Blockchain technology is being touted as a possible answer to emerging market currency liquidity problems.
XREX, a blockchain financial business, has raised $17 million in a pre-A round headed by a group of international investors, indicating increased institutional demand for crypto-focused startups.
CDIB Capital Group, a Taiwanese publicly traded corporation, led the consortium, which includes investors from major banks and venture capital firms in North America, Europe, and Asia.
SBI Investment, a subsidiary of SBI Holdings, ThreeD Capital, E.Sun Venture Capital, and Systex Corporation were among the other publicly traded firms that participated in the investment round.
In addition to Black Marble, New Economy Ventures, Metaplanet Holdings, Seraph Group, and the Taiwan government’s National Development Fund, the round included Black Marble, New Economy Ventures, Metaplanet Holdings, Seraph Group, and the Taiwan government’s National Development Fund.
The funds will be used by XREX to increase its fiat currency portfolio, get licences, and form new collaborations with financial institutions and digital wallet providers, according to the company. The company’s stated purpose is to use blockchain technology to tackle emerging market dollar liquidity constraints.
Despite the fact that the US dollar’s status as the world’s reserve currency is in jeopardy due to the Federal Reserve’s huge intervention and de-dollarization activities in China and Russia, the greenback remains the most commonly used currency in the world.
The greenback accounts for well over 80% of foreign exchange transaction volume, according to the Bank for International Settlements’ 2020 U.S. dollar funding report. It also accounts for over 60% of the country’s official foreign exchange reserves.
The Covid-19 outbreak added to the pressure on US dollar liquidity, particularly in emerging nations that relied significantly on the currency.
Long before the epidemic, these liquidity difficulties were affecting worldwide economy and trade. Consider the following example: According to a 2019 Asian Development Bank trade finance study, approximately 30% of respondents mentioned dollar liquidity as a major stumbling block.
“We keenly understand the struggles faced by many cross-border merchants who lack safe access to U.S. dollar liquidity,” stated XREX co-founder and CEO Wayne Huang.
As a result, his company is collaborating with regulators and financial institutions to create solutions that will help merchants and small enterprises in emerging nations decrease forex losses and acquire more consistent access to US dollars.
