Move over, Visa and Mastercard: In the not-too-distant future, Americans may leave their plastic behind and pay for their shopping sprees with stablecoins instead.
According to the Wall Street Journal, companies like Walmart and Amazon are exploring the possibility of issuing their own stablecoins. For the uninitiated, stablecoins are a type of cryptocurrency whose value is tied to legal tender like the US dollar. This helps keep a stablecoin’s value relatively steady, providing a reliable payment method that skirts the wild volatility of many popular cryptocurrencies out there today (We’re looking at you, fartcoin).
Retailers have good reason to create their own stablecoins, or even potentially band together to create a consortium of merchants under one stablecoin issuer: It would allow them to do an end-run around traditional payment methods issued by banks and credit cards, which siphon off an estimated 1.10%–3.15% in fees for every transaction. For retail giants like Walmart and Amazon, that amounts to billions of dollars.
A bill making its way through Congress could also help spur the acceptance of stablecoins across the economy. The GENIUS Act aims to regulate the $238 billion stablecoin industry and protect consumers, creating a clear path for businesses to issue their own stablecoins. If this bill comes to pass, “We’ll likely see a flood of them rush into the market at the start,” said Nic Puckrin, a crypto analyst and founder of The Coin Bureau.
Stablecoins steal the show
Stablecoins have been met with rave reviews lately. Circle Internet Group, which issues USDC, the second largest stablecoin on the market, went public on June 5 and soared 168% on its first day of trading, and remains up over 270% to date.
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But while the newly minted stock is a clear winner of wider stablecoin adoption, investors are worried that traditional financial companies are about to be hit with a wave of disruption if stablecoins go mainstream. That’s why shares of many major payment companies took a nosedive Friday: Visa fell 4.99%, Mastercard sank 4.62%, American Express lost 3.42%, and PayPal dropped 5.32%.
Still, analysts are skeptical whether this slump will stick, since retailers have tried and failed to forge their own payment methods in the past. One of the most infamous was Meta Platform’s attempt to create its own stablecoin back in 2019 called Libra.
Considered the first first major digital currency challenge to banks, Libra drew scathing criticism from authorities until Meta backed down and sold it in 2022. Still, Libra haunts lawmakers’ discussions to this day: Lobbying groups warn that the GENIUS Act could place “an excessive concentration of economic power” in an already powerful big tech company. Might concerns over Amazon’s and Walmart’s dominance cause this bill to hit the skids? Only time will tell.
Bottom line: Given many average Americans may not even know what a stablecoin is, they might be skittish about adding it to their cart without some serious education and incentives. Today’s news indicates interest, but there’s still a long way to go before Walmart gets into the crypto game.—JD