Stablecoins sweep the globe, Stripe's acquisition of Bridge sparks follow-up

Stablecoins are becoming an important force in the global financial sector. Recently, payment giant Stripe acquired stablecoin API service provider Bridge for $1.1 billion, a move that has attracted widespread attention in the industry. The development momentum of stablecoins is strong, with a year-on-year growth rate exceeding 50%, and their global transaction settlement volume is already more than twice that of a well-known payment network.

As one of the three major payment giants in the United States, Stripe has made this significant decision after frequent attempts in the crypto payment sector this year. The acquisition of the stablecoin API company Bridge.xyz, which was only established two years ago, creates the largest acquisition deal in the crypto industry to date.

Stablecoin: The "killer application" in the Web3 space

A recent report on the cryptocurrency industry released by a well-known venture capital firm clearly states that stablecoins have become one of the most significant "killer applications" in the Web3 field. Thanks to the widespread use of smartphones and the implementation of blockchain technology, stablecoins are expected to become one of the most influential financial empowerment tools in human history.

Stablecoins greatly simplify the value transfer process. Their quarterly trading volume has already surpassed that of a large payment network by more than twice, with annual settlement asset value reaching trillions of dollars, fully demonstrating their practicality. In addition, measured by daily active addresses, stablecoins account for nearly one-third of daily cryptocurrency usage at 32%, second only to decentralized finance (DeFi) at 34%.

According to a report from a payment company, the total supply of stablecoins is approximately $170 billion, settling assets worth trillions of dollars annually. There are around 20 million addresses on-chain conducting stablecoin transactions each month, with over 120 million addresses holding a non-zero stablecoin balance. These data indicate that stablecoins are building a monetary system parallel to traditional financial infrastructure.

It is worth noting that:

• Stablecoins have now become the sixth largest purchaser of U.S. Treasury bonds.
• 30% of cross-border remittances are conducted through stablecoin
• Many well-known payment and fintech companies are developing stablecoin projects.
• International payment clearing systems and some sovereign nations are exploring the application of stablecoin payments.

The application of stablecoins in non-crypto fields is becoming increasingly prominent, such as remittances, cross-border payments, salary distribution, trade settlement, and merchant settlement.

Bridge: A bridge connecting Web2 and Web3

Bridge, founded by entrepreneurs Sean Yu and Zach Abrams, is a platform that provides a stablecoin API engine, offering software tools for companies to accept stablecoin payments. The two founders previously sold the payment application Evenly to a payment company; Abrams was also a senior employee at a well-known cryptocurrency exchange.

The Orchestration API of Bridge enables the integration of stablecoin payment functions into the existing operations of Web2 companies while handling all compliance, regulatory, and technical complexities. Meanwhile, its Issuance API helps users issue their own stablecoins and offers a current 5% investment option in US Treasuries to enhance capital efficiency.

This API, combined with the stablecoin cross-chain trading developed by Bridge itself, fiat/crypto deposit and withdrawal acceptance, and the virtual bank account services provided by Leed Bank, enables Web2 users to use stablecoins for payments more conveniently, offering a smoother and seamless user experience.

Bridge stated that its API enables global fund transfers within minutes, seamlessly sending stablecoin payments, converting local fiat currency into stablecoins, and providing global users with USD and EUR account services, allowing users to save and spend in these currencies.

Bridge has attracted numerous clients, including a well-known aerospace company. According to reports, the aerospace company uses Bridge to collect payments in different currencies across various jurisdictions and transfers them to its global treasury via stablecoins.

Bridge has also established partnerships with certain blockchain networks and Bitcoin payment applications, providing infrastructure for their stablecoin payment functionality. In addition, a major cryptocurrency exchange has adopted Bridge's services to support transfers between stablecoins on one blockchain and stablecoins on another blockchain. According to statistics, the annual payment volume processed by Bridge has exceeded $5 billion.

Strategic Cooperation between Stripe and Bridge

The collaboration between Stripe and Bridge is essentially a continuation of the stablecoin development story, and their integration will further promote the implementation of Stripe's cryptocurrency payment strategy, allowing Stripe to handle stablecoins more easily and improve the transparency and security of transactions.

