The bank is investing in Ubyx to help traditional financial institutions settle stablecoin payments and compete with nonbank fintechs. Barclays is investing in Ubyx, a U.S.-based clearing system designed to facilitate interoperability between various stablecoins and tokenized deposits. Ubyx sells technology that enables stablecoin issuers to create relationships with banks for redeeming their tokens for traditional currency. In return, banks get noninterest income through redemption fees and foreign exchange spreads.
Barclays’ investment in Ubyx reflects a push by traditional financial institutions to stay ahead of nonbank fintechs that stand to disintermediate traditional payment rails. “Interoperability is essential to unlock the full potential of digital assets,” said Ryan Hayward, head of digital assets and strategic investments at Barclays, in a Wednesday press release. “Specialist technology will play a pivotal role in delivering connectivity and infrastructure to enable regulated financial institutions to interact seamlessly.” “Bank participation is vital to provide par value redemption through regulated channels,” said Tony McLaughlin, CEO of Ubyx, in the release. “We are entering a world in which every regulated firm offers digital wallets in addition to traditional bank accounts.”
“Those who choose not to participate will see their clients migrate to those who do,” McLaughlin wrote in the Ubyx whitepaper. The London-based bank said the deal with Ubyx is a necessary step toward integrating blockchain-based assets with traditional finance. Ubyx proposes a “mutualized acceptance network” where banks and fintechs can redeem stablecoins from multiple issuers at par value, similar to how checks or card payments clear today. The Ubyx model attempts to address a specific theme in recent regulations over stablecoins that a digital dollar always be convertible to a fiat dollar at par value.
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