Wirex and Stellar to create 26 new stablecoins

London-based Wirex is a borderless payment platform best known for launching the world’s first Visa card that allows users to convert and spend cryptocurrencies wherever Visa is accepted. The Wirex Visa card supports nine cryptocurrencies, ten fiat currencies and has two million users.

Last week, Wirex announced that it will partner with Stellar to build and launch 26 fiat-backed stablecoins. These stablecoins will be the first to be released by an Financial Conduct Authority (FCA) regulated entity and will be spendable using the Wirex card.

The Wirex stablecoins will run on the Stellar Network (XLM). Stellar was selected for the project as its platform is designed for tokenizing assets and processing payments. Wirex will also add Stellar Lumens (XLM) to its list of supported crypto assets.

According to the press release, the stablecoins will be pegged to major global currencies including USD, EUR, GBP, HKD, and SGD. They will provide use cases for both retail and business clients, such as international remittance, an alternative to existing credit cards, and instant merchant settlements.

How will Wirex stablecoins fare in the competitive stablecoin market?

As highlighted in Brave New Coin’s recent stablecoin report, Stablecoins: Mitigating Capital Risks in Crypto, the use cases and demand for price-stable cryptocurrencies continues to grow. The advantage that stablecoins offer is their relative stability when compared to volatile digital currencies such as Bitcoin.

Currently, the stablecoins with the largest market capitalizations, such as Tether (USDT), USD Coin (USDC), TrueUSD (TUSD), and Paxos Standard Token (PAX), have been designed to preserve their value one-to-one against the US dollar. However, several of the largest crypto asset trading markets, such as the United Kingdom, Japan, and South Korea, do not use the US dollar domestically.

In these markets, the new suite of Wirex stablecoins may prosper if they can leverage the relatively scarce landscape of local currency-denominated stablecoins. While most stablecoins are targeted at traders who want to move in and out of crypto assets using a price-stable digital asset, Wirex stablecoins are targeting commercial use and remittances as their primary use cases. For business users, Wirex are promoting the fact that these stablecoins can be used for instant international payments—but there’s a catch, as international payments are between Wirex users only.

The new partnership is a positive move for Stellar investors and existing crypto users with a Wirex card, although critics point out that Wirex card payments will still need to be transferred into a fiat currency as Visa itself does not support stablecoins.

There is no word yet regarding how Wirex and Stellar intend to collateralize the 26 stablecoins. To date most stablecoins have been backed one to one by the fiat currency on which they’re based, although other methods of collateralization include commodity-backed, and
crypto-backed.

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