To facilitate moving value from the traditional banking system into Stellar and vice-versa, the network relies on anchors, which are regulated financial institutions, money service businesses, or fintech companies that offer one — or both — of the following component services:
- Issue fiat token: Issue one-to-one fiat-backed tokens (also known as stablecoins) and maintain fiat reserves equivalent to the value of the issued tokens, so users can redeem them back to fiat at any time; and
- Provide a fiat on/off-ramp: Connect the Stellar network to the anchor country’s banking system by maintaining a service that handles 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 fiat on/off-ramp becomes a reseller of the fiat token issued by the token issuer. Click here to learn more about Stellar anchors.