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East Asia Stablecoin Suggested by Top Chinese Political Advisors

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On May 21, Chinese officials proposed stablecoin in East Asia during a national session. The regional stablecoin will be backed by four major fiat currencies and facilitate trade between China , Korea and Japan.

A member of the Chinese People’s Political Consultative Conference Shen Nanpeng, who is also a global managing partner at Sequoia Capital, suggested regional cryptocurrency during Thursday’s national session. The crypto would be backed by major fiat currencies such as the Japanese yen, the Chinese yuan, the Hong Kong dollar, and the won Korean won.

East Asia stablecoin to cross-border transactions 

The purpose of the proposed East Asia stablecoin is to ease trade and cross-border settlements in the East Asia region. Moreover, the digital currency would massively cut down the currency conversion expenses, reduce time taken to make cross-border settlements, and most importantly act as a litmus test for other state backed digital currencies.

Additionally, the east Asia stablecoin will also help in economic recovery efforts post coronavirus pandemic, by reviving trading activities as per the proposal. Although such digital currencies are not blockchain-based, they are similar to stablecoins such as Tether and USDC. Same as a stablecoin, a national cryptocurrency must maintain equality with the fiat they are pegged to.

Hong Kong recommended as ideal regional link

Furthermore, the digital currency proposal includes creating a regulatory sandbox and expand the system to Hong Kong as time goes; to refine cross border transactions within the region. The proposal recommends Hong Kong as the  main financial entrance and links mainland China to the other countries in Asia. Per the proposal, 70 percent of trans-boundary  renminbi transactions are processed there.

Hong Kong can make the ideal regulatory zone for the east Asia stablecoin. Hong Kong’s watchdog developed a licensing structure to regulate digital currency transactions and cryptocurrency trading platforms back in November 2019. Currently, the Hong Kong regulator has licensed 12 entities to operate in the metropolitan area.

Korean Firm Believes Ripple is the Key to Unlocking a Whole New World for Migrants

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South Korea has emerged as one of the most exciting countries in the world of cryptocurrencies, with multiple updates and developments happening within its borders. Cryptocurrency organizations in the country have also taken on the responsibility of improving the social standards and financial structure of their citizens.

Sentbe was one such cryptocurrency company that planned to transform the financial landscape by partnering with SBI Ripple Asia. The project will work in tandem with Ripple and SBI Holdings to improve processes related to traditional banks and services.

The Brad Garlinghouse led Ripple has been a stalwart in the cross border transaction department with multiple partnerships across the board. The company has partnered with several startups across the world to provide a better infrastructure to payment corridors untapped by the financial market.

According to Sentbe, traditional financial methods have remained ineffective since its inception. J Young Lee, the co-founder and Chief Strategy Officer of Sentbe stated that there was a large group of people who were left in the lurch due to outdated banking methods. He said:

“Cross-border payments are typically expensive and time-consuming.but with RippleNet’s help we’ve made them faster, cheaper, more convenient. Now we want every hard-working migrant in Korea to know about and have the ability to access this better way of sending money home to their families.We are interested in expanding to any area where RippleNet can take us as the ease of integration makes any new corridor instantly valuable”

RippleNet has enabled organizations with their cross border transaction needs since 2018. Ripple‘s latest partnership with MoneyTap was another example of this growing demand for faster transfers in payment borders. For Sentbe, improving remittances meant overcoming four major challenges faced by migrant workers. These included factors like transparency, speed, convenience and cost of individual transactions.

Lee stated that many times, low-income workers did not know about hidden costs and transaction charges. On top of this, remittances were slow and usually took about 2-3 days to settle. Families of these workers usually find it very difficult to receive payments due to outages and a lack of transparency, stated Lee. The lower financial strata have usually flocked to digital assets in times of need, a test case being Venezuela.

Sentbe Archives has shown that they first planned to use Ripple’s XRP back in 2017, but that it was stopped because of Korea’s regulatory authority. The initial plan was to use XRP as a liquidity settlement solution. After that, the company turned to use Ripple‘s technology, such as the RippleNet, for its speed and convenience. This straightforward approach resulted in users saving more than $25 million in transaction fees.

With the RippleNet partnership, Sentbe becomes part of a wide network of banks and financial institutions. At the moment, Korean customers have the option of sending money to 25 payment corridors across the regions. Sources close to the company said that there were also plans to set up partnerships in the Latin American corridor. The need of the hour was financial inclusion and migrants also needed to be a part of this, remarked Lee.