Some of the world’s largest banks and fintechs are rushing to launch their own stubcoins.
Last month, Bank of America has been open to issuing its own coins, and has been targeting businesses dominated by cryptocurrency groups, tethers and circles, joining established payment providers such as standard charters, paypal, revolute and stripes.
Their enthusiasm has been underpinned by increasing acceptance among regulators around the world that stubcoins, designed to hold a constant value in dollars per coin, could become a more accepted part of the financial system.
That shift was given even more momentum six years ago by President Donald Trump’s passionate embrace of cryptocurrency after regulatory hostility towards the Libra stable coins of Meta.
Fintech Consultancy 11: FS co-founder Simon Taylor said, “It’s about people selling shovels at Stablecoin Gold Rush.
“The other thing that drives that is, there’s a real volume,” he said. “The founders know they’re getting Stablecoin regulations, so they want to get it.
While idiots have usually been used to shift money between different cryptocurrencies, they have become increasingly popular in emerging markets, especially as an alternative to local banks for payments in commodity, agriculture and shipping.
They are a kind of private digital cash that serves as a de facto reserve for sovereign currencies, and with overwhelming US dollars and digital coin payments, businesses and consumers can access hard currencies outside the banking system cheaply and instantly.
Around $210 billion of stubcoins have been issued globally, with El Salvador-based Tethers printing approximately $142 billion each and $57 billion each by US circles, branded as USDT and USDC, respectively.
Elon Musk’s SpaceX uses them to repay funds by selling Starlink satellites in Argentina and Nigeria, while Scaleai offers the option to be paid with digital tokens to a large workforce of overseas contractors.
Data from Visa shows that it rose to $710 billion last month compared to $521 billion in the same period a year ago.
As regulations emerge, large banks are increasingly pushing into the industry with greater confidence. American politicians are discussing the bill in Congress, which sets the standard for stupidity and gives banks, businesses and ordinary consumers the confidence to use tokens.
“If they make that legal, we’ll be in that business,” commented Bank of America CEO Brian Moynihan on his Trump administration plan at the Washington Economic Club last month.
The EU introduced the rules at the beginning of the year, requiring BLOC’s Stablecoin operators to comply. The UK financial regulator will consult the market this year.
Standard Chartered said last month it will lead a venture plan to launch Hong Kong dollar-backed tokens under new, gradual stablecoin regulations on the territory.
Emphasizing momentum, last month US group Stripe closed its biggest acquisition to date with a $1.1 billion purchase of Stablecoin Platform Bridge.
“Stablecoins and the more modern chain are very interesting for payment use cases, and that’s what makes up our business,” said co-founder and president John Collison. The $91.5 billion financial technology company processed $140 million in payments last year.
PayPal already has a Stablecoin named Pyusd, which is pinned to the dollar, but is expected to expand its payment options more widely in 2025, and is expected to become particularly strong among US companies paying for suppliers overseas.
“Okay. I’ll give up. Klarna and Me accept the code! More coming. … The world’s last big fintech to accept it. Someone had to be the last. And it’s also some kind of milestone,” Sebastian Siemiatkowski, chief executive of “Buy Now,” wrote on X social media platform last month.
Still, newcomers face difficult battles to establish themselves. PayPal enacted a $163 million transaction this month, compared to Tether’s over $131 billion.
Last month there was a transaction of around 122 million people worldwide using Stablecoins, Visa said. However, credit card providers’ own networks have averaged 829 million transactions per day.
Martin Mignot, a partner at Index Ventures and a backer of Bridge, said Stubcoin is “attractive” in a market that “lacks good infrastructure or great liquidity and has a lot of currency risk.” However, their use cases were “not so obvious” in the Western market, he added.
Analysts also warned that it is unlikely that the market will be able to maintain dozens of coins as they begin to scrutinise the quality of the companies they issue.
11: FS’ Taylor noted that Stablecoins are only substitutes, not cash, and reflect the issuer’s ability to manage credit risks and operational risks of operating Stablecoin.
“Essentially, what the Stablecoin brand says to you is that this is the publisher,” he said. “So, your credit risk is X or Y, as the issuer is its organization. That’s not what you do in dollars.”
