Jack Dorsey-owned payments company Block has announced the integration of its open-source protocol, tbDEX, by Yellow Card, the pan-African cryptocurrency exchange.
TBD, the web3 software development arm of Block, made the announcement, saying that Yellow Card is the first company to deploy the system in its operations.
- Earlier in the year, Mariblock reported on a partnership between TBD and Yellow Card to facilitate cross-border transactions across 16 African countries.
- Per TBD’s announcement, the partnership involved Yellow Card integrating the protocol to facilitate real-time transactions from bitcoin to Kenyan shillings paid into an M-Pesa account.
- In its official press release, the company also said that cross-border transactions were only the first use case it considered for the tbDEX protocol.
- The exchange’s CEO, Chris Maurice, told Mariblock that the latest development signifies the full launch of the earlier announced partnership.
- Speaking on the infrastructure, Emily Chiu, TBD’s chief operating officer, said:
“tbDEX bridges the gap between the old and the new – enabling anyone to benefit from decentralized payment systems and digital assets, with easy on- and off-ramps to legacy payment systems and fiat currencies.”
- At its core, tbDEX is a decentralized and open-source protocol that bridges fiat currencies and cryptocurrencies without needing legacy third-party structures to establish trust among participants.
- tbDEX serves as a platform for exchanges such as Yellow Card and other counterparties involved in a transaction to establish trust.
- It also allows firms to negotiate and confirm the details of a transaction transparently through a bidding system before the transactions and trades are settled outside the protocol.
- In addition, tbDEX incorporates verifiable credentials (VCs) that allow digital claims and physical credentials to be verified in a secured and immutable manner.
- This ensures the protocol adheres to anti-money laundering and countering the financing of terrorism (AML/CFT) guidelines.
Why this matters
- Cross-border transactions across African countries are still not straightforward and incur heavy transaction fees.
- World Bank figures show that remittances into Sub-Saharan Africa cost an 8.4% fee on average.
- According to the Bank of International Settlements (BIS), a major contributing factor to the inefficiencies around legacy cross-border payment mechanisms is a lack of trust between the parties involved.
- The bank further suggested that payment solutions built around digital forms of money, such as cryptocurrencies and central bank digital currencies (CBDC), could help mitigate these trust issues.