Much of the excitement around stablecoins lies in the potential for the technology to upend how payments are made. Like bitcoin (BTC-USD), the most dominant cryptocurrency, disruption is part of the allure. But so are acceptance and adoption.
Rather than heralding a coming battle in the payments business, transforming how people send, receive, and convert money — and threatening giants like Visa (V) and Mastercard (MA) — stablecoins are shaping up to be another part of the industry's mix, with consumers winning out.
"We do not believe stablecoins will be a material threat to most of our covered companies, given the ubiquity of fiat transactions and the challenge of changing consumer payment behavior," wrote Bank of America analysts led by Mihir Bhatia in a report published Wednesday. "That said, we do view stablecoins as an additional payment rail that most incumbents will have to adapt and offer."
Wall Street's surging adoption of digital tokens pegged to the US dollar has been fueled by the recently signed GENIUS Act, which established guidelines and a landmark framework for the industry. Coinbase forecasts stablecoins could reach a market cap of around $1.2 trillion by the end of 2028.
Just about every major payments company has either partnered with a stablecoin issuer or crypto-focused entity or launched its own product, Bank of America noted.
Paypal (PYPL), among the companies the firms see as a winner in the space, was an early mover in stablecoins, launching its PYUSD (PYUSD-USD) in 2023. Visa is partnering with stablecoin companies and banks to build its own stablecoin stack and issue its own stablecoins. And Mastercard, among other initiatives, is working with companies including Kraken, Gemini, and Crypto.com to issue co-branded debit, credit, and prepaid cards that use stablecoin assets to make purchases.
Still, most companies have yet to report material revenue in the space.
A scenario in which both upstarts and legacy institutions win seems far removed from the more radical vision of crypto's earlier days, when talk centered around financial liberation (lol).
But greater industry adoption is a lucrative goal too.
"In our view, the real winners of stablecoins/digital currencies as an alternative payment form are the end users and those directly offering coins," the report said. "The digital currencies are additive to settlement speed, currency conversion, and as investment vehicles."
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