There is an increasing demand for digital tokens that represent stable values. These digital tokens are called ‘stablecoins’ and are designed to trade at parity with fiat currencies or precious metals. This increasing demand is reflected by the more than sixfold increase in the aggregate supply of stablecoins during 2020, from about $6 billion in January 2020 to almost $38 billion in January 2021.

Together with Tech Mahindra, we have launched ‘StableCoin as a Service’ to serve global banks and financial institutions with a stablecoin solution that has significant potential to reduce transaction costs and processing time, while providing auditability and enhancing security.

Why are stablecoins so interesting?

Because of their instantaneous and programmable nature, stablecoins are very suitable for the demands of a digitized world. Besides that, stablecoin transactions are extremely cheap while increasing the privacy of the end user, which enables many new business and revenue models.

What makes StableCoin as a Service different from other stablecoins?

Not all stablecoins are the same and suitable for all purposes. Many stablecoins miss the trust that comes with transparency and compliance, creating risks for both merchants and consumers. For example, there could be uncertainty about whether a stablecoin is really backed by an underlying asset or about whether they can be converted back. Additionally, it could be unclear whether certain coins have been associated with money laundering or other illegal activities. Lastly, many stablecoins are built on blockchains that are not optimized for financial applications, resulting in unnecessarily high transaction fees.