Visa started using USDC to settle transactions on Ethereum, what's the point?
According to a Reuters report on March 29, the giant US multinational financial services company Visa said on Monday that it will allow the use of the US dollar stablecoin USDC (a stable cryptocurrency whose value is directly pegged to the US dollar) to settle transactions on its payment network. It is the latest sign of the mainstream financial industry's growing acceptance of digital currencies.
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The first payment network using encrypted stable currency settlement
Visa processes billions of dollars in transactions every day between thousands of institutions in more than 200 markets and more than 160 currencies around the world, and has established partnerships with 35 digital currency platforms, including Coinbase, Crypto.com, BlockFi and Bitpanda, together they have over 50 million active users.
According to a March 29 announcement, Visa, through a partnership with San Francisco-based cryptocurrency exchange Crypto.com, will provide a cryptographic settlement system for fiat currency transactions based on the Ethereum blockchain. At this point, Visa will become the first large payment network to use a stablecoin as a settlement currency.
In the pilot program launched by Visa, Visa has cooperated with Anchorage, the first federally chartered digital asset bank, as its only digital currency settlement partner, as the custodian, and completed the first transaction this month - via Crypto .com sends USDC to Visa's Ethereum address in Anchorage.
In the past, Visa's standard settlement process required partners to settle in traditional fiat currencies, which added cost and complexity to businesses established using digital currencies.
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Jack Forestell, Executive Vice President and Chief Product Officer, Visa, said:
“Crypto-native fintech companies want partners who understand the intricacies of their business and digital currency form factors.”. “Today’s announcement marks a major milestone in our ability to meet the needs of fintech companies to manage their operations using stablecoins or cryptocurrencies, and it is effectively an extension of what we do every day, securely facilitating payments in all different currencies around the world.”
Previously, Crypto.com allowed customers within Canada to apply for a Visa card. The partnership grew even stronger when the exchange joined Visa’s network earlier this month by expanding its crypto debit card program.
Kris Marszalek, Co-Founder and CEO of Crypto.com, said: “The past year has seen record growth in both our business and the broader crypto ecosystem. To continue to accelerate the world’s transition to cryptocurrencies, we need to understand Partner in opportunities and tools that help us get to market faster and more efficiently. Having been a Visa partner for several years, we are excited to deepen this relationship through our global agreement and pioneer a new era in stablecoin payments An exciting world first."
“The Anchorage platform was purpose-built for institutions like Visa to develop new products with crypto. We have been dealing with Visa since 2019 and are very excited to see these first stablecoin payment corridors implemented through the Anchorage API Vitality,” says Anchorage co-founder and president Diogo Mónica.
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What is the point of settling in Ethereum?
Under traditional standards, if a customer chooses to pay for a cup of coffee with a Visa card on Crypto.com, the digital currency held in the cryptocurrency wallet needs to be converted into traditional fiat currency. Cryptocurrency wallets deposit traditional fiat currency into bank accounts and at the end of the day network with Visa cards to settle all transactions, adding cost and complexity to businesses.
Visa's use of the Ethereum blockchain eliminates the need to convert digital currencies into traditional currencies to settle transactions.
Supporting digital currencies as a new type of settlement currency marks an important step forward in Visa's network strategy to enhance the movement of money in all forms, both on and off the Visa network. By leveraging its global reach, partnership approach and trusted brand, Visa is committed to adding differentiated value to the ecosystem and making cryptocurrencies safer, more useful and suitable for payments.
Visa's partnership with Anchorage also strengthens Visa's ability to directly support new central bank digital currencies (CBDCs) in the future.
And what is the impact on the encryption market? First, it is interesting that this announcement and statement had an immediate positive effect on the price of ETH. Shortly after the news broke, the ETH price has surged above $1,750.
As Visa transfers more economic activities to the Ethereum blockchain, it means that Ethereum may become the settlement portal for daily economic activities (such as buying coffee), thereby driving the growing volume of dollar transactions settled on Ethereum.
Recently, there have been many positives in the encryption market, and neither companies nor banking institutions have reduced their deployment plans for cryptocurrencies. In addition to Visa, major financial firms including BNY Mellon, BlackRock Inc. and Mastercard Inc. have embraced digital currencies, sparking speculation that cryptocurrencies will A forecast that becomes a regular part of the portfolio.
Tesla CEO Elon Musk (Elon Musk) said last week that consumers can use bitcoin to buy its electric cars, marking an important step forward for the use of bitcoin in the commercial sector.
Cuy Sheffield, head of encryption at Visa, said, "We are seeing a growing demand from consumers around the world to be able to use, hold and spend digital currencies, and we are seeing customers asking us to build products that can provide consumers with this access."
