last week, Zodia MarketThe company, an indirect subsidiary of Standard Chartered, announced that it has integrated Circle’s EUROC stablecoin into its OTC crypto brokerage and exchange. The company is positioning this as the creation of a EUR/USD stablecoin-based foreign exchange (FX) market, given that it already supports Circle’s USDC and Tether.
Step back and that’s a pretty big question. Although it operates as an independent subsidiary of Standard Chartered, it is one of the world’s largest correspondent banks. Correspondent banks profit from the inefficiencies of cross-border payments. Stablecoins aim to address this.
Zodia Markets, which focuses on institutional investors, is based in the UK but also operates in Ireland and the UAE. Two of its jurisdictions, the UK and the EU, have both made their stablecoin status clear. For the EU, there is MiCA. And the UK recently announced a consultation on certain regulatory proposals.
in LinkedIn Post, which positions stablecoins as alleviating the time and geographic limitations we are accustomed to in banking. Blockchain is not the only way to transcend time and geography. For example, Revolut and Wise allow anyone with a bank account to hold balances in a number of foreign currencies. However, in both of these cases, unlike stablecoins, the arrival of the payment depends on local payments and how quickly the recipient’s bank credits the account.
This is an advantage of stablecoins. Its P2P nature eliminates intermediaries in payment transactions such as banks and correspondent banks. However, for most people, it is difficult to onboard to a stablecoin without going through a bank in the first place.
Public blockchains also have an open nature. That said, as the number of blockchains proliferates, the cost of moving between them will no longer be free.
However, sending money across borders using stablecoins is significantly cheaper than sending money through banks. Depending on the public blockchain used, gas fees may not always be cheaper than sending through Wise or its competitors. And the most liquid market for FX is Ethereum, where gas fees are the highest. Still in its early stages, liquidity should improve with lower cost blockchains as the market deepens.
