Wirex is boldly walking into a gray area building a crypto remittance market based on what it claims are Stablecoins – cryptocurrency pegged to 26 different fiat currencies. But without a lot more information that is provided in this Forbes article it’s hard to say if they are pushing limits or simply begging for trouble.
This article doesn’t describe how Wirex creates it’s Stablecoins. Are these fiat-collateralized, crypto-collateralized, or some smart contract non-collateralized balancing act? One assumes they are fiat-collateralized. But even if they are, how are the assets managed and monitored? What aspects of the Wirex business are FCA regulated? Do they have e-Money license or has the FCA validated the Wirex capital resources and requirements related to all aspects of the Wirex business plan including the management of the collateralized Stablecoins?
“Wirex’s main focus is to add support for local currencies in order to use stablecoins for international transfers. This is also being demonstrated by the IBM Blockchain World Wire Network.
Stablecoins have the potential to transform international remittances, as funds can be transferred at a fraction of the cost and time of traditional correspondent banking. This is a key reason why these digital assets are suitable for performing low-cost, near-instantaneous international remittance.
Stablecoins combine the speed and cost of cryptocurrency transfers with the market stability of fiat currency. Traditional banking remittance can be expensive and time consuming and does not reflect the constant live economy that consumers have come to expect. Fiat-backed stable coins also fall under existing e-money regulation. For example, in Japan, where cryptocurrency is regulated, there is no need to obtain a Virtual Currency License if your company only deals with fiat-backed tethers,” Matveev told me.
Moreover, according to Matveev, integrating Stellar-based stablecoins onto the Wirex platform represents the point at which stablecoins transition from being novel to practical. For instance, Wirex stablecoins will be available to over 2 million retail and 5 thousand corporate customers across more than 130 countries worldwide.”
Overview by Tim Sloane, VP, Payments Innovation at Mercator Advisory Group