[apinstein]

Here's the play. It's very simple, and it's quite good.

Stripe processes a LOT of money. The customers that get that money need to move it around. Often to banks. Stripe makes no money on that.

Over the last few years, stablecoins have become a preferred means to hold and move money (for convenience, etc).

Stablecoin providers make money on their float -- selling stablecoins means you get free deposits, and risk-free rates are presently around 4%. For every $1M in stablecoins your customers hold, you can make $40k/year. Stablecoin providers like Circle pay about half of that back out to partners that sell the tokens.

Stripe is huge, and well-trusted by customers for handling payments. By adoption stablecoin infrastructure to control financial flows into stablecoins, they can amass huge amounts of stablecoin sales.

If even ~3% of their transaction volume gets held in Stablecoins, and they make 1% a year on that, it's about $1B a year in bottom line.

~$10e9 (daily avg vol) * 365 * 3% (converted to stablecoins) * 1% (net income) = ~$1B

[j2kun]

> Over the last few years, stablecoins have become a preferred means to hold and move money (for convenience, etc).

For avoiding regulation.

[ralfhn]

My online bank doesn’t support international wire transfers. I had to wire money to a local bank then go to the branch in person, twice, to wire money to my own brother in Europe. He then had to schedule an appointment with his own bank, go in person, and justify why he received such a big transfer, mind you, it was 8k…

So yeah, it’s not about regulation. If crypto can help streamline all this, it’s a net positive

[_zoltan_]

screw regulation when a bank transfer isn't instant and the bank can do all kinds of checks and hold your money hostage for days or weeks.

[zarzavat]

I once wanted to send money to someone with an extremely common Arabic name, think "John Smith" in Arabic. My bank took issue with this and wanted a copy of their ID etc. One can speculate about why they wanted this, but ultimately I think it shows that the regulations are racist.

[kriops]

Obviously not true, as explained by other replies.

But if it was true, then so what?

[notatoad]

i'm still unclear what the crypto really adds to this play. stripe customers need to move their money around, and they need a trusted source to hold money. stripe could just do that. why add crypto into the mix?

[mondrian]

The GENIUS act enables tech companies to become reserve holders -- buy US Treasuries with customers' money. Stripe offers a "transactional ecosystem" to the customer in stablecoins, the customer gives USD to Stripe in exchange for stablecoins, Stripe buys short-term Treasuries and makes a shitload of money on interest.

Part of the very high level play is the US Govt seeks to diversify away from depending on nation states for borrowing, and to promote tech companies to the status of reserve holders.

This doesn't add much to the consumer however. I think in fact we are looking at a "fragmented currency" future where you hold like 36 different stablecoins in your wallet because certain platforms accept certain stablecoins. The GENIUS act doesn't offer strict guarantees for getting out of a stablecoin into USD, so I predict dark patterns and "incentives" to make it hard to get out of a stablecoin.

[alchemist1e9]

So many of the crypto skeptic comments on this story are massively out of touch with the products and sophistication of the crypto industry. For those of us who aren’t, the question has basically been flipped to “what does a bank add to this situation?” .

I’m typing this shortly after buying my groceries with a visa debit card that was funded 30 seconds before the transaction over Lightning Network with Bitcoin that was sold at a 0.1% fee for USD and immediately then transacted on Visa debit payment network.

The reason banks are lobbying so hard recently to close “loopholes” in latest US legislation is because with stablecoins you even need them less and less to hold dollar exposure.

The days of traditional banks are likely numbered and the crypto skeptics commenting on HN have their world models upside down. At least that is my view currently.

[monkeywork]

The first thing that came to mind to me - and maybe I'm a million miles off here - but all the recent drama around visa / mastercard / etc pressuring sites like Steam to modify their terms of use... maybe Stripe is thinking they can come in and be an alternative by doing it via crypto and hoping their name brings enough trust to cause users to jump on board.

[brendanfinan]

Some of the customer's money is already crypto though

[anthonypasq]

total shot in the dark, but im assuming there is much lower regulatory burden to holding lots of crypto than trying to be a bank

[TechDebtDevin]

There's over 75 billion in daily tether turnover... do the math. Not everyone is a boomer..

