The cryptocurrency industry has long been searching for a “killer app” to bring digital assets into the mainstream. But recently, some have pointed to the growing popularity of stablecoins like Tether and USDC and argue that long-sought use cases are already being realized. Stablecoins, designed to allow one-to-one transactions with major currencies such as the dollar, are increasingly being adopted in areas such as cross-border remittances and DeFi payments, and this is just the beginning. There are some people.
A startup called Bridge, co-founded by Square and Coinbase alumni Zach Abrams and Sean Yu, wants to take stablecoins to the next level. Bridge aims to build the future global payments network around stablecoins, leveraging its extensive experience in fintech to take on everything from Swift to credit cards .
Also, unlike other crypto-native companies developing within the stablecoin ecosystem, Bridge is partnered with blockchain-focused Haun Ventures, as well as top Silicon Valley generalists such as Sequoia, Rivit, and Index. It is supported by a venture company. The company has previously raised $58 million in unannounced funding, including $40 million in a new round led by Sequoia and Ribbit, as well as customers such as SpaceX and Coinbase.
“Fintech makes a lot of sense,” Abrams said in an interview with Fortune magazine. “If you can do something faster, cheaper, more economically, you win.”
stablecoin explosion
Stablecoins have seen significant growth over the past two years, with industry leader Tether having a market cap of around $118 billion, while USDC has a market cap of $34 billion. This asset class is where stablecoins are truly “stable.”
In 2022, the collapse of TerraUSD (a so-called algorithmic stablecoin that maintains a $1 peg through an associated cryptocurrency rather than fiat reserves) triggered a widespread meltdown in cryptocurrencies, leading to regulatory investigations and Congressional hearings. Ta. Then, in 2023, USDC temporarily lost its secondary market peg after disclosing that its issuer, Circle, had parked billions of dollars in reserves with a failed Silicon Valley bank. quickly bounced back with news of backstopping bank deposits). And Tether, which still dominates the market, has faced accusations of opaque accounting for years.
Despite problems and a continuing lack of federal legislation to provide regulation to the emerging sector, stablecoins have managed to recover, but how much of it is coming from real users rather than bots or large traders? There is still an open question as to whether the volume will be obtained. TradFi companies like PayPal and VanEck are launching or backing their own stablecoins, while companies like Stripe are starting to integrate products like USDC into their services.
Still, the challenge for many companies wishing to use stablecoins is building on-ramps and off-ramps for moving fiat currencies into and out of the cryptocurrency ecosystem, while also creating connections between different types of stablecoins and blockchains. to facilitate remittances. While dollar-backed options such as USDC and Tether may be the most popular, there are countless other options pegged to the Mexican peso or a basket of assets, making a single stablecoin a viable option for a dozen different May be issued across the blockchain.
Chris Ahn, a partner at Haun Ventures (who first invested in Bridge’s seed round while working at Index), said in an interview with Fortune that if there was just one stablecoin on a single blockchain, Bridge said it was not necessary. He said Bridge’s added value allows developers to move seamlessly between fiat currencies and stablecoins, as well as between different blockchains.
The pitch is simple. “We built Bridge as a set of low-level APIs that allows enterprises to use stablecoin rails without thinking,” Abrams said. But why would companies want that?
As cryptocurrency proponents are fond of pointing out, moving fiat currencies is slow and expensive. Large transactions often have to wait until bank hours, and cross-border payments can come with huge fees and long waiting times. Stablecoins, at least in theory, offer low fees and instant settlement.
In Bridge’s ideal future, the stablecoin would serve as a global payment method, and Bridge would be seamlessly integrated by developers. In that sense, you can think of Web3 as similar to Stripe, which helps businesses accept online payments, or Plaid, which makes it easy to connect apps to bank accounts.
Investors told Fortune that Bridge stands out from other crypto-native companies because of its founder’s fintech experience, having worked at startups like Brex and Square. They believe this will allow Bridge to serve not only crypto companies, but also companies that primarily operate in fiat currencies.
Bridge already has high-profile customers such as Elon Musk’s SpaceX, which uses Bridge to collect payments in different currencies in different jurisdictions and send them to global treasuries through stablecoins. There is. Bridge is also working with crypto companies such as blockchain Stellar and Bitcoin app Strike to provide the infrastructure for its own stablecoin payment capabilities.
One of its clients, Abrams’ former employer Coinbase, uses Bridge to help users transfer between Tether on Tron and USDC on its own layer 2 blockchain, Base. . “Their efforts to help bring traditional businesses on-chain are extremely important,” Base developer and former Abrams colleague Jesse Pollack told Fortune. “Every company will have all their assets on-chain because it will be faster, cheaper and more globally available.”
Bridge processes over $5 billion in payments annually.
The company’s main focus is on compliance. While software development is new and resource-intensive, Bridge is working with global financial institutions to enable on-ramps and off-ramps to various currencies, as well as blockchain and stablecoin integration. You also need to build relationships with. Abrams said Bridge is licensed in 48 states, also has a VASP license from Poland, and is applying for additional licenses in places like New York and Europe.
Stablecoins may not yet have gained credibility among non-crypto companies, but increased regulation and fundamental economics will attract businesses, Abrams said. “My interest is in moving money,” he told Fortune magazine. “It’s not blockchain-specific.”
Note: License details have been updated.
