Siam Commercial Bank (SCB), Thailand’s oldest commercial bank, has unveiled plans to offer stablecoin-based cross-border payment and remittance services to its customers. Founded in 1907, SCB is a well-established financial institution, and this move marks a significant step towards integrating digital assets into mainstream banking services in the region.
Partnership with Lightnet
The bank has teamed up with Lightnet, a fintech company, to enable the use of stablecoins for international transactions. This collaboration will allow SCB clients to send and receive cross-border payments 24/7, while benefiting from reduced transaction fees compared to traditional remittance services. The use of stablecoins, which are digital currencies pegged to traditional fiat currencies like the US dollar, will provide a faster, cheaper alternative to traditional payment methods.
Benefits of Stablecoin Remittances
The introduction of stablecoin services will have a direct impact on remittance transactions, particularly for those sending or receiving funds from countries with higher-value currencies. As the US dollar-denominated stablecoins will be used in these transactions, the service is expected to minimize the volatility associated with other cryptocurrencies.
Tridbodi Arunanondchai, CEO of Lightnet, emphasized that the project will help to promote financial inclusion by reducing the capital required per transaction. The service will be available to a wide range of customers, from retail to corporate and institutional clients. This move aligns with the broader push for greater access to digital financial services, particularly for those who have limited access to traditional banking.
Regulatory Sandbox Testing
Before launching the service, SCB tested the new stablecoin remittance offering through Thailand’s regulatory sandbox, a framework that allows financial institutions to experiment with digital assets and blockchain technology under more flexible regulatory conditions. This sandbox approach is intended to encourage innovation in fintech, while ensuring that the risks to consumers and the financial system are managed effectively.
Stablecoins as a Store of Value in Developing Nations
Stablecoins have gained traction in developing regions around the world, particularly as a store of value in countries with unstable or depreciating local currencies. USD-denominated stablecoins are increasingly being used by residents of countries with high inflation to protect their savings from currency devaluation.
A report by Chainalysis highlighted that stablecoins account for roughly 43% of all crypto transaction volume in Sub-Saharan Africa. The research also showed a strong correlation between currency devaluation and the adoption of stablecoins in regions where local currencies are losing value rapidly.
The Latin American market mirrors these findings. For instance, in Venezuela, a country that has been grappling with hyperinflation, over 50% of the digital assets used for remittances in 2023 were stablecoins. Other countries in the region, including Argentina, Colombia, Brazil, and Mexico, have also seen a rise in the use of stablecoins for remittances and day-to-day transactions. In fact, Mastercard’s March 2024 report on remittances noted that South America saw the fastest growth in remittances globally, with blockchain-based assets like stablecoins predicted to play an increasing role in this trend.
The Future of Blockchain in Remittances
The shift toward digital assets in remittance services reflects the growing demand for more efficient and cost-effective alternatives to traditional money transfer methods. As adoption of stablecoins and other digital assets continues to grow, more countries and institutions are likely to follow the lead of Siam Commercial Bank, integrating blockchain technology into their financial services to meet the needs of consumers in an increasingly digital and globalized economy.
In conclusion, SCB’s introduction of stablecoin remittance services in partnership with Lightnet underscores the ongoing trend of stablecoin adoption as a viable solution for cross-border payments. By leveraging stablecoins to streamline remittances, SCB is positioning itself as a key player in the growing blockchain-based financial ecosystem while also contributing to financial inclusion for a wider range of customers.
