Global payments platform MoneyGram has announced that it is set to launch a non-custodial wallet in the first quarter of 2024, according to CEO Alex Holmes. The announcement was made during the Stellar Development Foundation annual Meridian conference on Tuesday. The new wallet, developed in partnership with Cheesecake Labs, will utilize the Stellar network and MoneyGram’s fiat on and off-ramp services to facilitate instant transactions, with no charges until June 2024.
The move is MoneyGram’s latest venture into the crypto space, continuing its work with the Stellar blockchain. Over the past five years, the company has undergone a digital transformation to dispel misconceptions that it would be displaced by cashless products. “We’re redefining paradigms around what it really means to move money between fiat currencies,” Holmes said in an interview with Fortune.
The non-custodial wallet will allow users to leverage stablecoin technology to convert between fiat and digital currencies. This is aimed at strengthening MoneyGram’s focus on cross-border remittance and payment settlements. Users will be able to send digital assets to other users within the wallet. To increase the utility of digital assets, users will be able to cash out their assets at any partner MoneyGram facility. All wallet users will have access to global compliance screening tools for safer and more secure digital asset transactions.
Holmes acknowledged that while cryptocurrencies won’t replace cash, they can help solve certain financial dilemmas. With the new wallet, users can deposit cash and hold funds as USDC before deciding when to transfer it into another currency. This could be particularly useful for those wanting to hedge against inflation or fluctuations in exchange rates.
Unlike many non-custodial wallets where users control funds themselves, MoneyGram’s product will have full “know-your-customer” requirements and will only be compatible with other MoneyGram wallets. This limits its functionality with the broader crypto ecosystem but also shields MoneyGram from regulatory scrutiny often associated with decentralized finance.
Since launching its digital asset-fiat on/off-ramp services in 2022, MoneyGram has expanded these services to eight digital wallets on the Stellar network, allowing consumers to cash out in more than 180 countries and cash in over 30 countries worldwide.
The non-custodial wallet will initially be limited to countries with KYC capacity. Holmes stated that around 40 can currently support a digital KYC process. “We’re turning MoneyGram into a global ATM concept using blockchain,” he said.
According to the company, the average global cost to consumers is around 3%, which is lower than the industry average of 6.3% reported by the World Bank. Digital transactions tend to be lower than 1%, making it competitive with other crypto-powered remittance services like Mexico-based Bitso.
Stellar Development Foundation, which is partnering with MoneyGram for its non-custodial wallet, is also a stakeholder in the remittance firm. The foundation acquired a minority stake in MoneyGram in August this year, giving it a seat on MoneyGram’s board of directors.
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