Visa is making a bigger bet on digital currencies. The payments giant launched what it calls the Visa Stablecoin Platform - a single hub where financial institutions can mint new stablecoins, transfer them, and keep track of everything in one place.
Jack Forestell, Visa's chief product and strategy officer, said the goal is to give clients the same security and network reach they already get from Visa, but now for stablecoin operations. "With the Visa Stablecoin Platform, we're giving our clients a single place to mint, move and manage stablecoin operations with the controls, security and network reach they already expect from Visa," he said.
The first stablecoin to use the platform is Open USD, issued by a group called Open Standard. That consortium has some heavyweight backers - BlackRock, Alphabet, and Coinbase are all behind it.
Stablecoins are digital currencies that maintain a fixed exchange rate with a reference asset such as the U.S. dollar. They are already a big business. The total market value of all stablecoins has swelled to above $310 billion. And Morningstar, a research firm, forecasts the stablecoin market could hit $1.45 trillion in circulation by 2035.
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This could help banks and payment firms launch their own branded stablecoins more quickly, a capability many are exploring as demand for 24/7 settlement grows.
The reason Visa is jumping in now? The U.S. regulatory landscape has gotten clearer with recent advances. That regulatory clarity has encouraged traditional financial firms to prepare for wider adoption of blockchain payment systems. Banks and payment companies are now looking for ways to move money faster and 24/7 using stablecoins, and Visa wants to be the infrastructure behind that.
Not everyone benefited from the news. Circle Internet Group, the company behind the stablecoin USDC, saw its stock fall as much as 6% to $61.67 on the day of the announcement. Coinbase Global, which has a partnership with Circle, saw its share price drop roughly 4.5%.
Circle's stock has faced recent weakness after the formation of Open Standard. Open USD, the stablecoin initially supported by Visa's platform, is taking an aggressive approach to win partners. It has eliminated minting and redemption fees.
On top of that, nearly all of the reserve income it earns will be returned to its distribution partners. That is a big deal. Normally, the company that issues a stablecoin keeps most of the interest earned on the cash reserves backing it.
Open USD is giving that money away to banks, payment firms, and exchanges that use its token.
Should this model prove successful, a larger share of stablecoin value could move away from issuers and toward distributors.
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