Stripe has just paid a shedload of cash for stablecoin firm Bridge in a bet that this type of crypto will ultimately take over cross-border payments worldwide.
The $1 billion deal values Bridge at 90 times revenue. That is literally unheard of. So could this be the moment TradFi’s situationship with crypto gets serious? Maybe.
Stablecoins – crypto pegged to real currencies like dollars or dirhams – are set to become a massive part of day-to-day transactions, from paying with your credit card to transferring money abroad. There’s no actual money involved so these kinds of transactions can be processed pretty much instantly.
It’s a step “blending traditional and decentralized finance”, Reeve Collins, chairman of stablecoin platform TreasuryX and Tether co-founder, told MONIIFY.
So what’s the big deal?
Well, we are already talking a huge amount of money and the potential is endless.
- Stripe processed more than $1 trillion in total payments last year. Businesses using the platform contributed 1% to global GDP. Its valuation stands at more than $65 billion.
- Stablecoins, meanwhile, settled more than $10 trillion in transactions in 2023, of which $2.3 trillion were tied to activities like payments and cross-border remittances. So the synergies are really in your face.
- The stablecoin market cap today exceeds $172 billion, and analysts at the broker Bernstein reckon it could hit almost $3 trillion in the next five years.
“Bridge obviously has a good footprint and a great business model that standing on its own wasn’t even worth close to a billion dollars,” Collins told MONIIFY. “But they negotiated well, and they’re like … ‘When we’re part of you, we’re worth 10 billion dollars’, and that’s why Stripe paid.”
TradFi has joined the chat
The deal is part of a growing trend that’s seen DeFi increasingly getting integrated into the global financial system.
- PayPal launched its own stablecoin, PYUSD, mid-last year.
- Visa has been testing stablecoin settlements for cross-border payments since early 2023.
- And BlackRock is pushing ahead with plans to tokenize funds and issue stablecoins.
Other major players are likely to follow suit, but instead of building their own solutions, they’ll buy companies that already have the innovations and traction, Bundeep Singh Rangar, CEO of digital asset firm Fineqia, told MONIIFY.
So should investors jump in?
“Absolutely,” said Rangar. By his estimates, there are between 30 and 50 new stablecoin projects already in the works, so it’s worth keeping an eye on pre-sales and early opportunities.
Stablecoins with solid TradFi uses can give you a taste of the action without the wild rollercoaster ride associated with the likes of Bitcoin and Ether, said Navin Gupta, CEO of blockchain analytics firm Crystal Intelligence.
And who knows? Some of these startups could be tomorrow’s big players.
