Stellar.

Denelle Dixon, the CEO of the Stellar Development Foundation, said this about the agreement:

So this is just transformational in terms of being able to exchange crypto for fiat and fiat for crypto. We’re trying to go as big as we can.”

He also said that,

...a new segment of cash users will be able to convert their cash into and out of USDC, giving them access to fast and affordable digital asset services that may have previously been out of reach."

A U.S. bank, United Texas Bank, will also be involved in the crypto and payment process. It will act as the settlement bank for transfers within the US regulatory framework. The deal is expected to launch at the end of 2021.

What Investors In XLM Crypto Might Expect

Since July 19, when XLM crypto reached a trough of 20.19 cents per XLM token, it has risen over 87% to 37.84 cents as of late Oct. 21. It's possible there is much more upside as well.

For example, if this deal proves lucrative to MoneyGram and the Stellar Foundation, expect to see more such deals with other remittance companies around the world.

Recently, for example, a Latin American stablecoin issuer Anclap issued a stablecoin linked to Peru's fiat currency, the Peruvian sol (PEN).

According to Cointelegraph, the new stablecoin is called the “digital sol.” It will be 100% backed by local fiat currency and is available on the Stellar network to be integrated into any platform.

Anclap said that Argentina and Peru are currently connected to the Stellar Network using their respective stablecoins. Columbia and Chile will be connected to Anclap's Stellar network in Q4 2021.

If Stellar keeps cutting deals like this around the world, XLM crypto will not stay at its present price of about 37.84 cents as of Oct. 21. Its market cap is likely to double or triple over the coming years as XLM crypto comes into more demand.

Comments / 0

Published by

Mark Hake is a financial analyst, investor, and Chartered Financial Analyst (CFA). He writes about US and foreign stocks as well as cryptos, hedge funds, and private equity. He previously ran his own hedge fund, investment research firm, and acted as CFO for a fintech startup. He focuses on finding value, arbitrage, and hidden asset opportunities.

Phoenix, AZ

More from Mark Hake

Comments / 0