The world of digital finance is about to get even more interesting, as two prominent players, Robinhood Markets Inc. and Revolut Ltd., are reportedly considering entering the $170 billion stablecoin market. This move could pose a significant challenge to the current dominance of Tether USDT/USD, the leading stablecoin, which boasts a circulating supply of nearly $120 billion.
According to sources familiar with the matter, both Robinhood and Revolut are exploring the potential launch of their own stablecoins, though a final decision is yet to be made. This interest in the stablecoin market comes at a crucial time. The European Union is set to implement its Markets in Crypto-Assets (MiCA) regulations by the end of 2024, which could necessitate crypto exchanges operating within the EU to delist stablecoins from issuers lacking the necessary permits. Tether, for its part, is actively working on a “technology-based solution” to comply with the new regulations, as confirmed by Tether CEO Paolo Ardoino.
The appeal of the stablecoin market is evident. Tether reported a staggering $5.2 billion in profits during the first half of 2024, primarily generated from the reserves backing its stablecoin. This profitability has piqued the interest of many other companies, as highlighted by Thomas Eichenberger, chief product officer at Swiss crypto bank Sygnum. “Many businesses have looked at the likes of Circle and Tether and the figures they’ve posted. It sounded like a beautiful business model, and there are many out there that might want to replicate that.”
The increasing adoption of stablecoins as a payment method further strengthens their position in the digital finance ecosystem. Analysts at Bernstein have deemed stablecoins “systemically important,” citing that a significant portion of young adults in emerging markets hold a substantial part of their portfolios in stablecoins.
The potential entry of Robinhood and Revolut into the stablecoin market would inject a dose of fresh competition, challenging the established players like Tether and Circle. This development aligns with the growing adoption of digital currencies, as evidenced by PayPal Inc.’s expansion of its cryptocurrency offerings, enabling U.S. merchants to buy, sell, and hold crypto within their online wallets. The world of digital finance is evolving at a rapid pace, and the entry of major players like Robinhood and Revolut into the stablecoin market is set to shape the future of this dynamic sector.
