Stripe to Acquire Bridge: Another Strategic Step Into the Stablecoin Market

Rumors have it that Stripe, the payment processor, is looking to acquire a crypto payment solution, Bridge.
Payment providers like Visa and PayPal, fintechs like Revout, and even government banks have also shown interest in stablecoins.
Despite facing regulatory scrutiny after the collapse of Terraform Labs, the stablecoin market is experiencing remarkable growth.

After a six-year break, payments giant Stripe is bringing back crypto payments. Bloomberg reports Stripe is in negotiations with stablecoin payment solution Bridge.

The deal isn’t sealed yet, so any party can back off at any time. But if it does happen, it could open up a $172B stablecoin market for Stripe.

What does Stripe’s return to crypto mean for digital payments?

Stripe Doubles Down on Crypto
Stripe isn’t the first traditional payment platform to show interest in crypto. Visa launched the Visa Tokenized Asset Platform (VTAP) earlier this month to help banks issue tokens linked to real-world assets.

Tech giants like Sony and Apple also tap into the stablecoin market. Even the German national bank partnered with Bitpanda to process crypto payments.

Still, Stripe’s potential acquisition of Bridge is a huge push for crypto adoption. Backed by leading investors like Sequoia, Index Ventures, and Ribbit, Bridge helps businesses create, store, and send stablecoins like Tether’s $USDT and Circle’s $USDC.

Interestingly, Bridge was co-founded by former Square executive Zach Abrams – it appears the rivalry remains fierce, even when the players switch teams.

Stripe’s recent integration with Paxos gained traction in 70 countries within the first 24 hours. The alleged Bridge merger would advance Stripe’s Pay with Crypto feature, expanding its geographic reach and giving users more payment options.

Regulatory Scrutiny and Record-Breaking Growth
Stablecoins have been facing regulatory scrutiny after the 2022 Terraform Labs collapse. The Court found its CEO Do Kwon, now serving time in a Montenegro prison, liable for fraud and misleading investors about Terra’s algorithm stability.

Terraform reached a settlement with the SEC, but the regulator continues to throw wrenches in the stablecoin market.

However, this doesn’t undermine the sector’s growth. Tether, issuer of the largest stablecoin, $USDT, with a $119B market cap, reported a record profit of $5.2B in the first half of 2024.

The second-largest stablecoin issuer, Circle, isn’t as transparent about its earnings but reports the number of $USDC wallets has grown 59% since 2023.

Beyond Visa and Stripe, Circle attracted investments from the world’s leading asset manager BlackRock and financial technology enterprise MoneyGram.

Given such accelerated expansion, it’s clear why traditional payment providers like Visa and fintech companies like Revolut are looking to launch their own stablecoins.

Revolut’s rumored stablecoin would be available to users under the UK’s banking license. US customers won’t get the privilege as Revolut limited crypto operations in the region last year.

PayPal, too, introduced its proprietary stablecoin, $PYUSD, in 2023. It is now ranked #111 among all cryptocurrencies with a $10M 24-hour trading volume.

Partners or Rivals?
Competition intensifies as traditional payment providers enter the stablecoin market. Will they forge partnerships with crypto firms or challenge them by issuing their own solutions?

Either way, the rivalry is likely to be fruitful for users, who would get greater service selection.

References

Stripe in Advanced Talks to Acquire Stablecoin-Focused Fintech Platform Bridge (Bloomberg)
Q2 2024 Attestation Report (Tether)
State of the USDC Economy (Circle)