MoneyGram Joins Solana as Validator as Stablecoin Business Expands

By becoming a validator, MoneyGram will help process transactions on Solana's network by verifying transactions and adding new blocks to the ledger, earning rewards in return.

The announcement underscores MoneyGram's continuous push into crypto as global payments industry increasingly embraces stablecoins. The validator move also highlights how companies are taking a more direct role in the blockchain infrastructure that supports stablecoins.

Stablecoins are digital tokens designed to maintain a stable value, typically by being pegged to a fiat currency such as the US dollar. In a statement, MoneyGram chief product and technology officer Luke Tuttle said the company now helps "run the rails" it uses to move money.

Low fees and fast transactions

Solana is one of the largest blockchain networks for stablecoins, with about $15.2bn worth of stablecoins on the network and around $4.9bn in total value locked (TVL), according to DeFiLlama data. It has become a popular blockchain choice for stablecoin payments due to its settlement times and transaction costs.

As of 22 Jun, the average transaction cost stands at about $0.000009 on Solana, versus around $0.006 on Ethereum, the largest smart contract blockchain, according to data from Solscan and Etherscan.

More than remittances

MoneyGram has spent the past several years adding stablecoins and blockchain technology to its business. Last year, the company launched MoneyGram Ramps, a service that helps wallets, exchanges and fintech firms connect cash and crypto through its global network.

The company also recently launched its own stablecoin, MGUSD, which it said will serve as the foundation for a growing suite of financial services across its global payments network.

"Our core business in the past has been remittance. But if you think about our asset, which is our global network, it's a payments network," MoneyGram CEO Anthony Soohoo said in an interview with Sandmark at Consensus in May.

Soohoo also said that MoneyGram expects to handle about $1bn in stablecoin transactions this year. "I think that number is only going to increase," he added.

A growing stablecoin market

MoneyGram's latest move comes as the stablecoin market continues to expand. The total market capitalization of stablecoins currently stands at about $315.3bn, up from $250.6bn a year ago, according to DeFiLlama.

Tether's USDT remains the largest stablecoin with a market share of about 59%, followed by Circle's USD Coin (USDC) and Sky Dollar (USDS). 

Soohoo is among the industry participants who see stablecoins as one of crypto's most practical use cases. "I do think that stablecoin is the killer app, just like the spreadsheet was for the PC or the browser was for the Internet," he said in the interview.

The growth has also attracted increasing interest from banks, payment companies and policymakers, many of which view stablecoins as a faster and more efficient way to move money compared with traditional avenues. 

Sandmark reached out to MoneyGram for comment but had not received a response by publication time.