Visa Inc. reported early Monday that after a year of preparation it has completed the first transaction involving direct settlement with a so-called stablecoin, USD Coin. The transaction, which involves a stablecoin that mirrors the U.S. dollar, allowed Crypto.com, a platform for the trading of digital currencies, to send transactions valued in USD Coin directly to Visa for settlement without having to first convert the assets to fiat currency. The transaction settled on the Ethereum blockchain.
Visa said the settlement was possible through an integration with San Francisco-based Anchorage Hold LLC, said to be the first federally chartered digital-asset bank. USD Coin is a blockchain-based digital coin tied to the value of the dollar, which Visa said made it particularly attractive for the new service.cyr
Visa says the significance of the transaction lies in the fact that, historically, banks have had to settle through the network in dollars or other national currencies. That requires fintechs or other digital-asset exchanges to first convert settlement assets to fiat, a step that adds costs to the process, particularly as volumes grow.
“We’ve seen record-breaking growth in our business and the broader crypto ecosystem over the last year,” says Kris Marszalek, Crypto.com’s cofounder and chief executive, in a statement. “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.” The exchange claims more than 10 million users and supports more than 100 cryptocurrencies.
Visa says USD Coin appealed to the network for reasons besides its stability. It also wanted to support a digital currency with demonstrated demand as well as clear governance and compliance protocols. “USDC measured up against all these criteria,” the company says in a blog post.
Settlement support for more cryptocurrencies—at least those that mirror national currencies— may be coming as central banks ponder a digital option. Visa’s blog post cites a Bank for International Settlements statistic indicating 80% of central banks are “engaging in some CBDC-related effort.” The key, Visa adds, will be to make sure these digital currencies can work on its network. CBDCs are central bank digital currencies.
USD Coin ranks 12th among the world’s cryptocurrencies with a market capitalization of $10.7 billion, according to CoinMarketCap.com. That’s larger than two Bitcoin variants, Bitcoin Cash and Bitcoin SV, as well as the suddenly popular Dogecoin. Tether ranks first among stablecoins, at $40.5 billion, good for fourth place among all digital currencies.