Payments firm Stripe is in active negotiations with stablecoins dealing firm Bridge to acquire the firm.
The company allows businesses to send, receive, store, and accept stablecoins. According to an anonymous source in the know about the deal, no conclusions have been made yet and there is still a possibility that it doesn’t go through.
Stripe makes a push into the crypto sector
Bridge has been making strides in the crypto market, raising about $58 million in Series A funding. The funding was led by Sequoia Capital, with firms like Ribbit Capital, Index Ventures, and Huan Ventures.
The acquisition is a major move for Stripe, which recently resumed accepting crypto payments. Before now, the firm had gone on a six-year hiatus. Stripe has been tipped for an Initial Public Offering (IPO), but the company has cooled down all talks about it.
Earlier in the year, Stripe and its investors pushed the company’s valuation to around $65 billion, after repurchasing over $1 billion worth of shares from its employees. At the company’s peak in 2021, its valuation touched close to $100 billion.
The firm announced last week that it will allow merchants to accept payments in USDC. The decision follows the steps of industry firms like Visa, allowing clients to use different stablecoins for their transactions. Robinhood and Revolut are also mulling the idea of launching stablecoins.
Stablecoin competition among firms heats up
Over the last few years, there have been firms trying to challenge Tether’s dominance in the Stablecoin space. However, it has yielded little success. The USDT has become a mainstay in the stablecoin industry, accounting for over two-thirds of the industry’s $170 billion market cap.
USDC, which has managed to take the second spot, pales at $36 billion in comparison to USDT, while other smaller stablecoins take up the remaining space.
Now, the market is bracing up for new Markets in Crypto-Assets (MiCA) law by the European Union, which is about to shake up the market.
The new policies will mandate exchanges in the EU to remove stablecoins from issuers without permits. USDC’s parent company Circle has the license. Meanwhile, Tether boss Paolo Ardoino has voiced his displeasure about the rules. Ardoino believes that the rule could prove costly for stablecoin issuers if there is a large redemption of tokens.
On its part, Tether is working on a technology-based solution in its quest to remain compliant. Although Ardoino refuses to go into details on what the solution is, time is running out for Tether to find a solution before the window elapses.
Profits in the stablecoin sector and emerging markets
The financial benefits of dealing with stablecoins have always been enormous. According to company reports, profits from the reserves backing USDT hit $5.2 billion in the first half of the year.
In countries like Nigeria, Brazil, and India, stablecoins are being used as a store of value in dollars. A recent survey carried out by Castle Island Ventures, Artemis, and Brevan Howard Digital revealed that users in the market protect their savings with stablecoins.
Meanwhile, payments of salaries account for 20% of the use of stablecoins while about 40% is used to pay for goods and services. In countries where currencies are unstable, citizens turn to stablecoins to save value.
In Russia, stablecoins are being used to evade sanctions, with companies paying for imports with USDT. In the last few years, USDT has fought hard to be on top even with other firms releasing their stablecoins. PayPal’s stablecoin peaked at around $1 billion in circulation when it gained traction but has since dropped by 30%.
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