Institutional FX meets blockchain in new stablecoin initiative

Digital asset trading firm Nonco has unveiled its new FX On-Chain protocol on the Avalanche blockchain, marking an effort to integrate traditional foreign exchange (FX) liquidity into blockchain-based financial infrastructure.

Digital asset trading firm Nonco has unveiled its new FX On-Chain protocol on the Avalanche blockchain, facilitating the direct conversion between USD-backed stablecoins and non-USD stablecoins pegged to currencies like the euro, Brazilian real, and Mexican peso.

Nonco, which is backed by Valor Capital and Hack VC, said its protocol will offer more competitive spreads and faster settlement compared to automated market maker (AMM) models. For this, it is tapping into institutional FX providers to offer liquidity.

The protocol will initially support USDMXN pairs, with plans to expand into EURUSD, USDBRL, and more in the near future.

The protocol is built on Avalanche’s C-Chain, which is said to be a central hub of liquidity for decentralized applications. The system automates the process of converting between local and USD-pegged stablecoins, aiming to optimize global payments, cross-border remittances, and multi-currency settlements.

While stablecoins such as USDC and USDT have reportedly achieved a combined market capitalization of over $200 billion, Nonco said that stablecoins pegged to non-USD currencies remain largely underused due to fragmented liquidity and operational hurdles in facilitating conversions.

To overcome these challenges, Nonco said it has assembled a network of institutional foreign exchange (FX) provides to offer optimal pricing and efficient execution.

The protocol also includes several features designed to align blockchain-based transactions more closely with traditional financial standards. It utilizes a Request-for-Quote (RFQ) system to deliver "institutional-grade pricing," offering rates and spreads that closely reflect those in off-chain FX markets, the firm said.

Trades are settled atomically on-chain, which helps minimize counterparty credit risk, especially in more complex multi-currency transactions. The protocol also includes direct integrations with regulated banks and stablecoin issuers, facilitating smoother transitions between traditional and digital finance environments, it added.

Avalanche's infrastructure supports extended trading hours and enables rapid settlement, contributing to a smoother transaction experience, Nonco said.

“FX On-Chain represents a step-change in bringing institutional FX liquidity to blockchain-based markets. Nonco's expertise in institutional trading and its high-quality network of partners and customers, combined with Avalanche's high-performance infrastructure, marks a major step toward expanding stablecoin-based FX markets and capabilities—something the whole industry has been waiting to see,” said Morgan Krupetsky, Head of Institutions & Capital Markets at Ava Labs.

As part of its expansion plans, the firm also announced that asset management firm VanEck has committed to investing in Nonco.

Announcing the investment, Jan van Eck, CEO of VanEck, said: “At VanEck, we are always exploring new technologies and investment opportunities. We have been following the development of digital assets with great interest, and we see significant potential in this emerging ecosystem.”

Highlighting the firm's interest in Nonco, van Eck added: “We are particularly impressed by Nonco's team and their vision for merging stablecoin infrastructure with institutional-grade foreign exchange capabilities. We believe that Nonco is well-positioned to become a leading player in the rapidly growing digital asset market.”

Nonco has also secured prior funding from firms including Valor Capital, Hack VC, and Morgan Creek Digital.

Commenting on the launch of the protocol and the firm's expansion plans, Fernando Martinez, CEO of Nonco, said: “We chose Avalanche for its speed, low fees, and compatibility with Ethereum-based tooling.

“Nonco is building the next generation of financial protocols on Avalanche to unlock liquidity and provide new use cases forcoins like USDC and USDT. Nonco’s FX On-Chain protocol solves a key inefficiency in stablecoin markets: the lack of institutional FX liquidity.”