In 2022, the unpegging of the TerraUSD (UST) stablecoin led to a collapse of the crypto sector and ultimately led to the exposure of fraud at FTX and others.
A lot has changed since then, especially in relation to the views that traditional stakeholders in finance and payments have regarding stablecoins.
Observers in the financial services and corporate business sectors seem to be paying close attention to blockchain technology and stablecoins. For example, PayPal completed its first business payment to EY on Thursday (October 3) using its stablecoin PYUSD.
PayPal, which made a venture investment in blockchain company Chaos Labs in September using its PYUSD token, is not the only company moving into the digital asset space. Swift announced Thursday that it will allow banks to test tokenized transactions on its global messaging network starting next year.
Perhaps the biggest news of the week is that Visa on Thursday launched a new platform for issuing fiat-backed tokens such as stablecoins and tokenized deposits.
The Visa Tokenized Asset Platform (VTAP) is designed to enable banks to issue and transfer fiat-backed tokens on blockchain networks by leveraging the payments company’s expertise in technologies such as smart contracts. .
“Visa has been at the forefront of digital payments for nearly 60 years, and with the introduction of VTAP, we are once again setting the pace for the industry,” said Vanessa, Global Head of Innovation and Digital Partnerships at Visa. Corella said. press release.
The involvement of major industry players such as Visa and PayPal signals the maturation of the stablecoin ecosystem. These heavyweights are working not only to expand the use cases for stablecoins, but also to strengthen their stability and legitimacy, and this work will change how stablecoins are perceived and used in the broader financial world. It has the potential to bring about change.
Also Read: Can Stablecoins Drive Cryptocurrency Adoption Across Retail and B2B Markets?
The push towards stablecoins in B2B and beyond
Traditionally seen as a payment network giant in consumer payments, Visa’s stablecoin ambitions appear to be firmly rooted in the B2B space. VTAP is focused on enabling banks to issue stablecoins and manage tokenized deposits, which will impact the rise of B2B transactions, cross-border payments, and smart contracts. Possibly.
Visa’s foray into stablecoins is aimed at not just adding another payment option for consumers, but enabling new levels of efficiency in large-scale business transactions.
The company’s network scale and established relationships with financial institutions around the world puts it in a position to contribute to the stability and legitimacy of stablecoins. By allowing banks to issue their own stablecoins and integrate tokenized deposits into their systems, Visa facilitates widespread adoption and reduces the risk of market panic that often leads to de-pegging events. There is a possibility that it can be done. Furthermore, as banks enter this competition with regulatory frameworks in place, the perception of stablecoins as a reliable asset class is likely to improve.
Visa’s efforts to build the infrastructure for banks to issue stablecoins could create a network effect where stablecoins issued by trusted institutions reduce the risk of depegging and increase user trust. be.
By addressing key pain points in B2B and cross-border transactions, smart contracts, and corporate payments, stablecoins are a cornerstone of the global financial system, backed by the most trusted companies in the financial industry. may emerge as a component.
See also: Stablecoins are rapidly gaining popularity and utility across the FinTech ecosystem
Can scaling bring stability and legitimacy?
Last month, PYMNTS explored the role blockchain technology plays in cross-border payments in a conversation with Sheraz Sher, general manager of payments and commerce at Solana Foundation.
“We found that blockchain solutions and stablecoins (I don’t want to use the word crypto because this is about fintech) have a good product market fit in cross-border payments,” Scheer said. spoke.
Financial institutions are also considering their own stablecoin options to settle transactions and streamline internal operations. JPMorgan Chase, for example, is involved in exploring blockchain and stablecoins, but is primarily focused on wholesale banking. Designed for institutional customers, the bank’s JPM Coin is a stablecoin that helps streamline large-scale cross-border payments and transactions between banks and corporate customers.
The path to mainstream adoption of blockchain solutions will largely depend on regulatory clarity and how well these companies can maintain stablecoin pegs with underlying assets. If successful, stablecoins could become a permanent fixture in B2B and consumer payments.
See more: B2B, B2B payments, Bitcoin, blockchain, commercial payments, cross-border payments, cryptocurrencies, global payments, jpmorgan, news, PayPal, PYMNTS news, stablecoins, SWIFT, Visa
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