Original Author: Ben Weiss, Leo Schwartz
Original Translation: Luffy, Foresight News
Original Title: Fortune Magazine: Why Are Tech Giants Clustering Around Stablecoins?
Dara Khosrowshahi, Uber CEO
In June this year, Uber CEO Dara Khosrowshahi announced that the ride-sharing giant is considering stablecoins as a global fund transfer method. A year ago, such a statement from a tech giant executive would have seemed far-fetched. But now, from Apple to Amazon, not to mention major banks and brokers, everyone is racing to embrace stablecoins - a cryptocurrency pegged to assets like the US dollar. What has changed?
Most notably, the regulatory environment in Washington D.C. has undergone a massive transformation. A bill has been passed by the Senate and is currently under review in the House, which will clear obstacles for stablecoins to be integrated into the financial system.
Cryptocurrency supporters also argue that stablecoins' commercial prospects are increasingly broad. Unlike more volatile cryptocurrencies like Bitcoin and Ethereum, stablecoins are expected to become a more efficient payment method, capable of sending digital dollars at near-instant speed and lower costs. This could fundamentally change how businesses handle global fund management, pay global employees and contractors, and manage various affairs.
However, since this technology is still in its early stages and the regulatory landscape remains unclear, analysts interviewed by Fortune magazine are skeptical about whether Silicon Valley tech giants will widely adopt stablecoins in the near term.
Operational Costs
For companies like Amazon, transferring funds globally is costly. According to its 2024 annual report, international business net sales accounted for 22% of last year's consolidated revenue, totaling nearly $143 billion. These sales are denominated in local currencies, meaning the company must consider foreign exchange risks and currency fluctuations, which could cost them billions of dollars.
Nick van Eck, CEO and co-founder of stablecoin startup Agora, points out that global fund management is one of stablecoins' advantages, enabling conversion of local currencies to stablecoins and remittance back to the US.
Agora allows companies to label their own US dollar stablecoins. Van Eck told Fortune magazine that while Agora's current customers are mostly crypto companies, his ideal clients are multinational corporations like Pepsi, which have dozens of bank accounts and corporate entities globally, along with thousands of suppliers. "Stablecoins can significantly improve their capital efficiency," he said. "Now you can transfer $100 million from one country to another in a second, without waiting for days."
Agora is not the only startup hoping to profit from Silicon Valley's stablecoin boom. Over the past year, numerous stablecoin startups including Mesh, Bastion, and BVNK have raised tens of millions from venture capital firms. Last October, payment company Stripe completed a milestone acquisition of stablecoin startup Bridge for $1.1 billion.
Stripe, whose customers include half of the Fortune 100 companies, offers various payment products including helping businesses automatically charge customers, providing pre-built checkout systems, and assisting customers with global remittances. Co-founders Patrick and John Collison praised stablecoins in their recent annual letter to investors, stating that such assets will help large enterprises expand globally faster and bring other benefits.
"Why Would I Pay with Stablecoins?"
Colin Sebastian, an Amazon research analyst at Baird, told Fortune magazine that major companies have been seeking financial instruments or payment methods that can help manage expenses or reduce friction. "Traditional credit card payments are quite expensive," he said. "Of course, cross-border transaction fees are even higher."
However, despite Amazon and other multinational companies potentially having economic motivations to try stablecoins, convincing consumers to adopt the technology for payments will be more challenging. "What could truly drive changes in consumer behavior?" Sebastian asked. "Credit and debit cards are already very popular."
Thomas Forte, an analyst at Maxim Group focusing on consumer internet companies like Amazon and Apple, agrees with Sebastian. He believes Amazon's most reasonable use of stablecoins would be accepting customer payments via stablecoins to reduce transaction fees. "I'm conflicted: As an American consumer, why would I pay with stablecoins?" Forte questioned.
Van Eck from Agora believes that before stablecoins are more widely adopted in the US, countries with higher currency volatility are most likely to accept this technology, as consumers there have more motivation to try more stable payment methods. He recalled a recent example of receiving funding from angel investors outside the US, where one transfer took 10 working days and another 22 working days. "This situation is very common, not just for individuals but also for multinational businesses," he told Fortune magazine.
For instance, in Argentina, inflation has persisted for over 15 years, and the country's currency has dramatically plummeted against the US dollar. Therefore, it's unsurprising that from June 2023 to July 2024, stablecoin transactions accounted for nearly 62% of the country's cryptocurrency transactions. According to a Chainalysis 2024 report, the global average is around 45%.
Nic Carter, founding partner of Castle Island Ventures, a crypto venture capital firm focused on stablecoin investments, stated: "I'm more interested in businesses that truly solve problems for enterprises, like helping Nigerian businesses pay someone in the Philippines."
Nevertheless, large US tech companies remain enthusiastic about this technology and have already taken action to enter this emerging field. PayPal has launched its own stablecoin. Online brokerage Robinhood and payment giant Mastercard have joined an alliance whose members can mint or create the stablecoin USDG. Companies like Amazon, Apple, and Meta have also begun exploring stablecoin payments.
Meta previously declined to comment on its stablecoin plans. Apple and Amazon spokespeople have not responded to requests for comment.
Baird analyst Sebastian suggests that as congressional regulation of stablecoins is about to be completed, there's almost no downside for large tech companies to experiment with this new technology. "A common characteristic of many large tech companies is that they are very willing to try new things."
