Payment giants Stripe, Visa and Mastercard are set to introduce a new stablecoin platform, amid a quest to bank on the stablecoin market growth.
According to media reports on Wednesday, other crypto giants, including Coinbase, are also scheduled to participate in the project, making it one of the largest collaborations between the conventional financial industry and the cryptocurrency sector.
Collaboration comes amid the market growth
The collaboration is happening amid a spike in the use of Stablecoins. The stablecoin phenomenon has gained much attention as a hot topic in the crypto market. The phenomenon is now gaining the interest of the world’s leading payment organizations.
Whereas cryptocurrencies such as Bitcoin tend to fluctuate in prices, stablecoins are pegged to fiat money and have stable prices. Due to their stable nature, they have been utilized for a wide variety of purposes such as trading, cross-border payments, transactions, and settlement.
The Stablecoin market has expanded rapidly and is now worth about $325 billion, according to CoinGecko data. The sector remains dominated by Tether’s USDT, which has a market capitalization of roughly $115 billion. However, competition is increasing as both traditional financial firms and crypto companies look to establish a stronger presence in the space.
Crypto giants prepare for Stablecoin race
Large players in the world of fintech have been getting ready for the upcoming stablecoin race, either by introducing their services straight away or through aggressive M&A deals.
This situation was clearly illustrated at the end of 2024 when Stripe bought out bridge, the infrastructure for stablecoins for $1.1 billion dollars. The deal was interpreted as evidence of the fact that stablecoins have finally moved from being part of cryptocurrency exchanges and are now becoming a part of mainstream payment infrastructure.
Stablecoins would provide Stripe with an opportunity for much faster and cheaper international transactions using not solely traditional banking services.
Moreover, at the same time Mastercard is intensifying its own efforts in the field. At the beginning of the year, it acquired the stablecoin payments platform BVNK and announced plans to introduce continuous stablecoin settlement.
The point of such an operation is that the transaction will be able to run continuously rather than during typical banking hours which are inherent in blockchain-based systems.
In addition, native crypto companies are continuing to broaden their portfolio of products. For instance, at the end of last year, Coinbase started offering white label services for stablecoins.
In addition, the firm launched Coinbase Business, which aims at helping businesses make and accept payments via stablecoins.
The core of the Coinbase business model lies in the stablecoin known as USDC, which was issued by Circle Internet Group, backed by the US dollar. Currently, USDC has a market cap of roughly $76 billion and ranks second after USDT in terms of market capitalization.
The partnership between the two companies is arguably among the key partnerships in the stablecoin industry today. As of August 2023, Coinbase and Circle have been in a revenue-sharing agreement with USDC.
While Coinbase retains all the interests earned through USDC directly held on its platform, revenue arising from USDC not held on its platform is divided evenly between both companies.
This arrangement will be coming to an end shortly, meaning it could be crucial in light of stiff competition in the stablecoin market.