Stripe CEO Patrick Collison has said that stablecoins will reduce payment friction in anti-money laundering (AML) procedures. The opinion came during a discussion with Mark Carney at an Institute of International Finance (IIF) event.
According to the report, Collison believes the critical rewards of stablecoins and central bank digital currencies (CBDCs) will manifest in international payments. The Stripe executive supported his claim with an example of how to know your customer (KYC) and AML procedures can be standardized.
Noteworthy, the U.K. has supported real-time payments for years, with the most recent entrant being SEPA Instant payments across Europe. Moreover, there are speculations for the Fed Now instant payment system to launch in the U.S. in 2023.
According to Collison, increasing the efficiency of clearing houses may not be as desirable as blockchain and CBDCs. However, he noted that the move would reduce costs by a significant margin. In Collison’s opinion, combining a faster clearing process and open banking would enable innovation.
Stripe’s foray into digital assets
This is not the first time Stripe is moving into the digital asset realm. The company was one of the pioneering members of the Libra initiative, the Facebook-founded project. However, just like Visa, MasterCard, and PayPal, Stripe withdrew following severe pressure from regulators that eventually led to the collapse of the re-branded Diem project.
In March 2022, Stripe introduced a new payment service for crypto-related businesses, enabling businesses to accept payment in fiat currencies through deposits and payout in local currencies. The Twitter announcement read:
“Stripe now supports crypto businesses: exchanges, on-ramps, wallets, and NFT marketplaces. Not just pay-ins but payouts, KYC and identity verification, fraud prevention, and lots more.”
CBDCs and stablecoins are not speed-oriented
As it stands, the world is looking to a future where payments are already real-time. This comes in light of advances in technology and innovation. In the end, CBDCs and stablecoins might not be so impactful on the speed front. From the discussion, Collison opines that the benefits will be seen further afield.
During the discussion, Collison referred to a report from April 2022, where Stripe would facilitate Twitter creators to receive payment from followers in USDC stablecoins. According to the report, these would have been related to Ticketed Spaces, and Super Follows. Commenting on this prospect, Collison said:
“In the ordinary course of things, this product would be made available again to Twitter users in North America and Western Europe. That is where those are the most lucrative opportunities on an average revenue basis. Those are the markets that are best understood.”
According to Collison, this would still not make sense, given that a Twitter user in a country such as Brazil, Pakistan, or Namibia, among other countries, would still not be allowed to have a premium account. Further explaining this, Collison said, “And so the way we built it with Twitter was they’re using stablecoins, USDC, to make it possible to pay out to any country in which one can pass basic KYC, AML, counter-terrorism, etcetera.”
Collison also ensured that verification is uniform for all markets, such that in situations where heterogeneous rails would be inhibiting, users can now enjoy much broader enfranchising.
Growth in crypto-based payments
Google is the latest addition to Web2.0 giant firms that have adopted crypto payments. This came after the company joined hands with Coinbase crypto exchange to accept crypto payments for its cloud services. According to reports, Google will launch this payment mode in 2023, allowing Google Cloud users to pay using multiple crypto tokens.
Another move by Google in this direction is integrating crypto features into its search engine. This followed the tech giant’s recent decision to allow Ethereum wallet balances to be visible every time an address is searched on the search engine. Noteworthy, Google also displayed a countdown for the recently completed Ethereum Merge.
While this is happening, the theme of CBDCs continues to heat up as many nations are now seeking a more efficient way to support cross-border payments.