Visa (V.US) makes a move into stablecoins! Betting on stablecoins to reshape the global payment landscape.

The product business manager of Visa (V.US), a global leader in digital payments, stated that the payment network giant is just beginning to focus on building stablecoin systems as the next generation of digital payment technology, and indicated that the market size related to stablecoins will be immensely vast. With the thawing of U.S. regulations, the entry of Wall Street financial giants, high interest returns, stablecoin issuers approaching commercial bank-level profits, and resonance with cross-border payment pain points, stablecoin issuers have seen continued skyrocketing popularity since the beginning of this year, attracting global funds inflow, and driving the stock price of Circle (CRCL.US), known as the "first stock of stablecoins", up by more than 700% since its listing on the U.S. stock market. Stablecoin is a type of digital currency that maintains a stable value ratio by anchoring core reserve assets such as the U.S. dollar, euro, gold, etc. With key legislation establishing a regulatory framework for stablecoins accelerating in the U.S. Congress, these price-stabilizing cryptocurrencies are beginning to enter the mainstream asset field of the global financial market, and Visa has been dedicated to participating in the evolution of digital currency flow for many years. Essentially, stablecoin is the "dollar on the chain", with high liquidity dollar assets (cash, short-term U.S. Treasury bonds) serving as underlying collateral at a 1:1 ratio. By combining the "dollar" with the "blockchain", stablecoin provides a new type of payment vehicle that is stable and efficient, allowing the capital market to see the commercial potential of "digital dollarization". Undoubtedly, high interest rates and interest earning cycles allow these reserves to earn substantial interest, bringing close to bank-level profits to stablecoin issuers (such as Circle, Tether), while also providing "quasi-money market fund" returns. Legislation such as the U.S. "GENIUS Act", EU MiCA, and the Hong Kong "Stablecoin Regulations" are either in place or have been implemented, and major Wall Street banks also plan to jointly issue stablecoins; coupled with Circle's status as the first large cryptocurrency company to IPO after Coinbase in 2021, scarcity and policy dividends have ignited funding, creating a frenzy surrounding the concept of stablecoins. In the past, stablecoins were primarily used as channels for traders to transfer funds in and out of other cryptocurrencies. However, more and more cryptocurrency investors are optimistic that with the return of Trump to the White House strongly supporting cryptocurrency development, stablecoins may soon play a more important role in the global commercial and trade systems, especially as stable payment tools for cross-border transactions. Is it a match made in heaven for Visa and stablecoins? Statistics show that since 2020, the global leader in digital payments, Visa, has facilitated nearly $95 billion worth of cryptocurrency purchases and over $25 billion in cryptocurrency spending, as stated by the company's Chief Product and Strategy Officer Jack Forestell in a recent blog post. He explained that the company has exclusive offerings for native stablecoin settlements and programmable financial solutions; can facilitate cross-border fund flows through stablecoin infrastructure; and connect stablecoins and cryptocurrency platforms with fiat systems and Visa's global digital payment network through Visa accounts and Visa token models. However, Forestell also pointed out, "In developed markets like the United States, whether consumers and businesses will choose stablecoin payments as the mainstream payment method is not yet clear, as people can already use various 'digital dollar' payment methods directly through bank accounts." Analyst Trevor Williams from Jefferies Financial Group Inc., a Wall Street major bank, is not worried about the "stablecoin risk exposure" of Visa and its competitor MasterCard (MA.US). "We believe that two things can coexist: the long-term actual risks of stablecoins to these payment businesses are very limited, and there is a wide space for cooperation between the two; but the market's concerns about potential threats are enough to keep stock prices in range-bound fluctuations," he wrote in a report to clients. Since the report by The Wall Street Journal on June 13 that U.S. retail giants Amazon.com, Inc. (AMZN.US) and Walmart Inc. (WMT.US) were considering issuing stablecoins to revamp payment systems and reduce long-term reliance on banks and digital payment organizations, Visa and MasterCard's stock prices have been under pressure. A week later, the U.S. Senate passed the stablecoin bill, further exacerbating selling pressure in the short term. In the eyes of some blockchain and digital payment experts, if Visa intensifies its layout of stablecoins, the combination of "Visa + stablecoin" payment network system could exhibit highly synergistic effects, resembling a match made in heaven. It is reported that as early as 2023, Visa settled its VisaNet obligations with USDC, becoming the first global digital payment network to introduce stablecoins into its core settlement system, and Visa Token Service is connected to on-chain smart contracts, enabling stablecoin payments to be embedded in automated settlement, profit sharing, and other business processes. Looking ahead to the future, cross-border remittances, B2B supply chain settlements, Web3 merchant acquiring - their pain points include time zone differences, long chains, and high fees - the "Visa + stablecoin" network can immediately leverage its advantages, relying on long-term partners in the cryptocurrency field such as Circle, Crypto.com, Visa is expected to enjoy incremental income from the expanding field of stablecoins through on-chain cross-border payment APIs. If U.S. stablecoin legislation stabilizes by 2026, Wall Street financial giants and retail giants begin to issue stablecoins on a large scale, whether by collecting fees/interface fees through integrating digital payments and stablecoin settlement network systems, or by issuing Visa's own stablecoin, Visa is poised to share a huge increment of business, while needing to use network effects to ward off fee compression. In terms of long-term value, "Visa + stablecoin" is more like replacing a new generation of engines to continue leading, rather than completely remaking a ship.