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Monumental Moment for Global Stablecoins as USDC gets US Government approval
PAR002_123 • Nov 21, 2020
Breakthrough use-case for USDC as Circle is given permission from US Government to Deliver Aid to Venezuelans
Venezuela's exiled government is working with Stablecoin issuer 'Circle' and crypto firm 'AirTM' after the U.S. Government gave them permission to distribute funds to health care workers and bypass Nicolás Maduro in support of the Bolivarian Republic led by Juan Guaidó.
After Maduro was declared an “usurper” by Venezuela’s national assembly, Guaidó was declared the acting president of Venezuela in January 2019 following a widely-disputed election where the Venezuelan president was accused of rigging the election to hold on to power.
Guaidó has since won recognition from many countries including the United States. However, the US governments efforts have thus far failed to push president Nicolás Maduro out of office despite the worsening economic and health conditions which were accelerated with the onset of Coronavirus.
Stablecoin USDC now a tool for US Foreign Policy
Circle is using USDC which is a dollar-pegged stablecoin to distribute relief the funds in an initiative that has been conceived as a potential solution to Venezuela’s economic difficulties.
- launched with support from the US Government it marks a global foreign policy first using Stablecoins for foreign aid.
- Circle, the creator of the USDC stablecoin, is partnering to create the Unique private-public partnership.
- The Distribution of funds will bypass censorship by the Maduro regime.
- The development is intended to overcome Venezuela’s ongoing economic crisis.
Because USDC's value is pegged to the U.S. dollar, it doesn’t suffer from the same change in price as the Venezuelan bolivar which has seen 2,358.5% inflation in 2020 alone. Moreover, as it’s a digital currency, it’s much easier to distribute amongst those in urgent need.
According to Circle's blog, the initiative involves the U.S. Treasury and Federal Reserve releasing funds to the Guaidó government, which will then use them to mint USDC. The new aid pipeline distributes funds via AirTM's service, where it will be distributed to the Airtm's wallets of Venezuelan healthcare workers bypassing the need to interact with Venezuelan banks.
All local residents will need to receive the stablecoins is a mobile phone and some way of accessing the internet.
The Circle Team Blog explains:
"In this new aid delivery flow, the US Treasury and Federal Reserve releases seized funds to the Guaidó government’s account at a US bank. The Guaidó government then uses those funds to mint USDC. The USDC is then sent to Airtm, a bank-and-blockchain connected dollar-denominated payment platform that powers digital dollar payments throughout North, Central, and South America. Airtm’s network of dollar-to-anything forex agents enables withdrawals to local currency in Latam bank accounts at free market (vs. government-rigged) rates. Once the USDC is received on Airtm wallets, it is then dispersed to accounts of Venezuelan healthcare workers as AirUSD (Airtm's stablecoin-backed dollar token). The healthcare workers are then able to withdraw to their local bank accounts as bolivars at free market rates, send to other users, or even spend the funds online anywhere using Airtm’s virtual debit card - bypassing the need for a bank at all. With over half a million users in Venezuela, Airtm’s network is big enough to support enough peer-to-peer transactions to make this a viable solution for day to day transactions such as paying rent."
Airtm currently has approximately 500,000 users in Venezuela, who under the terms of the arrangement with Circle, will then be able to distribute USDC to any of its mobile digital wallet users. It’s hoped that the app will provide a lifeline by allowing Venezuelans to transact in US Dollar Stablecoins.
It’s also a significant turning point for Airtm. Only in August, the Maduro government was responsible for blocking the exchange from distributing $18 million in aid. It’s just one example of the party’s policies, which have come under intense scrutiny from much of the rest of the world since the beginning of the Venezuelan crisis.
This marks really a first where the U.S. is executing a global foreign policy objective with Stablecoins for foreign aid because the existing dollar banking system lacks the facilities that modern payment networks provide.
Circle concluded,
"All of this is powerful, inspiring, and underscores the ability of the internet and digital currency to transform not just how value and money moves, but ultimately also the freedom of people to transact, even in the face of brutal dictatorships. It also marks a historic moment where in order to execute on US government foreign policy objectives, economic and political leaders have turned to stablecoins. While this may be the first time, it will no doubt not be the last as global stablecoins firmly arrive on the world stage as a foundational infrastructure in the future of the international monetary system."
(Source: https://www.circle.com/blog/circle-partners-with-bolivarian-republic-of-venezuela-and-airtm-to-deliver-aid-to-venezuelans-using-usdc)
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