You can’t miss the stablecoin vibe. Although Bitcoin As the rest of the cryptocurrency market slumps after falling from all-time highs in October, others are talking about issuing fixed-value tokens pegged to real-world assets. Mainly US dollars.
Of course, it’s not just dollars. This week alone, AllUnity, a German joint venture between DWS, Galaxy and Flow Trader, launched a Swiss franc token (CHFAU), while SBI Holdings and Startale Group launched a Japanese yen version (JPYSC). Earlier this month, Agant said it was developing a pound stablecoin, and Hong Kong said it planned to issue stablecoin licenses starting in March.
There is also news that Mark Zuckerberg-led Meta (META) plans to add stablecoin-based payment capabilities early in the second half of this year. The company famously tried to launch the Libra stablecoin and changed its name to Diem in 2019 amid strong opposition from lawmakers and regulators.
But Libra co-founder Christian Catalini said Meta’s return to stablecoin-based payments later this year will offer little comparison to Libra/Diem.
Catalini said the difference now is that stablecoins are fading into the background, being offered by multiple providers and becoming part of the payments infrastructure. The once much-hyped business of issuance and orchestration of stablecoins, or the coordination of payments across different blockchains and conversion between tokens and fiat for payment purposes, is becoming a commodity, he said.
“Not just Meta, but Google, Apple, they’re all going to use multiple providers, just like when they make payments,” Catalini told CoinDesk. “So I expect the market in the future to be commoditized rather than branded stablecoins. In a sense, that’s a sign that the market has matured.”
This sentiment was echoed by Meta’s vice president of communications, Andy Stone, who said the move to restore stablecoin payments is simply about “enabling people and businesses to pay on our platform using the method they prefer.”
Billions of users
Catalini said the real competitive advantage of stablecoins is the moat that blocks competitors, which now lies in distribution. Whoever has a direct relationship with the end user will get the most value. Meta has billions of users across Facebook, WhatsApp and Instagram, with the number approaching 3.6 billion according to its latest earnings report.
The focus on exposure and reach is a significant change from accumulating value by providing stablecoins to wallets, or from fiat to cryptocurrencies and back to fiat – the so-called stablecoin sandwich required for regular payment transactions.
This change has begun to appear recently, with news that the company has given up on acquiring stablecoin orchestration companies.
Catalini pointed out that this is also good news for existing players such as card networks, fintechs, neobanks and some wallet companies, as they actually have the touchpoint with the end user and therefore have an advantage. Stablecoin payments may undercut lucrative interchange fee payment networks like Visa and Mastercard, but these card networks have significant advantages in distribution.
“if [the card networks] “If they can commoditize rail and the asset, they will be able to defend their business,” Catalini said. “Commoditization of assets is inevitable — there will be a lot of stablecoins, and a lot of banks will want their own stablecoins — so rail is where things get interesting.”
Also in the fray is Meta’s long-time payments partner Stripe, whose CEO Patrick Collison joined Meta’s board a year ago and is a potential vendor Meta could recruit for its stablecoin project.
The payments giant’s aggressive cryptocurrency prowess cannot be underestimated: Stripe acquired stablecoin specialist Bridge last year for $1.1 billion and built its own blockchain, called Tempo.
Still, Catalini questioned whether other companies would flock to a rival blockchain, even if it is purportedly a public network.
“If you were another large payments provider, would you want to build on Stripe’s Tempo? Probably not,” Catalini said. “This goes back to the key challenge of making these networks truly open and neutral, which is what cryptocurrencies are all about. But of course, from a practical perspective, that’s hard to really achieve unless you’re building on top of something that’s already established like Ethereum or Bitcoin or Solana.”