Visa has significantly advanced its stablecoin settlement capabilities across Central and Eastern Europe, the Middle East, and Africa (CEMEA) through a new strategic partnership with Aquanow, a leading digital assets infrastructure and liquidity provider. This collaboration seamlessly integrates Aquanow’s robust digital asset infrastructure with Visa’s extensive technology stack.
The primary goal is to empower financial institutions, issuers, and acquirers within Visa’s network to settle transactions using approved stablecoins, such as USDC, thereby ushering in a new era of efficiency for cross-border payments in the region.
This groundbreaking initiative directly addresses the surging demand among banks and payment providers for faster, more cost-efficient, and operationally smoother cross-border settlement processes. By leveraging stablecoins, Visa is digitizing backend money movement to support 365-day settlement cycles, a significant leap from traditional banking hours. This strategic move, which Visa began exploring in 2023, has already seen substantial success, with monthly volumes linked to this process now exceeding an annualized run rate of US$2.5 billion.
What is a Stablecoin? (And is it like Bitcoin?)
A stablecoin is a type of cryptocurrency designed to maintain a stable value relative to a “stable” asset, such as the U.S. dollar or a basket of fiat currencies. Unlike most cryptocurrencies, which are known for their extreme price volatility, stablecoins aim to minimize price fluctuations.
Here’s a quick breakdown:
How it works
Stablecoins achieve their stability through various mechanisms:
- Fiat-backed: The most common type, where each stablecoin in circulation is backed by an equivalent amount of fiat currency (e.g., USD) held in reserves by a financial institution. USDC (USD Coin), the stablecoin used in this Visa partnership, is a prime example of a fiat-backed stablecoin.
- Crypto-backed: Backed by other cryptocurrencies, often over-collateralized to absorb price swings.
- Algorithmic: Uses complex algorithms to automatically adjust supply and demand to maintain price parity.
Is it the same as Bitcoin?
No, stablecoins are fundamentally different from Bitcoin (BTC).
Volatility: Bitcoin is famous for its high volatility; its price can swing dramatically. Stablecoins are designed to have minimal to no volatility, always aiming for a 1:1 peg (e.g., 1 USDC = 1 USD).
Purpose: Bitcoin was created as a decentralized digital currency and a store of value. Stablecoins are primarily designed to facilitate transactions, act as a bridge between fiat and crypto, and enable efficient value transfer without the risk of price fluctuations during the transaction period. They are more akin to a digital dollar than a speculative asset like Bitcoin.
Visa and Aquanow – A Strategic Partnership for Digital Settlement
The partnership between Visa and Aquanow is a strategic alignment of a global payment giant with a leading digital asset infrastructure provider, aimed at unlocking new efficiencies in the CEMEA region.
- Aquanow’s Role: Aquanow provides the critical digital asset infrastructure and deep liquidity needed to facilitate USDC transactions at scale. Their technology seamlessly integrates with Visa’s existing network, enabling the secure and efficient conversion and movement of stablecoins. This allows financial institutions to access the stablecoin rails without needing to build their own bespoke infrastructure.
- Visa’s Vision: Visa is pioneering the use of stablecoins not just as a payment rail for consumers, but as a robust solution for digitizing backend money movement between financial institutions. This strategic shift leverages the inherent benefits of blockchain technology—speed, transparency, and lower costs—to modernize the settlement process.
- Addressing Demand: The collaboration directly responds to the growing demand from banks and payment providers in CEMEA for solutions that offer lower settlement costs and faster transaction processing in cross-border scenarios.
What This Partnership Means for Participating Financial Institutions and Businesses
This expansion of stablecoin settlement capabilities brings a wealth of benefits for financial institutions and the businesses they serve across CEMEA:
Reduced Costs
By bypassing traditional, often expensive, correspondent banking networks, financial institutions can achieve lower settlement costs associated with cross-border transactions. This cost-efficiency can translate into better rates for businesses and consumers.
Faster Processing and Settlement
Stablecoins enable near-instant transaction finality, a stark contrast to the multi-day settlement periods common in traditional banking. This allows for 365-day settlement cycles, meaning money can move globally at any time, significantly improving liquidity management for businesses engaged in international trade.
Operational Efficiency
The digital nature of stablecoin settlement reduces manual processes and operational friction, streamlining back-office operations for banks and payment providers.
Enhanced Liquidity Management
With faster settlement, financial institutions can optimize their liquidity, as funds are not tied up for extended periods awaiting finalization. This is crucial for managing cash flow effectively in an international context.
Future-Proofing Payments
This integration positions financial institutions at the forefront of digital payment innovation, enabling them to offer cutting-edge services and adapt to the evolving demands of a global, digital economy.
About Visa
Visa Inc. is a world leader in digital payments, facilitating transactions between consumers, merchants, financial institutions, and government entities across more than 200 countries and territories. Its mission is to connect the world through the most innovative, convenient, reliable, and secure payment network, enabling individuals, businesses, and economies to thrive. Visa is committed to embracing new technologies, including blockchain and stablecoins, to enhance its global payments network.
About Aquanow
Aquanow is a leading digital assets infrastructure and liquidity provider, offering a comprehensive suite of services that enable financial institutions to build and scale their digital asset businesses. The company specializes in providing solutions for trading, payments, and wealth management across a wide range of cryptocurrencies and stablecoins, serving as a trusted partner for institutions navigating the evolving digital asset landscape.
Bottom Line
Visa’s partnership with Aquanow to expand stablecoin settlement in the CEMEA region marks a pivotal moment in the modernization of cross-border payments. By leveraging the speed and cost-efficiency of USDC transactions, Visa is not only addressing critical pain points for financial institutions but also setting a new standard for digital asset infrastructure for banks. This initiative underscores a clear commitment to a more efficient, interconnected, and digitized global financial system, with significant benefits for CEMEA’s economic growth and lower settlement costs.
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