Stripe’s Billion-Dollar Bet on Stablecoins Tops This Week in Web3

Crypto observers nowadays must feel as though they’re suffering from déjà vu.

While the cryptocurrency-based prediction and betting platform Polymarket is in the news for the recent multimillion-dollar bets being placed on the upcoming U.S. presidential election, despite a ban on U.S. users, the biggest headline for Web3 payments and commerce was the Monday (Oct. 21) confirmation that Stripe plans to acquire stablecoin payments platform Bridge.

“Stablecoins are room-temperature superconductors for financial services. Thanks to stablecoins, businesses around the world will benefit from significant speed, coverage and cost improvements in the coming years. Stripe is going to build the world’s best stablecoin infrastructure,” Stripe CEO Patrick Collison said in an announcement.

Sound familiar?

Crypto proponents have been arguing, since the very first bitcoin was minted, that blockchain-based digital assets were the key to speeding up and democratizing global payments and commerce, while simultaneously making money movement cheaper.

But despite these promises, the adoption and scalability of cryptocurrencies for everyday payments and commerce remains a challenge, especially as regulatory scrutiny and technical hurdles persist.

So, is the rise of stablecoins mere déjà vu for the crypto space, or is there real disruption at play? Only time will tell, but until it does, the Web3 and blockchain news that PYMNTS rounds up each week might just hold some clues.

Read more: This Week in Web3: Usability and Network Expansion Drive Stablecoin Momentum

Stripe’s Bet on Stablecoin Payments

Where traditional payment rails are too difficult, slow and expensive, some 30 million users are now moving $3.2 trillion in stablecoins every month. Bridge, the stablecoin company which Stripe announced it intends to acquire this week for $1.1 billion (the deal is still pending and expected to close in the coming months), builds software infrastructure allowing companies to move, store and accept stablecoins.

“We both believe that our increasingly globalized world needs better money. We need money that can move across borders; be freely accessible to anyone, in any country; and can be sent at almost no cost,” Bridge CEO Zach Abrams said in a statement announcing his firm’s acquisition.

He added that stablecoins will become core global money movement infrastructure “not because consumers or businesses inherently want crypto, but instead because stablecoins solve critical financial problems. They make money easier to move, more economical to hold, and cheaper to send than ever before.”

On Oct. 10, before announcing the deal with Bridge, Stripe said that in the first 24 hours of allowing its merchants to accept stablecoin payments for online transactions on its platform, customers from more than 70 countries made purchases with that form of payment.

The bets being placed on stablecoins as a mechanism to help bridge the gap between traditional finance and blockchain technology is why, on Monday, PYMNTS unpacked what every payments professional needs to know about the fiat-backed digital assets.

Just last Thursday (Oct. 17), payments infrastructure provider BVNK launched a partnership with the stablecoin USDC issuer Circle designed to accelerate the utility of the USDC stablecoin for BVNK customers. And for payment professionals, understanding stablecoins’ role and their practical use cases is essential to staying relevant and competitive in the digital economy.

Read also: What CFOs Should Know About the Growing Use of Stablecoins

Can Stablecoins Bridge Crypto and FinTech?

Despite the promise of stablecoins within global payments, the adoption and scalability of cryptocurrencies for everyday commerce remain challenging due to several interrelated factors.

Perhaps the biggest factor is the fact that regulations for cryptocurrencies, including stablecoins, vary by region, creating uncertainty for businesses and consumers. Some jurisdictions have established crypto-friendly policies, while others impose strict regulations or outright bans, making it difficult for firms to develop consistent and scalable payment solutions.

To that end, it was reported Wednesday (Oct. 23) that an exec of crypto firm Circle said, “We’re within months, not years” of formal U.K. laws for the stablecoin market being introduced, noting that the U.K. “has some catching up to do with the European Union,” which has begun enforcing regulation of stablecoins under the Markets in Crypto Assets (MiCA) regulation.

While stablecoins, as their name implies, are pegged to fiat currencies to minimize volatility, their stability depends on the trustworthiness of the backing mechanism. Instances like the collapse of algorithmic stablecoin TerraUSD (UST) have raised concerns about the security and reliability of some stablecoins. Even when backed by fiat reserves, there are questions about transparency and regulation of these reserves.

Widespread adoption of stablecoins for payments requires trust from consumers and merchants. Concerns over the transparency and management of stablecoin reserves, particularly with unregulated or less well-audited projects, deter people from using them for day-to-day transactions.

At the same time, though some merchants accept cryptocurrencies, the infrastructure for crypto payments is still fragmented. Businesses may face technical, legal and financial challenges when trying to integrate crypto payment solutions, limiting the scale of merchants willing to adopt and offer these options to consumer.

As the industry evolves, finding ways to navigate these challenges while building robust, user-friendly infrastructure will be crucial for cryptocurrencies to become a mainstream payment solution.