Stablecoins Growth Threatens Visa, Paypal’s Supremacy
Stablecoins, cryptocurrencies pegged to the U.S. dollar, are posing a threat to traditional financial players like Visa and PayPal. These cryptocurrencies provide liquidity in crypto trading, payments, and efficient cross-border transactions. In 2022, stablecoins settled transactions exceeding $11 trillion on blockchains, nearly matching Visa’s $11.6 trillion and surpassing PayPal’s figures. Over 25 million blockchain wallets hold some value in stablecoins, with the majority carrying smaller balances. This highlights the potential for stablecoins to benefit individuals underserved by conventional financial institutions.
Brevan Howard highlights the rapid rise in stablecoin adoption as a potential opportunity for expansion in the payments sector, potentially leading to substantial profits. Tether, a prominent stablecoin issuer, could amass around $6 billion in profits this year, outpacing even BlackRock. PayPal introduced its own dollar-backed token, PYUSD, in August 2023. However, the stock market’s response has been less enthusiastic, and questions have arisen about Coinbase Global’s investment in Circle Internet Financial. This muted response may be attributed to dollar-pegged stablecoins finding more favor beyond the US, addressing global demand for dollar-based financial services accessible via the internet.
(With inputs from Shikha Singh)
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