What are tech giants betting on stablecoins?

Writing by Ben Weiss, Leo Schwartz

Compiler: Luffy, Foresight News

Dara Khosrowshahi, CEO of Uber

In June, Uber CEO Dara Khosrowshahi announced that the ride-sharing giant was considering stablecoins as a way to transfer funds globally. A year ago, a tech executive's remark would have been outrageous. But now, everything from Apple to Amazon, not to mention major banks and brokerages, are scrambling to embrace stablecoins, a cryptocurrency pegged to underlying assets like the U.S. dollar. What exactly has changed?

Most obviously, the regulatory environment in Washington, D.C., has shifted dramatically. The Senate has passed a bill that is currently being considered by the House of Representatives that would clear the way for stablecoins to be integrated into the financial system.

Crypto proponents also say that the business prospects of stablecoins are getting brighter. Unlike more volatile cryptocurrencies such as Bitcoin and Ethereum, stablecoins are expected to be a more efficient payment method, capable of sending digital dollars at near-instant speeds and lower costs. This could fundamentally change the way businesses handle everything from global treasury management to paying employees and contractors around the world.

However, with the technology still in its early stages and the regulatory outlook uncertain, analysts interviewed by Fortune are skeptical about whether Silicon Valley tech giants will adopt stablecoins widely in the near future.

Operating costs

For a company like Amazon, it is costly to move money globally. According to its 2024 annual report, net sales from international operations accounted for 22% of last year's consolidated revenue, totaling nearly $143 billion. These sales are denominated in local currency, which means the company must consider foreign exchange risk and currency fluctuations, which could cost it billions of dollars.

Nick van Eck, CEO and co-founder of stablecoin startup Agora, points to global money management as one of the strengths of stablecoins, with the ability to convert local currency into stablecoins and repatriate them back to the United States.

Agora allows companies to mark their own USD stablecoins. Nick van Eck told Fortune that while Agora's current customers are mostly crypto companies, his ideal customers are multinational companies like PepsiCo, which have dozens of bank accounts and corporate entities around the world, as well as thousands of suppliers. "Stablecoins can dramatically improve their capital efficiency," he said, "and now you can move $100 million from one country to another in a second, without having to wait days."

Agora isn't the only startup looking to profit from the Silicon Valley stablecoin boom. Over the past year, numerous stablecoin startups, including Mesh, Bastion, and BVNK, have raised tens of millions of dollars from venture capital firms. Last October, payments company Stripe completed a landmark acquisition of stablecoin startup Bridge for $1.1 billion.

Stripe's customers account for half of the Fortune 100 companies, and the company offers a variety of payment products, including helping businesses automate customer billing, providing a pre-built checkout system, helping customers send money globally, and more. Co-founders Patrick Collison and John Collison were full of praise for stablecoins in their recent annual letter to investors, saying that such assets will help large corporations expand globally faster and bring other benefits.

"Why should I pay with stablecoins?"

Colin Sebastian, an analyst at Baird who leads Amazon research, told Fortune that companies are always looking for financial instruments or payment methods that can help manage expenses or reduce friction. "Traditional credit card payments are quite expensive," he says, "and of course the fees for cross-border transactions are even higher."

However, while Amazon and other multinationals may have a financial incentive to try to adopt stablecoins, convincing consumers to adopt the technology for payments will be trickier. "What can really drive change in consumer behavior?" "Credit and debit cards have become very popular."

Thomas Forte, an analyst at Maxim Group who focuses on consumer internet companies like Amazon and Apple, agrees with Sebastian. He believes that Amazon's most reasonable use of stablecoins is to accept customer payments through stablecoins, thereby reducing transaction fees. "What I'm struggling with is: As an American consumer, why should I pay with stablecoins?" Forte asked.

Agora co-founder Van Eck believes that at least until U.S. stablecoins are more widely adopted, the countries most likely to embrace the technology will be more volatile currencies, as consumers in these countries are more motivated to try more stable payment methods. He recalls a recent example of funding from an angel investor outside the U.S., where one took 10 business days to arrive and another 22 business days. "It's very common, not just for individuals, but for businesses that operate across borders," he told Fortune.

In Argentina, for example, inflation has been going on for more than 15 years, and the country's currency has plummeted against the US dollar. Therefore, it is not surprising that between June 2023 and July 2024, Argentina's stablecoin trading volume accounted for nearly 62% of the country's cryptocurrency trading volume. And according to a 2024 report by Chainalysis, the global average is around 45%.

Nic Carter, founding partner of Castle Island Ventures, a crypto venture capital firm focused on stablecoin investments, said: "I'm more focused on businesses that really solve problems for businesses, like helping businesses in Nigeria pay someone in the Philippines and things like that."

Still, big tech companies in the U.S. are enthusiastic about the technology and have already made moves into this emerging field. PayPal has launched its own stablecoin. Both online brokerage Robinhood and payments giant Mastercard have joined an alliance where members can mint or create the stablecoin USDG. Companies such as Amazon, Apple, and Meta have also begun exploring the use of stablecoins for payments.

Meta previously declined to comment on its stablecoin plans. Spokespeople for Apple and Amazon have not responded to requests for comment.

Baird analyst Sebastian said it would hardly hurt for big tech companies to experiment with the new technology as Congressional regulation of stablecoins nears completion. "One of the common characteristics of many big tech companies is that they are very willing to try new things."