Visa unveiled a platform that lets financial firms issue, move and manage stablecoins, broadening the payments giant’s crypto offerings as banks and fintechs prepare for wider adoption of the digital tokens.
The Visa Stablecoin Platform (VSP) will initially support Open USD, a stablecoin which will be issued by industry consortium Open Standard, the payments company said on Thursday. The new system — which is being rolled out to a select group of beta customers — is designed to help clients issue stablecoins, transfer them across blockchain networks and manage them through a single platform, Visa said.
The launch is Visa’s latest move to build infrastructure around stablecoins as traditional financial firms position themselves for broader use of blockchain-based payments following recent regulatory advances in the US. Stablecoins, digital tokens designed to hold a steady value against an asset like the dollar, have drawn interest by large financial institutions who view them as a way to transfer money faster and 24/7.
Shares of stablecoin issuer Circle Internet Group Inc. fell as much as 6% after the announcement, suggesting investors viewed Visa’s move as adding competition. Coinbase Global — which has a partnership with Circle — dropped 4.5% at one point on Thursday, while Visa rose nearly 2%.
“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,” said Jack Forestell, chief product and strategy officer at Visa.
Circle’s shares have been under pressure of late following the creation of Open Standard, which — besides Visa — is also backed by BlackRock Inc., Alphabet Inc. and Coinbase. Circle’s stablecoin, USDC, is the second-largest by circulation, after Tether’s USDT.
Open USD aims to attract banks, payment firms, exchanges and other distributors by eliminating minting and redemption fees while returning nearly all reserve income to partners. If that approach succeeds, more of the value created by stablecoins could shift from the companies issuing them to those distributing them.
Stablecoins — originally created as way for crypto traders to move in and out of positions— have become one of the sector’s most successful products. Their overall market value has swelled to above $310 billion, with Morningstar recently projecting that they could reach $1.45 trillion in circulation by 2035 — driven by use cases like cross-border payments and remittances.
Bloomberg
