Coastal Bank, the Nasdaq listed bank, has partnered with the Tempo blockchain, co-founded by Paradigm and Stripe, to enable cross border payments using stablecoins. This is a use case where the speed and 24/7 nature of blockchain-based settlement offer advantages. Coastal Bank has approximately $4.7 billion in total assets with its CCBX division providing services to fintechs, including FDIC-insured deposits.
“By integrating stablecoin capabilities and Tempo’s blockchain-based infrastructure into our platform, we’re enabling our partners to build more seamless, efficient experiences for their customers while staying grounded in the trust and reliability of the banking system,” said Brian Hamilton, President of CCBX at Coastal.
Tempo emphasized that the solution will retain a large proportion of banking infrastructure for cross border payments, including AML and compliance, ISO 20022 messaging and bank confirmations. What is changing is the settlement. Correspondent banking has the potential to add delays and cost, especially for smaller banks that are more likely to use correspondents. The aim is for banks to use stablecoins to exchange funds directly for cross border settlement, completing in minutes.
However, given the network nature of payments, for this to work between regulated banks, the foreign banks will also need to integrate stablecoin rails, wallets and acquire stablecoins, which is presumably the point for both organizations. While there are now a few stablecoin friendly banks around the world, given Tempo is so new, very few are likely to support this particular blockchain or hold stablecoins on this chain. For now.
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