Chainlink Helping Banks Launch Cross-Border Stablecoin Trades

Chainlink is reportedly joining several dozen international banks on a cross-border stablecoin payments project.

The goal is to bring about real-time, stablecoin-based cross-border payments for foreign-exchange trades within a year, an executive from the blockchain infrastructure company told CoinDesk in an interview Tuesday (June 23).

Project Pangea, as the effort is known, hopes to reshape global foreign exchange markets, said Niki Ariyasinghe, Chainlink’s vice president of Asia-Pacific and the Middle East. Beyond Chainlink, the project includes Qivalis, a euro stablecoin group of 37 European banks, and UniKA, a Korean banking alliance made up of more than 10 commercial banks.

The goal is to look at moving foreign-exchange settlement from a traditional 48-hour timeline to near-instant settlement with regulated euro- and South Korean won-pegged stablecoins, or crypto tokens whose value is pegged 1:1 to the underlying currency, the report said.

The project will examine whether those stablecoins can be exchanged through atomic payment-versus-payment settlement, in which both sides of a currency trade settle simultaneously or not at all, thus lessening counterparty and settlement risk.

The project is more than just experimental, Ariyasinghe said, noting that Chainlink is marking a line between theoretical “proofs-of-concept” (POCs) and actual infrastructure.

“This is not just a POC,” Ariyasinghe said. “Everyone’s coming in with their eyes wide open. Appetite is very much about building real infrastructure … The target is live transactions within a legal, regulatory compliance framework within the next 12 months.”

PYMNTS wrote last month about stablecoins’ potential to unlock the “missing settlement layer” in global payments.

“Cross-border payments remain a multi-trillion-dollar inefficiency embedded inside global commerce, weighed down by correspondent banking chains, pre-funded accounts, foreign exchange friction, compliance overhead and opaque fees,” that report said.

Stablecoins can present a way to compress settlement time and capital requirements at once, especially in emerging markets where access to dollar liquidity remains uneven.

However, the degree of innovation that stablecoins still come with risks. Hacks on digital asset bridge solutions make up around 40% of the entire value of crypto lost due to hacks across the entire history of the digital asset sector, with counterparty risk a prominent concern.

“CFOs are, rightly so, conservative,” Tanner Taddeo, CEO of Stable Sea, said during a conversation for PYMNTS’ “From the Block” podcast. “They’re not buying innovation. They’re buying to de-risk something … It’s a crawl, walk, run approach to the enterprise because that trust does take time. It’s never given, it’s always earned.”