How stable coins have failed for value transfer in cross border payments

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“My name is faizal khan of a banking in the payment consultant. I have a a question which someone asked me is you know i did a recent video on coins and person asked me as a remittance has a money transfer company should they look at stable coins. Because their understanding is that this is a token it can be traded amongst all the parties and they don t have to do this preforming and you know investment here and there. And don t have to block their money etc.

And that a stable coin or a stable token makes a lot of sense for purposes of money transfer. So here s my answer it depends when this ic o thing started in 2018 and 2019. And there was a huge huge you know thing about it a lot of people thought that stable coins were going to be it for purposes of value transfer. A lot.

Many companies raised money on it etc. Now we tracked about 30 to 33 companies. And literally all of them all 32 33 companies that raised money in this arena. Have failed and failed miserably in some cases meaning that the original you know notion that they will use their coin for purposes of transfer and you can always peg it with a stable coin you know whatever nikon coin or apple coin whatever you want to call it etc and you know it ll be going all around the world and people would be making payments using this coin.

It never happened right now out of all the contenders. There are two that come to mind that somehow may have a game. There is the xrp by ripple and there is the xlm by stellar these two companies are perhaps the only two companies are poised to play in this game. Everyone else that i can think of or i know of are not basically being taken seriously.

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Yes. There are companies will say claim. And say hey listen our entire premise of making our stable coin. Was for the purposes of b2b trade.

Or b2b payments. And you can pull them the network and everyone would accept it. But the fact of the matter is it s not being used in most cases. The intention is has been very noble in most cases not all but in most cases.

But the reality is that the traction never came they tried that tried the regulations. The licensing. All those regimes. Then you know all those problems came on to you and then you realize you know this is not as easy as it sounds the you need a whole lot of anchors.

Who will accept that stable coin as a basis for payments for making it happen. The problem is if your token is valued and let s say if i have an apple coin and my apple coin is valued at two dollars and 10 cents. That s that s the problem. I ve now introduced a third currency.

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However. If my apple coin was pegged one to one towards the us dollar then it s just the us dollar coin. So it s like a like a usd tethered or what have you and herein lies. The problem.

A lot of these companies came up with their own tokens. You know so they have the x token. The wide open the z token all trading in their own prices. So.

Now. You have the us dollar to their token their token to some others and liquidity is a huge issue. When you try to go and sell try to go and buy etc. Based on that token price.

The price can fluctuate. Now. Some mail say oh well we ll peg it to the us dollar. But even those ones are finding it very hard to find and clients so let s say you have an ecosystem you have a million dollars worth of coins and those coins are pegged to the us dollar one on one well who is using it if you are willing to use it is your counterparty that you want to pay to willing to use it and if they are willing to use and then they immediately want to liquidate it well that s not the point.

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The whole point is and it should not be liquidated that the point should keep on circulating within the system. So if they liquidated when are they going to send it send it back in the us exchange and then transfer to the serf fire transform you know they don t want to get into that hassle. Because there s another 20 or sorry. 25 basis points or 30 basis points being paid as exchange fees.

Etc. So why would they want to do that so in most cases stable coins have failed as far as value transfer are concerned. I m talking about non us dollar peg stable coins. They have absolutely fare like i said and xrp are the exception to the rules.

But in most cases they have failed and money transfer companies that are now trying to invest in these or look into these you know a stable coins or even come up with their own stable coin. I caution them a lot you know a few i think a few months ago. A couple of software providers came to me and large network providers. A large conglomerate of you know multiple mto s came to me.

And they said you know we d like to have our own trading io you are not own tradable coin. And i advise them against it and you know luckily for me. And for them. In a turn out to be true that it was not a good idea that you know having a stable coin and then if it s only going to be immediately liquidated.

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It just doesn t make sense. I do have a reserved opinion on ripple and xrp and you know stellar and xlm. But i will do that separately in two separate videos where i will try to explain what ripple is and how they re trying to solve a problem and will and they will they be successful at it or not it s particularly with respect to the x rp and with stellar with respect to the x lm. But on and on if you re talking about stable coins.

No they are a huge failure when it comes to value transfer for money transfer networks anyways. I hope if you can agree or disagree. With me. There s a contact form in the description below please.

Give me your opinion. I will be happy to you know answer your questions and voice it next time around. But anyway still next time ” ..

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