On Thursday, U.S. time, the Senate will hold a key procedural vote on the "U.S. Stablecoin Innovation and Establishment Act" (GENIUS Act), which will determine whether stablecoin regulatory legislation moves into substantive advancement. If the vote passes, the stablecoin industry will welcome its first clear federal regulatory framework.

On the day before the voting, payment service provider Stripe announced the launch of Stablecoin Financial Accounts, which support users and businesses in storing stablecoin balances on Stripe, sending and receiving funds through fiat and cryptocurrency channels, and circulating through its global fiat payment network, which now covers 101 countries and regions.

The stablecoin balance in the account currently supports two stablecoins – USDC (issued by Circle) and USDB (issued by Bridge). Among them, USDB is a closed-system stablecoin that circulates only within the Stripe platform and is not open for public trading. Both stablecoins are pegged to the US dollar at a 1:1 ratio, with underlying assets including cash and short-term money market funds managed by BlackRock.

Bridge was acquired by Stripe for $1.1 billion in 2024, marking the largest merger and acquisition in the company's history. Bridge has full capabilities in stablecoin issuance, custody, and settlement, having previously served clients like Coinbase and SpaceX. Currently, Bridge has been integrated into Stripe's on-chain account infrastructure system, responsible for stablecoin issuance and custody services, indicating that Stripe is transforming from a "crypto payment gateway" to an "on-chain financial infrastructure provider."

However, although Stripe claims to support registered businesses in 101 countries and regions, major financial markets such as the United States, mainland China, Hong Kong, Singapore, and Japan are currently not on the open list.

Midway Abandonment and Re-Entry: Stripe's Crypto Journey

Stripe was founded by Irish brothers Patrick and John Collison in 2009. As early as 2014, Stripe became one of the first major companies to accept Bitcoin payments; however, its cryptocurrency plans ended in failure in 2018. The reason given was that the volatility and instability of Bitcoin were too high. That year, Bitcoin fell from a high of $19,650 in December 2017 to $3,401 by the end of 2018.

After several years of silence, Stripe announced its return to the cryptocurrency business in 2022, focusing on infrastructure areas such as KYC, fraud detection, and stablecoin payments, and collaborating with crypto projects like Polygon and OpenNode.

In March 2023, Stripe completed a $6.5 billion Series I funding round at a valuation of $50 billion, with investors including a16z, Baillie Gifford, Founders Fund, General Catalyst, MSD Partners, Thrive Capital, GIC, Goldman Sachs, and Temasek.

Starting from April 2024, Stripe announced support for USDC stablecoin payments on Solana, Ethereum, and Polygon, successively integrating the Avalanche network and announcing a strategic partnership with Coinbase to add Base network support to its crypto product suite.

Related reading: "After 6 years, accepting Crypto again, is Stripe joining PayPal's crypto payment competition?"

On October 21, 2024, Stripe announced the acquisition of the stablecoin platform Bridge for $1.1 billion, allowing it to optimize cross-border payment solutions and expand its stablecoin payment infrastructure. This is Stripe's largest acquisition to date and the largest acquisition in the history of the cryptocurrency industry.

Related reading: "The Largest Acquisition in Web3 History: What Exactly is the $1.1 Billion Bridge by Stripe?"

In February of this year, Stripe announced the official completion of its acquisition of Bridge, marking the official start of its significant layout in the stablecoin field.

At the end of April, Stripe announced that it is developing a brand new stablecoin product supported by Bridge technology, and the eligibility requirements for companies in the testing phase are that they must be headquartered outside the United States, the European Union, or the United Kingdom, and wish to gain access to US dollar channels. This stablecoin product is one of the stablecoins supported by the stablecoin financial account announced by Stripe this morning, USDB.

It is worth noting that USDB adopts a more platform-oriented incentive approach—Bridge returns part of its stablecoin underlying revenue to developers. This mechanism is analogous to on-chain interest sharing, which is not commonly seen in traditional financial structures, and may indicate that Stripe is exploring revenue sources beyond stablecoin profit models.

The stablecoin payment feature launched last year focuses on merchants accepting payments, emphasizing the immediacy of payments and fiat settlement, addressing the efficiency issue in the payment process. Now, the launch of stablecoin accounts signifies that Stripe has completed the closed-loop construction from payment access, network support, to stablecoin issuance and custody. It resembles a comprehensive financial account, allowing users to hold and manage stablecoin balances, supporting a wider range of financial use cases (such as savings, transfers, future card payments), not limited to payment scenarios.

The Battle of Stablecoin Payments Heats Up

Unlike PayPal's launch of the publicly circulating PYUSD, Stripe is more cautious about adopting stablecoins, as its USDB is limited to internal platform use. This "controlled closed-loop" strategy is more aligned with Apple's product philosophy rather than the open Web3 concept.

However, Stripe's launch of stablecoin financial accounts undoubtedly intensifies the increasingly fierce competition in the stablecoin payment sector, with more and more traditional financial institutions entering this field. According to the Financial Times, some of the world's largest banks and fintech companies are eager to launch their own stablecoins, aiming to seize market share in cross-border payments that they anticipate will be reshaped by cryptocurrencies.

