You are the company you keep. And that old adage is good news for stablecoins, digital currencies pegged to traditional fiat currencies such as the US dollar, which have gained momentum in recent years. The main reason for this is that the companies they maintain support stablecoins by being tied to fiat currencies. It solves one of the biggest problems with cryptocurrencies: volatility.
Unlike cryptocurrencies such as Bitcoin and Ethereum, which are primarily known for their price volatility despite their prominence in the cryptocurrency space, stablecoins are designed to maintain stable value. and is ideal for a variety of financial applications. Fintech companies around the world are turning to stablecoins for their ability to offer the benefits of digital currencies without the volatility of cryptocurrencies.
UK FinTech Revolut is reportedly well underway in the process of creating its own stablecoin, while PayPal launched its PYUSD stablecoin in 2023 and has since amassed a market capitalization of 700 million yen. It became the 4th largest stablecoin with over $30 million.
As the FinTech sector continues to mature, stablecoins are emerging as a key component, with impact across payments, remittances, decentralized finance (DeFi), and the broader financial ecosystem, disrupting traditional It has become a bridge between the world of finance and blockchain payments.
After all, as of Monday (September 23), the market capitalization of stablecoins stood at $172 billion, which is no small amount.
And central to the utility of stablecoins in the fintech industry is their potential impact across payments.
Read more: Can stablecoins drive cryptocurrency adoption across retail and B2B markets?
Streamline transactions
Stablecoins can reduce transaction costs and settlement times by bypassing traditional banking systems and intermediaries, and Fintech companies focused on tackling the challenge of improving global payments It is particularly attractive for
“Traditional cross-border payments still have a lot of issues with transparency and cost. For the experience to be a 10, it needs to be like using Venmo, at least from a user experience perspective. You find the recipient, choose the currency you want to send the money to, and you get those funds instantly,” Solana Foundation told PYMNTS about payments and commerce.
“Blockchain solutions and stablecoins, I don’t like to use the term crypto because this is more about fintech and we see a product market fit in cross-border payments. “Yes,” Scheer emphasized.
Stablecoins were initially popularized by retail users and the crypto community, but institutional adoption is accelerating as fintechs and financial institutions realize their potential. Major payment processors such as PayPal are integrating stablecoins into their services, allowing users to buy, hold, and sell digital currencies alongside traditional fiat currencies.
In fact, on Friday (September 20), when PayPal Ventures announced an additional investment in Chaos Labs, a company that provides blockchain risk management, PayPal announced that the investment would be made using the company’s PYUSD stablecoin. I paid special attention to what happened.
It’s not just PayPal. This spring, blockchain and cryptocurrency company Ripple unveiled its own plans to issue a dollar-pegged stablecoin backed 100% by U.S. dollar deposits, short-term U.S. Treasuries, and other cash equivalents, leading to industry speculation that RLUSD I hope that stablecoins will be introduced. It will be released soon.
Banks and financial institutions are also considering stablecoins to settle transactions and streamline internal operations. For example, JP Morgan developed JPM Coin, a stablecoin designed to facilitate instant payments between institutional customers. By leveraging blockchain technology and stablecoins, banks can reduce settlement times from days to seconds and streamline cross-border payments, securities settlements, and trade finance.
Read more: What CFOs need to know about expanding the use of stablecoins
The future of stablecoins in FinTech
As the FinTech landscape evolves, stablecoins are poised to play an even bigger role in the global financial system. They offer the benefits of digital currencies without the volatility of cryptocurrencies, making them an attractive option for businesses, consumers, and institutions alike.
In the future, stablecoins could become the basis for a new era of programmable money, with automation of financial transactions and integration with smart contracts. In such scenarios, stablecoins could facilitate complex transactions such as escrow services, insurance claims payments, and supply chain finance without the need for intermediaries.
However, despite their growing role in fintech, stablecoins face some regulatory challenges. Regulators around the world are scrutinizing stablecoins more closely due to their potential to disrupt traditional financial systems. Concerns range from the stability of the assets backing these digital currencies to the potential for money laundering and other illegal activities.
More information: blockchain, chaos labs, cross-border payments, cryptocurrencies, decentralized finance, DeFi, digital payments, fintech, JP Morgan, jpm coin, news, PayPal, PayPal Ventures, PYMNTS news, PYUSD, money transfers, Revolut , Ripple, RLUSD, Shera’s Share, Solana Foundation, Stablecoin
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