The largest stablecoin issuer Tether has invested $18.75 million in XREX, a Taiwanese startup targeting emerging market cross border payments for SMEs.
Unlike stablecoins such as USDC and USDP, Tether has chosen to remain offshore and its terms don’t allow U.S. users. In fact it’s banned in New York.
In contrast, XREX has taken a proactive approach to regulatory compliance, securing several licenses, including a major payment institution license from Singapore, a Taiwanese VASP registration, and money service business registrations in the U.S. and Canada. One of the most notable aspects of XREX is its involvement in a novel emerging market stablecoin protocol, Unitas.
“Tether’s strategic investment in XREX Group signifies our unwavering commitment to fostering financial inclusion in emerging markets,” said Paolo Ardoino, CEO of Tether.
Existing XREX backers include SBI Holdings, the Taiwanese Government National Development Fund, and CDIB Capital Group.
Currently, XREX’s main offering is a trade escrow service, BitCheck, which is similar to Escrow.com but uses crypto or stablecoins for payments. It’s currently free, whereas Escrow.com charges a minimum of $50 or 2.6% for amounts less than $5,000.
Tether has often been accused of being a haven for criminals, a label that the stablecoin issuer is keen to erase. Of late, Tether has been touting its willingness to comply with law enforcement, including in this announcement.
“Tether and XREX have collaborated successfully to help law enforcement agencies identify, arrest, and sentence criminals,” said Wayne Huang, XREX Group CEO. “With Tether’s strong support and investment, we’re expanding this success into a RegTech product line that further refines XREX Group as a responsible financial institution.”
However, the most distinctive aspect of XREX is that Mr Huang is also the co-founder of the Unitas Protocol. As part of the Tether deal, Unitas will issue gold-backed stablecoins using Tether’s gold token as collateral.
Gold tokens aside, the core Unitas Protocol is focused on a clever way of creating emerging market currency stablecoins. It’s sufficiently novel that we explore it in a separate article.
