Argentina and Brazil Get Their Own Stellar Stablecoins
In a world where banks can make international transactions very slow, if not downright difficult, blockchain technologies can provide a safe, fast, and efficient alternative for sending money. However, the volatility associated with cryptocurrencies makes them a little scary for most of the world's population.
With this in mind, Settle Network and Stellar are issuing two stablecoins in Latin America. The ARST is tied to the Argentine peso, while the BRLT is tied to the Brazilian real.
Settle Network is the largest digital assets settlement network across Latin America for exchange and cross-border payments, while Stellar is a blockchain created by Ripple co-founder Jed McCaleb to provide an infrastructure capable of connecting financial institutions via cryptocurrency payments.
The announcement for the stablecoins was made on November 19 during Stellar's Meridian conference.
But why create stablecoins of currencies as damaged as the Argentine peso and Brazilian real, which respectively lost 30% and 20% of their value relative to the dollar in the past year?
For one thing, trading. Users could have an easier way to move their funds between exchanges by having their money running on a blockchain. This saves any complex procedures involved in making fiat-to-crypto transactions if users want to dabble in the markets.
But remittances seem to be the main focus of the Settle Network.
"The new Settle Network and Stellar stablecoins, ARST and BRLT, allow users to virtually send Argentine Pesos (ARS) and convert them to Brazilian Reais (BRL) in a matter of seconds, opening a new world of possibilities for international remittances and cross border payments," said Pablo Orlando in a statement shared with Decrypt.
Although the Argentinean and Brazilian economies have been hard hit by the coronavirus pandemic, Settle Network's move is strategic in the medium term—Brazil and Argentina are South America’s two largest economies.
However, large bureaucracies and social inequality prevalent in the region have led to a substantial percentage of the population being unbanked or underbanked. Research by Brazilian FinTech firm Airfox revealed that approximately 44% of the total population of Brazil does not have a bank account. CashEssentials estimates that 52% of Argentines are unbanked.
If this partnership delivers and helps people send money with just a click, then a big market could be about to open its gates to crypto remittances.