The latest official statement from Bridge states: "Bridge and Stripe will work together to accelerate the adoption and practicality of tokenized dollars, enabling global users to more easily transfer, store, and spend currency. Since the launch of the API 18 months ago, the world has changed dramatically. Many have begun to question the practicality of the entire digital asset space, and stablecoins have also been affected. Regulatory agencies, banks, and fintech companies have not been very involved in this new medium of exchange."

"However, since then, some of the largest financial institutions in the world have begun to natively support stablecoins. Policymakers around the globe are working to provide clear guidance and support for stablecoin infrastructure, recognizing the strategic importance of the technology to the current financial system."

"Behind the scenes, the adoption and use of stablecoins are rapidly accelerating. We are collaborating with government agencies to disburse aid funds, supporting thousands of frontline workers in certain regions. Subsequently, we established virtual account services that enable fintech companies to allow consumers and businesses around the world to hold and spend dollars."

"Through every application scenario, we have demonstrated internally and externally that stablecoins can become the core global fund flow infrastructure, representing a brand new payment platform. This is not because consumers or businesses inherently want 'cryptocurrency', but because stablecoins solve key financial issues. They make it easier for funds to flow, more economical to hold, and cheaper to remit."

"Stripe and Bridge share a common vision: our increasingly globalized world needs better currency. We need currency that can flow across borders; anyone in any country/region should be able to use it freely; and remittances should be almost free."

Stripe's Crypto Layout

Previously, Stripe announced on October 10 that it would re-enable cryptocurrency payment gateways for U.S. merchants, allowing U.S. merchants to:

1. Accept USDC and USDP from over 150 countries through multiple blockchain networks;
2. Businesses can choose to receive US dollars;
3. Integrated for various payment scenarios, including acquiring, payment components, and APIs, and will support subscription functionalities in the future.

Stripe became the first major payment company to offer Bitcoin payments in 2014. However, due to long confirmation times, high fees, and price volatility leading to a decline in demand, the feature was gradually phased out in 2018.

In July this year, Stripe's EU company allowed users to purchase a variety of mainstream cryptocurrencies. In June, Stripe also signed a cooperation agreement with a well-known cryptocurrency exchange to incorporate the exchange's Layer 2 solution into its cryptocurrency payment products. At the same time, the exchange allows users to use Stripe's fiat-to-crypto gateway to purchase cryptocurrencies in their wallets.

The essence of Stripe's businesses (whether it's acquiring or transferring) is: 1) the inflow and outflow of cryptocurrencies; 2) cross-chain settlement of cryptocurrencies/stablecoins.

Therefore, the acquisition of Bridge can:

• Rapidly improve the functional requirements of this business.
• Better serve existing customers of the Stripe system;
• Expand beyond the Stripe system. It is worth mentioning that a key client of Bridge is the U.S. government.

The Stablecoin Layout of Payment Giants

Last August, a major payment giant issued its stablecoin on Ethereum for the first time, and in June this year, it launched on another blockchain. The company not only promotes it within its own ecosystem but also actively fosters the developer ecosystem for its stablecoin.

According to statistics from a certain data platform, in August of this year, the stablecoin accounted for 64% on a certain blockchain, while it only accounted for 36% on Ethereum. Its total market capitalization once reached 1 billion US dollars.

The company previously published an article that clarified the evolution approach of stablecoin payments towards large-scale adoption:

• The introduction of concepts brings about cognitive awakening
• Integrate to achieve payment utility
• Stablecoin payments are everywhere.

Currently, stablecoin payments are in the second phase and are advancing towards the third phase.

Another payment giant is also making moves in the cryptocurrency space, holding a large amount of Bitcoin and venturing into several related areas.

Conclusion

As industry insiders say, in the crypto space, companies with the most complex APIs and the broadest networks may dominate. We may see more surprising acquisition deals happening.

The development of stablecoins is still in its early stages, and there may be more exciting progress in the future.