Wells Fargo Jumps the Stablecoin Bandwaggon
Wells Fargo plans to offer near real-time payments with Digital Cash, but believes even crypto assets should not exist outside the control of banks.
Wells Fargo launched the preliminary stage of its Digital Cash project, becoming the underwriter for a dollar-pegged stablecoin. The banking giant, which in the past cut off the Bitfinex exchange from its service, holds a struct stance to crypto assets, believing they should also exist under conditions of banking supervision.
“As a result of the increasing digitization of banking services globally, we see a growing demand to further reduce friction regarding traditional borders,” Wells Fargo stated.
The new coin is scheduled for a launch in 2020, starting with a round of internal testing. Wells Fargo plans to use its permissioned blockchain payment system for international assets as well in the future.
Wells Fargo and other banks have been skeptical of existing decentralized networks, and most were even reluctant to service exchanges. But running their own permissioned blockchains was another matter. Previously skeptical firms like J.P. Morgan moved on to use dollar-pegged coins.
At the same time, Wells Fargo still limits US customers from crypto-related transactions, and Barclay’s has joined in, dropping Coinbase as its client.
In the past, public blockchains were used to disguise transactions. But more recently, Bitcoin (BTC) and other networks showed the potential for tracking users. Even anonymous coins are not an ideal defense for anonymous, censorship-free transactions.
It must be noted that the new coin will not be used outside the Wells Fargo system, and will not facilitate crypto trades. Instead, it is just a fintech tool for faster transfers. Wells Fargo also has not used any of the distributed ledger projects that boast of being the most suitable for banks. The US giant spurned the system offered by Ripple, and a similar distributed ledger system by Stellar.
The move by Wells Fargo coincides with the cautious approach of Facebook to launch its own stablecoin. Libra, the potential digital asset scheduled for early 2020, will be backed by an international currency basket, and be used in international payments.