Fortune Magazine: Why are tech giants flocking to stablecoins, and what are they betting on?

Original Authors: Ben Weiss, Leo Schwartz

Reprint: Luke, Mars Finance

Dara Khosrowshahi, CEO of Uber

In June of this year, Uber CEO Dara Khosrowshahi announced that the ride-sharing giant is considering using stablecoins as a means of global money transfers. A year ago, such statements from tech giant executives would have seemed absurd. But now, from Apple to Amazon, not to mention various banks and brokerages, everyone is eager to embrace stablecoins—a type of cryptocurrency pegged to assets like the US dollar. What exactly has changed?

The most obvious change is that the regulatory environment in Washington, D.C. has undergone a significant transformation. The Senate has passed a bill that is currently under review by the House of Representatives, which will clear obstacles for the integration of stablecoins into the financial system.

Cryptocurrency supporters also claim that the commercial prospects of stablecoins are becoming increasingly broad. Unlike more volatile cryptocurrencies like Bitcoin and Ethereum, stablecoins are expected to become a more efficient payment method, capable of sending digital dollars at nearly instant speed and lower costs. This could fundamentally change the way businesses handle various affairs such as global funds management and paying salaries to employees and contractors worldwide.

However, due to the fact that this technology is still in its early stages and the regulatory outlook remains unclear, analysts interviewed by Fortune magazine are skeptical about whether Silicon Valley tech giants will widely adopt stablecoins in the near future.

Operating costs

For companies like Amazon, the cost of transferring funds globally is high. 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 currencies, which means the company has to consider foreign exchange risks and currency fluctuations, which could result in losses of billions of dollars.

Nick van Eck, the CEO and co-founder of the stablecoin startup Agora, pointed out that global fund management is one of the advantages of stablecoins, allowing local currencies to be exchanged for stablecoins and sent back to the United States.

Agora allows companies to label their own dollar stablecoins. Nick van Eck told Fortune that while Agora's current clients are mostly cryptocurrency companies, his ideal clients are multinational corporations like PepsiCo, which have dozens of bank accounts and corporate entities around the world, as well as thousands of suppliers. "Stablecoins can significantly improve their capital efficiency," he said, "Now you can transfer $100 million from one country to another in a second without waiting for days."

Agora is not the only startup hoping to profit from the stablecoin boom in Silicon Valley. Over the past year, numerous stablecoin startups, including Mesh, Bastion, and BVNK, have raised tens of millions of dollars from venture capital firms. In October of last year, payment company Stripe completed a landmark acquisition of stablecoin startup Bridge for $1.1 billion.

Stripe's customers include half of the Fortune 100 companies, and the company offers a variety of payment products, including helping businesses automatically charge customers, providing pre-built checkout systems, and assisting customers with global remittances. Co-founders Patrick Collison and John Collison recently praised stablecoins in their annual letter to investors, stating that such assets will help large companies expand globally more quickly and bring other benefits.

Why should I use stablecoins for payment?

Colin Sebastian, an analyst at Baird responsible for Amazon research, told Fortune magazine that major companies have been looking for financial tools or payment methods that can help manage expenses or reduce friction. "Traditional credit card payments are quite expensive," he said, "and of course, the fees for cross-border transactions are even higher."

However, despite the economic incentives for Amazon and other multinational companies to try to adopt stablecoins, convincing consumers to use the technology for payments will be more challenging. "What can really drive a change in consumer behavior?" Sebastian asked, "Credit and debit cards are already very popular."

Maxim Group analyst Thomas Forte focuses on consumer internet companies like Amazon and Apple, and he agrees with Sebastian's viewpoint. He believes that the most reasonable use of stablecoins by Amazon is to accept customer payments through stablecoins, thereby reducing transaction fees. "What I struggle with is: as a U.S. consumer, why should I pay with stablecoins?" Forte asked.

Van Eck, co-founder of Agora, believes that before stablecoins gain wider adoption in the U.S., countries with greater currency volatility are more likely to embrace this technology, as consumers in those countries are more motivated to try more stable payment methods. He recalled a recent example of funding from angel investors outside the U.S., where one fund took 10 working days to arrive, while another took 22 working days. "This situation is very common, not just for individuals but also for multinational businesses," he told Fortune magazine.

For example, in Argentina, inflation has persisted for more than 15 years, and the exchange rate of the country's currency against the dollar has plummeted. Therefore, it is not surprising that from June 2023 to July 2024, the trading volume of stablecoins in Argentina accounted for nearly 62% of the country's cryptocurrency trading volume. According to a report by Chainalysis in 2024, the global average level is around 45%.

Nic Carter, founding partner of the cryptocurrency venture capital firm Castle Island Ventures, which focuses on stablecoin investments, stated: "I am more concerned with businesses that truly solve problems for enterprises, such as helping businesses in Nigeria make payments to someone in the Philippines."

Nevertheless, large technology companies in the United States remain enthusiastic about this technology and have taken action to enter this emerging field. PayPal has launched its own stablecoin. Online brokerage firm Robinhood and payment giant Mastercard have joined an alliance, where members can mint or create the stablecoin USDG. Companies like 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 yet responded to requests for comment.

Analyst Sebastian from Baird stated that with Congress's regulation of stablecoins nearing completion, there is almost no downside for large tech companies to experiment with this new technology. "A common trait among many large tech companies is that they are very willing to try new things."