IBM is taking its banking clients a step closer to cryptocurrency.
Announced Monday, six international banks have signed letters of intent to issue stablecoins, or tokens backed by fiat currency, on World Wire, an IBM payment network that uses the Stellar public blockchain. The network promises to let regulated institutions move value across borders – remittances or foreign exchange – more quickly and cheaply than the legacy correspondent banking system.
So far three of the banks have been identified – Philippines-based RCBC, Brazil’s Banco Bradesco, and Bank Busan of South Korea – the rest, which are soon to be named, will offer digital versions of euros and Indonesian rupiah, “pending regulatory approvals and other reviews,” IBM said.
The network went live Monday, although while the banks await their regulators’ blessings, the one stablecoin running on World Wire at the moment is a previously announced U.S. dollar-backed token created by Stronghold, a startup based in San Francisco. “We say ‘limited production,’” said Jesse Lund, IBM’s head of blockchain for financial services, of the project’s status.
Indeed, while Stronghold’s USD-backed coin currently serves as an on-ramp for greenbacks, there are as yet no pay-in/pay-out locations in the U.S. In this regard, IBM has received “a favorable verbal response” from U.S. regulators, said Lund.
“So we are starting with markets that are outside of the U.S., but it won’t be long before we add U.S. as an operating endpoint. It will be sometime this year; we will get to it, third quarter, fourth quarter something like that,” he said.
Still, the World Wire platform has payment locations in 72 countries, with 48 currencies and 46 “banking endpoints” (which include banks and money transmitters) where people can send or receive cash, said IBM.
Aside from issuing their own tokens, the arrangement opens up the possibility of banks using lumens, the native token...