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.
All of these issues have been tackled with StableCoin as a Service, a joint solution from Quantoz and Tech Mahindra. Our solution is compliant by design and by working together with financial institutions and independent auditors, we can guarantee the backing of the assets and the conversion back to fiat currency. By building on the most suitable blockchains, we enable payments that are settled within seconds at less than a thousandth of a cent.
The technology behind StableCoin as a Service
For this solution, we make use of our NEXUS technology. NEXUS enables automated token, crypto and fiat transaction processing. It connects traditional financial infrastructure to public and private blockchains, enabling businesses to easily integrate blockchain infrastructure into their existing financial applications.
NEXUS is cost-efficient and makes it cheap to add additional Points of Sale. It is built with compliance in mind and easily integrates into existing financial systems. The system requires very little technical skills to operate and has been in production for five years. Our clients currently process 30.000 transactions per day and we have attained an ISO 27001 certification and the ISAE 3402 certification.
Since its inception, NEXUS is being used in many public blockchain projects by crypto frontrunners such as Bitcoin Suisse, Bank Frick and QuickBit. But the underlying technology is also used in a large number of private blockchain projects with larger corporates such as Airbus, Porsche and BASF.