Last month, Bank of America expressed its intention to issue its own stablecoin, joining established payment providers such as Standard Bank, PayPal, Revolut, and Stripe, with the goal of competing with businesses dominated by cryptocurrency groups like Tether and Circle. In addition to Bank of America, other traditional financial players are also preparing for the development of stablecoins.

In the payment sector of major overseas markets, PayPal is the most important competitor to Stripe, which targets businesses of all sizes, while PayPal focuses on small businesses. In 2023, PayPal holds a share of 42.35%, Stripe has a share of 19.44%, in addition, Shopify Payments has a share of 12.42%, and Amazon Pay has a share of 4.76%.

PayPal launched the dollar-pegged stablecoin PYUSD back in 2023. Although it was previously under investigation by the SEC, on April 30, the SEC stated that it has terminated its investigation into PayPal's dollar-pegged stablecoin PYUSD and took no enforcement action.

At the same time, Tether is also actively laying out its stablecoin ecosystem, not only strategically investing in the fintech company Fizen but also planning to launch a new dollar-pegged stablecoin in the United States this year. This move comes as Tether—once labeled as the "preferred cryptocurrency" for criminals—repositions itself as a partner to U.S. lawmakers and law enforcement.

In addition, JD has entered the sandbox testing phase for stablecoin in Hong Kong; in recent days, informed sources have indicated that Futu Securities is conducting internal testing to support USDT and USDC deposit transactions; and last night, Visa announced an investment in the stablecoin payment infrastructure startup BVNK.

As cryptocurrency researcher YettaS stated, this field is no longer a playground for new players; the core of stablecoin competition has always been the channels. Whoever masters the usage scenarios of the currency holds the moat of the stablecoin. Imagine if Amazon and Walmart issued their own stablecoins and enforced settlement within their internal systems; isn't this just a replay of Alipay's path back in the day?

From bank cards to electronic payments, and then to stablecoins, this is the third generation of the payment war. However, this war has long surpassed payment itself, as it leads to the gateway of currency value and the reconstruction of the coinage authority led by enterprises.

The US stablecoin regulatory bill is about to make a breakthrough.

The reason why many traditional companies are heavily entering the stablecoin sector is closely related to the gradual clarity of U.S. cryptocurrency regulation and the stablecoin bill.

In February of this year, U.S. crypto-friendly Senator Cynthia Lummis stated at the first hearing of the Senate Banking Committee on Digital Assets, "We are about to establish a bipartisan legislative framework for stablecoins and market structure." At the White House's first crypto summit, Trump expressed hope to receive stablecoin legislation before the August congressional recess to advance federal regulation reforms on cryptocurrencies, and reiterated the desire for the dollar to "maintain its dominance in the long term."

U.S. Treasury Secretary Scott Bessent pledged to strengthen the dollar's position as the global reserve currency through digital assets. He stated, "We will think deeply about the stablecoin system, as President Trump has instructed, and we will maintain the United States' position as the world's dominant reserve currency, and we will use stablecoins to achieve this."

This statement highlights the U.S. government's concerns about macroeconomic and geopolitical uncertainties, which may lead to a decrease in demand for U.S. Treasury bonds from foreign investors, subsequently driving up Treasury yields. Over the past year, the two largest holders of U.S. Treasuries, Japan and China, have continuously reduced their holdings. To maintain the dollar's status as the global reserve currency, it is essential to ensure sustained demand for U.S. Treasuries in the international market.

Related reading: "Why did the cryptocurrency market evaporate 900 billion dollars while the stablecoin market cap reached an all-time high?"

By holding U.S. Treasuries as reserve assets, stablecoins can help lower Treasury yields while simultaneously expanding the global circulation of the U.S. dollar. Stablecoins need to have sufficient reserves in U.S. dollars to meet investor redemption demands, and currently, Tether is one of the largest holders of three-month U.S. Treasuries. JPMorgan has stated that the stablecoin market is expected to grow to between $500 billion and $750 billion in the coming years. Assuming that 70% is allocated to U.S. Treasuries and 30% to Treasury repurchase agreements, stablecoin issuers would become the third-largest buyers of U.S. Treasuries.

The total market capitalization of stablecoins surged by 50 billion dollars since Trump's election; Source: DeFiLlama

Specifically at the policy level, the United States has proposed two stablecoin bills—the House of Representatives' "Stablecoin Transparency and Accountability Act" (STABLE Act) and the Senate's "U.S. Stablecoin Innovation and Establishment Act" (GENIUS Act), aimed at regulating stablecoin issuers through licensing requirements, risk management rules, and 1:1 reserve backing, requiring that stablecoins must be 100% backed by liquid assets such as U.S. dollars or short-term government bonds.

The two bills propose different frameworks but reach an agreement on strict compliance measures. Both support private, dollar-backed stablecoins and prohibit central bank digital currencies (CBDCs).

On May 7, Senate Majority Leader John Thune submitted a motion to terminate debate on the stablecoin "GENIUS Act," with a key procedural vote scheduled for Thursday. The bill requires 60 votes in favor, with the current Senate comprising 53 Republican seats and 47 Democratic seats, meaning Republicans need to secure support from at least 7 Democrats.

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