In an annual letter published on Thursday, Stripe believes stablecoins are one of the most innovative areas of the “internet economy.” The payments company reportedly generated $1.4 trillion in total volume in 2024. Stripe bets big on stablecoins to transform payments This stance aligns with Stripe’s strategic moves, including its $1.1 billion acquisition of stablecoin startup Bridge in October. However, given that the company handles transactions equivalent to approximately 1% of global GDP, it’s worth exploring why co-founders Patrick and John Collison are betting on blockchain technology. According to their annual letter, the Collison brothers argued that stablecoins represent an “improvement” on the “basic usability of money,” much in the same way that banknotes were an advancement from coins and—perhaps more controversially among The Block readers—fiat currency was an upgrade from the gold standard. Stripe founders believe that stablecoins have four important properties relative to the status quo: They make money movement cheaper and faster, they are decentralized and open-access (and thus globally available from day one), and they are programmable. To be precise, fiat-pegged cryptocurrencies enhance traditional monetary functions and open new avenues for using money. “Improvements to the basic usability of money make economies more prosperous,” the Collison brothers write. Stripe’s stance on crypto has evolved over time. The company famously halted Bitcoin payments in 2018 after just a few years, citing blockchain limitations at the time. However, after a four-year hiatus, Stripe re-entered the crypto space by enabling payouts in USDC—a move that expanded two years later to allow customers to accept stablecoin payments on Solana, Ethereum, and Polygon. While the move may have been influenced by competitors like PayPal and Visa embracing crypto payments, the Collison brothers maintained that the industry’s maturation drove the decision—faster transaction speeds, lower costs, and stablecoins delivering “real utility.” The Stripe co-founders emphasized that years of research and careful systems engineering were required for decentralized technologies to become competitive with traditional financial infrastructure. According to their letter, the conditions for widespread stablecoin adoption have only recently come together. Stablecoins reshape the future of digital transactions The Collison brothers highlight that stablecoin transaction volumes more than doubled between Q4 2023 and Q4 2024, with over 40 million monthly active wallets now in use. They point out that stablecoins are increasingly used for real-world applications, including corporate treasury management, remittances, savings in countries with volatile currencies, and enabling payments in regions with low card penetration. Just as the Stripe co-founders credit much of the company’s success to their early investment in AI solutions, they believe that establishing a leadership position in stablecoin services could fuel Stripe’s next growth phase. While stablecoins are a win-win for Stripe and its client base, they also largely benefit the US government, as many stablecoin advocates have argued. Not only are nearly all stablecoins denominated in the U.S. dollar — strengthening the greenback’s economic hegemony — but issuers like Tether and Circle are among the largest buyers of U.S. government debt due to their need for low-risk treasury assets. As of the end of 2024, Tether has direct and indirect exposure to $113 billion in US government debt. According to Treasury Department data , if it were a nation-state, it would rank as the 19th-largest holder of U.S. Treasury bills. The Collison brothers believe that stablecoins, functioning as a more user-friendly and accessible version of eurodollars, have the potential to deliver similar benefits to a much wider range of participants. However, the subtitle of the stablecoin section in Stripe’s annual letter likened the asset class to “room-temperature semiconductors”—a groundbreaking innovation that, while theorized to be transformative, has yet to become a reality. Cryptopolitan Academy: Tired of market swings? Learn how DeFi can help you build steady passive income. Register Now
