Global logistics giant DP World has turned heads with its plans to launch a multi-currency stablecoin to ease global trade transactions.
The Dubai-based supply chain solution company announced the project at the World Economic Forum in Davos on Thursday.
Stablecoin is crypto designed to maintain a steady value by being pegged to a government-backed currency or a commodity like gold. The promise is lower costs, instant settlements, and more transparency in cross-border transactions – concepts with obvious appeal to a global logistics player.
And while crypto projects are a dime a dozen, this one’s drawn attention because it’s coming from a supply chain powerhouse, more at home operating ports than blockchain.
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Not its first rodeo
It’s a bold call to be wading into such unfamiliar territory, yet this isn’t DP World’s first blockchain experiment. Back in 2020, the company invested in TradeLens, a blockchain platform co-created by supply chain management firm Maersk and IBM, to improve global trade by using blockchain to streamline supply chains.
Despite attracting 300 members, including major ocean carriers like CMA and CGM, it had to shut down operations after five years. It was just a situation where technology was there, but a lack of wide industry buy-in, reluctance to share data, and fragmented regulation meant it fell apart.
This time though, DP World could be onto something, although the lack of details, strategy, or timeline that the company’s made public so far make that difficult to assess. (DP World told MONIIFY that it was holding off announcing further details until it had engaged with financial institutions and tech firms.)
But the broad concept clearly has potential. With its multi-currency coin pegged to a basket of currencies, the need for currency conversion is minimal and transaction costs are diminished.
Read more: Stablecoins: Less a ‘Ripple,’ more an unstoppable wave
Crowded market
It’ll face some tough competition though. DP World will be launching stepping into a crowded stablecoin market where major players Tether and USD Coin – who have single-currency coins – already boast $190 billion in market cap, accounting for about 90% of the stablecoin market.
And not every market will be rolling out the red carpet.
While Singapore and the UAE have taken a proactive approach to stablecoins, India, a heavyweight in global trade and cryptocurrency adoption, isn’t keen on jumping aboard.
Just last year, the Reserve Bank of India warned about stablecoins, calling them threats to financial stability that could erode the effectiveness of monetary policy, bypass regulatory frameworks, and undermine fiscal systems.
Above all, the recent failure of fellow logistics giant Maersk in the blockchain space should serve as a cautionary tale — vision alone won’t cut it in this space.
Edited by Tim Hume and Amitoj Singh. If you have any tips, ideas or feedback, please get in touch: talk-to-us@moniify.com
