While stablecoins have been effective in providing shelter against volatility for traders, they could possibly be a solution for cross border payments as well. To exploit this use case and challenge XRP dominance in blockchain based cross border payments, Bitspark has launched Sparkdex HKD, the world first stablecoin that is pegged to Hong Kong Dollar (HKD).
Stability important for cross border transactions says, Co-Founder
While the current blockchain based cross border, solutions are dominated by XRP and Ripple, Sparkdex.HKD has been testing waters in the same field. According to the George Harrap, CEO and Co-Founder, Bitspark, who in an interview to Bloomberg said cross border payments need price stability and hence stablecoins are the best-suited solution for cross border transaction ass they provide the benefits of both worlds.
George Harrap was also quoted saying to media that
“Until now, US Dollar stablecoins have dominated the market but there are other national currencies in the world, like the Hong Kong Dollar. We are proud to have pioneered this landmark first for both the cryptocurrency and traditional Finance industry, and anticipate that this will lead the way for much-needed diversity among other currencies within the stablecoin sector”
Explaining more on stablecoins, Harrap mentioned that stablecoins were cryptocurrencies that are backed by and pegged to the price of existing real-world assets. Likewise, Sparkdex.HKD is tied to reserves of physical cash in Hong Kong dollars held by Bitspark. The start-up said that these reserves will get a regular check-up from an external auditor, with a quarterly report released to the public.
Currently, there are no other stablecoin solutions for HKD with similar measures to ensure transparency.
Another prominent voice from the company Maxine Ryan, Co-Founder, and COO of Bitspark was quoted saying to media
“Bitspark was founded in Hong Kong, a front runner for innovation in Finance. We see the launch of Sparkdex.HKD as a clear opportunity for Bitspark to bring the benefit of this technology to Asia. We’re planning to also launch a further 179+ stablecoins to service the company’s money transfer markets starting initially with emerging and frontier markets.”
Hong Kong’s has had a very innovation-friendly regulatory environment and has been accepting projects leveraging the blockchain technology to experiment before putting in specific regulatory guidance.
Stablecoins were clear buzzwords for the second half of 2018 and saw many stablecoins being launched so far which find themselves pegged to the US dollars. These include Tether, TrueUSD, and USD Coin amongst many others
This craze of stablecoin also flew to Asia as Singapore-based blockchain startup Rate3 unveiled SGDR, the first stablecoin backed by the Singapore dollar. The same was seen in Australia where Australian online payments processor Novatti Group began issuing the Novatti AUD Utility Token, which is backed by Australian dollars held in a trust.
With Bitspark’s clear intentions of tapping and testing the cross-border payments with use of its stablecoin is definitely something XRP cannot ignore. How much would this be a threat is something only time would tell.
Will rise of Stablecoins like Sparkdex.HKD be a threat to XRP in the cross-border payment industry? Do let us know your views on the same.
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Nilesh Maurya has been associated for past 8 years as an Investment Banker with Omega Capital, a bespoke Investment Banking outfit having offices in Mumbai, New York, Singapore, and Dubai. He has been a regular contributor to business publications such as Business India and Market Express and has been a mentor to many start-up companies. Nilesh Maurya has been associated for past 8 years as an Investment Banker with Omega Capital, a bespoke Investment Banking outfit having offices in Mumbai, New York, Singapore, and Dubai. He has been a regular contributor to business publications such as Business India and Market Express and has been a mentor to many start-up companies. Follow him on Twitter at @KoinKing1 or connect with me on linkedin.