Blockchain for Banking News

DRW’s Cumberland highlights need for non-USD stablecoins

fx forex multi currency

Cumberland, the crypto subsidiary of trading firm DRW, published a report on non-USD stablecoins, noting that currently, they are simply a rounding error. U.S. dollar-denominated stablecoins make up 99.3% of all stablecoins and the top dozen stablecoin tokens.

The report highlights multiple use cases for non dollar stablecoins, including FX trading and cross border remittances. Referring to FX trading volumes of $7.5 trillion per day, it observes, “Bringing even a small percentage of that volume onto crypto rails would be an enormous boost to volumes.”

One point we’d want to complement is some cost comparisons for converting USD to Euro. Uniswap Research compared the $7 cost of converting $500 on Uniswap to a $28 charge with a bank and $19 with a money transfer operator. We won’t debate the latter two, but it’s fair to say the costs of Uniswap transactions can vary significantly. 

However, many people who regularly do these remittances, particularly in Europe, use neither banks nor money transmitters. They use specialist operators such as Wise or Revolut. If you have a Wise account, the cost is $2.75 using the mid market FX rate.

Another critical use case for non dollar stablecoins is to support crypto transactions in currencies other than dollars.

The report explores some challenges, not least the proliferation of stablecoins across different blockchains. Interoperability is important, including some minimum standard for stablecoins. One thing we learned from the report is a new organization called the Stablecoin Standard. So far, it has signed up at least five smaller stablecoin operators and has a concise standard of less than 200 words.

In other stablecoin news, Circle’s Singapore provisional license has been finalized.

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