[udev4096]

Bullshit. The biggest stable coin, Tether, is pure scam. They are essentially creating money out of nowhere. They were found guilty of massive fraud and were fined $18M [1]. They refuse to get audited by a third-party [2]. The ones that do audit them are just as sketchy as them [3]. I would recommend watching this video to grasp the scope of their fraud [4]

[1] - https://coingeek.com/tether-bitfinex-prohibited-from-operati...

[2] - https://ecoinimist.com/2024/09/20/concern-over-tether-audits...

[3] - https://finance.yahoo.com/news/sec-fines-tether-former-audit...

[4] - https://www.youtube.com/watch?v=-whuXHSL1Pg

[smoovb]

Counterpoint. Tether has grown into one of the most profitable, well funded companies on the planet. Their past growing pains are irrelevant to where they are now. They make $30-50 million per day with just 200 employees. They are the 18th largest holder of US debt, ahead of UAE and Germany. Last year, Tether achieved $14 billion in profit, surpassing Pfizer, Tesla, and BlackRock. https://www.bitget.com/news/detail/12560604740855

[smitop]

There are other stablecoins that aren't scams though, like USDC. I think Stripe would probably either create their own USD stable or partner with Circle.

[irusensei]

Isn't coingeek big SV shills? The whole thing is a fraud starting with its creator Craig Wright.

[jml7c5]

Even if they were a fraud, at this point they've made enough money that they could be well capitalized. I'd love to know if they were a fraud (and I suspect they were), but I suspect they got past the "fake it until you make it" hurdle.

[koolba]

> Stablecoin providers make money on their float -- selling stablecoins means you get free deposits, and risk-free rates are presently around 4%. For every $1M in stablecoins your customers hold, you can make $40k/year. Stablecoin providers like Circle pay about half of that back out to partners that sell the tokens.

These numbers only work while short term rates are high (relative to recent history) and the share percentage is low. The lower the rates and the tighter the margins, and it drops like a rock.

Nobody with a sizable balance is going to accept the risk of a system like this without being paid a premium over traditional bank deposits. If my bank gives me 4% I’m not going to give stripe half of that in exchange for losing FDIC protections.

[knorker]

> Over the last few years, stablecoins have become a preferred means to hold and move money (for convenience, etc).

Huh?

In the western world this is nonsense. I move 6-7 digits regularly, internationally, even between continents, for free. Convenience of cryptocurrency? Lol. Maybe if I want to send money to Nigeria or North Korea.

Cryptocurrency was never more convenient. It's cheaper than Western Union when that's the only alternative, but boy is that a low bar and an edge case.

Traditional banking is getting faster and cheaper by the year, so your claim is getting less true every day, not more,

[soared]

How are you doing it for free, how long does it take, and what happens if something goes wrong?

These are the things companies want. With current methods you must take on risk to move money cheaper, faster, or without chargebacks/etc.

[hippo77]

You literally describe the problem in your comment: banking works in the western world. It doesn't work for the rest of the world (which is a lot of people) but maybe you don't care about them.

[vagab0nd]

That doesn't make sense. You are basically making money on the interest of "in-flight" fund. What does it have to do with stablecoins?

[chinathrow]

> Stripe makes no money on that.

They do if you charge in a foreign currency, e.g. in USD and transfer it to the bank account abroad, e.g in CHF.

[bigyabai]

> Over the last few years, stablecoins have become a preferred means to hold and move money

Moving money, sure. Holding money, only for chumps. The oldest grift in the cryptocurrency book is "unpegged no-audit stablecoin" and vanishingly few tokens actually put their money where their mouth is. Anyone can spin up money out of nowhere, but only a few businesses can survive a true bank-run scenario.

This seems like a threat to put pressure on CBDC to be pro-business or else the private sector will take over part of their job for them. A rational administration would probably want to put a stop to this, letting the private sector print it's own money will invariably end in heartbreak.

[dmbche]

Beautiful - clean and clear. Thank you.

I'm not in that space, but how stable is that 4%? What is it correlated to?

[CamelCaseName]

Interest rates. Their returns are dependent on what they invest in, which is usually US treasuries (since the token is pegged to USD)