Currency Gateways Connect XDEX to Regulatory Finance and Markets
Today’s payment landscape is fragmented — each region has its own payment scheme (ACH, SEPA, SPEI, etc.) and they are not interoperable. That is why we are stuck with outdated systems like SWIFT and the correspondent banking model.
To bridge these disparate local payment systems, XDEX makes it possible to represent real world currencies and financial assets — in the form of digital tokens — on one decentralized ledger where they can all interoperate freely. This allows currencies to interoperate not only among each other, but also among all the wallets and apps that leverage the XDEX Network to provide users a wide variety of cost-effective financial services.
To facilitate moving value from the traditional banking system into XDEX and vice-versa, the XDEX Network relies on Gateways, which are regulated financial institutions, money service businesses, or fintech companies that offer one — or both — of the following component services:
- Issue fiat and asset tokens: Issue one-to-one fiat-backed tokens (also known as stablecoins) and maintain treasury currency reserves equivalent to the value of the issued digital tokens, so users can redeem them back to treasury currency at any time; and
- Provide a fiat on/off-ramp: Connect the XDEX Network to the Gateway nation’s banking system by maintaining services that handle regulatory processes such as KYC/AML and allows users to make seamless deposits and withdrawals.
These two components can be provided by a single entity, or by multiple entities, in which case the treasury currency on/off-ramp becomes a reseller of third-party CBDC or stablecoin tokens issued by the depository asset token issuer.
XDEX is paving the path toward a new global records management standard. Gateways have an opportunity to become an integral part of this effort.
As the critical link between the XDEX Network and the traditional financial system in their respective countries, Gateways are positioned to leverage a variety of business models and monetization strategies, including deposit/withdraw fees, FX spread, seigniorage, and transaction fees.
Successful Gateways offer services as part of a larger portfolio of products and services that leverage the efficiency of XDEX to provide new, cost-effective financial services, ranging from API-based Banking-as-a-Service offerings, to capital markets, and cross-border B2B payments, invoicing, remittances, P2P payments, international payroll, or two-sided marketplace payments.
Requirements for Central Bank Currency and CBDC Gateways
10XTS is interested in developing relationships with high quality financial institutions and financial technology companies around the world that can meet or exceed the following criteria:
When issuing assets
- All customer deposits should be held 1:1 in reserve in insured accounts dedicated to stablecoin redemption.
- Issuers should engage a third party to audit whether the stablecoin asset tokens are backed one-to-one with treasury currency, and whether the treasury currency funds are held in dedicated accounts;
When creating an on/off ramp
- Deposits and withdrawals should be processed through local domestic payment rails (ACH, SEPA, SPEI, etc.), not via wire transfer
- Deposit and withdrawal flows should follow XDEX ecosystem standards to allow for seamless interoperability between wallets and gateways across the network
- Gateways should maintain a customer support function to ensure customer queries and/or problems are resolved in a timely manner
- Gateways should maintain a comprehensive AML policy and program, including the ability to perform KYC checks on new customers
For all locations where a Gateway makes their services available, they must comply with:
- Regulatory, registration, and licensing obligations to perform the Gateway’s financial and money transmission services
- Financial crimes, anti-money laundering, and counter-terrorism obligations
- Data privacy rules and regulations.
- Industry standard cybersecurity practices.
- Gateways also need to comply with U.S. all US Treasury BSA requirements and sanctions.
Because XDEX was designed to enable the process of tokenizing real-world assets, securities, and central bank treasury currencies, issuing asset-backed tokens is a native feature of the core XDEX Network — no ad hoc smart contract scripting required, which significantly reduces the technical risks.
Launching a seamless CBDC or treasury currency on/off-ramp is a streamlined process thanks to XDEX ecosystem standards and a dedicated process designed to help Gateways create deposit and withdrawal flows that seamlessly interoperate with all wallets and apps in the XDEX Network.