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Elon Musks SpaceX uses stablecoins to hedge against foreign exchange risks

Elon Musks SpaceX uses stablecoins to hedge against foreign exchange risks
© Copyright Image: CryptoSlate

SpaceX uses stablecoins to dodge foreign exchange risks, Silicon Valley venture capitalist Chamath Palihapitiya said in the All-In podcast on Friday.

Foreign exchange risk refers to the risk of losses that could arise from drastic fluctuations in a currency. For example, if a U.S. company has customers in Brazil that pay in Real (BRL), the company could stand to lose money when converting to U.S. dollars.

Using stablecoins as a hedge

According to Palihapitiya, SpaceX collects payments from all customers of Starlink in long-tail countries, and converts them to stablecoins. Starlink, which is wholly owned by Elon Musks SpaceX, provides satellite internet services.

Palihapitiya said the company re-converts the stablecoins to dollars in the U.S..

When they [SpaceX] aggregate them [payments] in all of these long-tail countries, they dont want to necessarily take the foreign exchange risk. They dont want to deal with sending wires.

According to Palihapitiya, stablecoins should become the primary method of cross-border transactions in the U.S., which would allow us to chip away all of this decrepit infrastructure that the banks use to sort of slow down and tax a process that should never have been taxed.

Stablecoin providers competing with traditional financial institutions

Stablecoin providers like Tether and Circle are emerging as worthy contenders that will give banks a run for their money when it comes to money storage and transfer services.

But its not just the banks the stablecoin providers are competing with. Stablecoin providers are also contending with traditional payment giants like MasterCard and American Express, Palihapitiya said.

He added that reducing the cost of cross-border transfers by even 3%which is what Stripe chargeswould be a boon to global GDP (gross domestic product).

Aaron Levie, the CEO of enterprise cloud firm Box, agreed with Palihapitiya and said that stablecoins replacing costly traditional transaction mediums makes total sense.

With SpaceX being run by Elon Musk, a fan of meme coin DOGE, it comes as no surprise that the firm uses stablecoins. Elon Musks Tesla invested heavily in Bitcoinan investment that has clearly paid off with the investment value crossing the $1 billion mark last month as the price of Bitcoin (BTC) started surging after Donald Trumps election victory.

Since taking over Twitter and rebranding the social media platform to X, Musk has enabled X users to send Bitcoin and other cryptocurrencies as tips to other users. There has also been widespread speculation about cryptos role in Xs upcoming payments feature.

The post Elon Musks SpaceX uses stablecoins to hedge against foreign exchange risks appeared first on CryptoSlate.

Read more: https://cryptoslate.com/elon-musks-spacex-uses-stablecoins-to-hedge-against-foreign-exchange-risks/

Text source: CryptoSlate

Disclaimer: Financial information and news are not financial advice, read the disclaimer.
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