Wells Fargo Launches USD-Backed Coin: “Not a Crypto”
A Not-So-Cryptocurrency Stablecoin
Announced Tuesday morning, Wells Fargo, an American financial powerhouse, revealed that it will be launching a stablecoin backed by the U.S. dollar. While called “Wells Fargo Digital Cash”, making it sound like the name of any old crypto asset, the firm has asserted that it shouldn’t be defined as a “cryptocurrency“.
The digital coin will purportedly be used for internal transaction settlement for cross-border branches and partners, allowing funds to be moved easily between Wells Fargo locations around the globe. “[There is] a growing demand to further reduce friction regarding traditional borders, and today’s technology puts us in a strong position to do that,” wrote the head of the Innovation Group at the bank, per CoinDesk.
This platform will purportedly involve digital ledger technology (DLT) — corporate America’s term for blockchain and similar innovations — to move money in “near real-time”.
Wells Fargo is the latest mainstream financial institution to have jumped on the bandwagon of entering the realm of ledger technologies.
As reported by Ethereum World News previously, Deutsche Bank, one of the world’s largest banks, recently joined a blockchain consortium headed by JP Morgan. The network is meant to allow for the sharing of key transaction details between institutions to reduce transaction times and potentially reduce costs, which is important in an industry where processes are analog and are subject to human error.
Also, JP Morgan earlier this year unveiled JPM Coin — a stablecoin based on Quorum, the bank’s take on Ethereum technology that is private to improve efficiency and privacy.
Wells Fargo Not the Biggest Crypto Fan
Wells Fargo’s decision not to call its digital asset project a “cryptocurrency” might be for good reason.
The Silicon Valley-based bank has seen a number of run-ins with members of this budding industry over the years.
In 2017, Wells Fargo was sued (case later dropped) by Bitcoin exchange giant Bitfinex, with the exchange accusing the bank of blocking Bitfinex-issued transactions from Taiwan-based banks.
More recently, Wells Fargo made it clear on Twitter that it doesn’t allow its clients to deal with cryptocurrency transactions, becoming one of the only U.S. banks to explicitly have made such a move. By naming its new project a cryptocurrency, it may have been deemed hypocritical.
Stablecoins Under Fire
Wells Fargo’s product launch comes as stablecoin projects have come under fire from central bank leaders from across the globe. On Monday, representatives of the world’s monetary authorities convened in Switzerland to talk about the potential threats stablecoins pose.