Sending money from one country to another can be done through money transfer organizations like Western Union or MoneyGram or through bank transfers. But in both cases, payors (senders) and payees (recipients of the monies) face issues like transfer fee charges, currency exchange rates and charges for the service, and time it takes to get the money to the payee. The process is complicated by the need to comply with regulation, particularly around money laundering.
Enter cryptocurrencies. Proponents claim that cryptocurrency allows individuals and business to move massive amounts of money for an extremely low transaction fee in comparison. For example, over US$60 million of Litecoin was recently moved for fifty cents.
But for all the advantages of cryptocurrencies and cryptocurrency payments – difficult to counterfeit, immediate settlement, protects the identity of the payor, access to everyone worldwide – there remains two major business roadblocks to the use cryptocurrencies as a remittance conduit: bitcoin volatility and the availability of crypto exchange facilities accessible to the payee.
The solution may lie with stablecoins – cryptocurrencies that are backed by and pegged to the price of existing real-world assets. Stablecoins have been around since 2014 and US Dollar-pegged stablecoin currently dominate the market. But there are other currencies around the world besides the US dollar.
Hong Kong-headquartered Fintech Bitspark says the launch of Sparkdex.HKD, a stablecoin pegged to the Hong Kong dollar calling it the first market-ready cryptocurrency pegged to the Hong Kong Dollar (HKD).
“We are proud to have pioneered this landmark first for both the cryptocurrency and traditional finance industry, and anticipate that this will lead the way for much-needed diversity among other currencies within the stablecoin sector,” said George Harrap, co-founder and ceo of Bitspark.
Sparkdex.HKD is tied to Bitspark’s reserves of physical cash in HKD. This will be regularly audited by a local audit firm in a quarterly report for the public.
Currently, there are no other stablecoin solutions with similar measures to ensure transparency.
Sparkdex.HKD began listing on Sparkdex, Bitspark’s decentralized exchange (DEX), and BitShares connected DEX, on 31 October, 2018 and their market capitalization after one month of trading reached approximately HK$500,000.
The stablecoin is marketplace agnostic and can be integrated into other exchanges as well.
“We see the launch of Sparkdex.HKD as a clear opportunity for Bitspark to bring the benefits of this technology to Asia. We’re planning to also launch a further 179+ stablecoins to service the company’s money transfer markets starting initially with emerging and frontier markets.” said Maxine Ryan, co-founder and coo of Bitspark.
At the moment, cryptocurrencies remain unregulated in Hong Kong.