Stripe Acquisition of Bridge: A New Chapter in Stablecoin Payments

Stablecoins are sweeping the globe, with a year-on-year growth rate exceeding 50%. The global transaction settlement volume has already surpassed that of Visa by more than twice. After multiple attempts at cryptocurrency payments this year, Stripe, one of the three major payment giants in the United States, has finally made a significant decision. It acquired the stablecoin API company Bridge.xyz, which was established only 2 years ago, for $1.1 billion, creating the largest acquisition case in the cryptocurrency industry to date.

The Rise of Stablecoins

A recent report on the cryptocurrency industry clearly points out that stablecoins have become one of the most significant "killer applications" in the Web3 space. Thanks to the proliferation of smartphones and the implementation of blockchain technology, stablecoins are expected to become one of the greatest financial empowerment movements in human history.

Stablecoins greatly simplify the value transfer process. The quarterly transaction volume has already more than doubled Visa's $3.9 trillion, settling assets worth trillions of dollars annually, fully proving their practicality. In addition, measured by daily active addresses, stablecoins account for nearly one-third of daily cryptocurrency usage at 32%, second only to decentralized finance (DeFi) at 34%.

According to a stablecoin report by a major payment giant, the total supply of stablecoins is approximately $170 billion. There are about 20 million addresses on-chain conducting stablecoin transactions each month. Over 120 million addresses on-chain hold a non-zero stablecoin balance. These data indicate that stablecoins are forming a monetary system parallel to traditional financial infrastructure — and all of this only began five years ago.

Some surprising stablecoin statistics:

• Stablecoin is now the sixth largest purchaser of U.S. Treasury bonds.
• 30% of cross-border remittances are conducted through stablecoins.
• Several major payment companies have stablecoin projects.
• International payment systems and some sovereign countries are exploring the utility of stablecoin payments.
• The application of stablecoins in non-crypto fields is increasing, such as remittances, cross-border payments, salary payments, trade settlements, and merchant settlements.

Bridge's Business Model

Bridge was founded by entrepreneurs Sean Yu and Zach Abrams. It is a stablecoin API engine that provides software tools to help companies accept stablecoin payments. The two founders previously sold Evenly, a competitor to Venmo, to a payment company in 2013; Abrams was also a former senior employee at a cryptocurrency exchange.

The Orchestration API of Bridge is an API that integrates stablecoin payments into the existing operations of Web2 companies, with Bridge handling all the complexities of compliance, regulation, and technology.

The Issuance API of Bridge enables users to issue their own stablecoin and offers a 5% investment option in US Treasuries to enhance fund utilization.

This set of APIs, combined with Bridge's own capabilities, enables 1) stablecoin cross-chain trading, 2) fiat/cryptocurrency deposit and withdrawal acceptance, and 3) virtual bank accounts provided by partner banks, allowing Web2 users to use stablecoins for payments more conveniently, resulting in a smoother and seamless user experience.

Bridge states that using its API, funds can be transferred globally within minutes, seamlessly sending stablecoin payments, converting local fiat currency to stablecoins, and providing global consumers and businesses with USD and EUR accounts, allowing users to save and spend in USD and EUR.

Bridge has attracted numerous clients, including a certain aerospace company. According to reports, this aerospace company uses Bridge to collect payments in different currencies across various jurisdictions and transfers them to its global treasury via stablecoin.

Bridge has also established partnerships with several blockchain networks and crypto payment applications to provide infrastructure for their own stablecoin payment functionalities. In addition, a certain cryptocurrency exchange platform has adopted Bridge's services to support the transfer of stablecoins across different blockchains. According to statistics, the annual payment volume processed by Bridge has exceeded 5 billion US dollars.

Collaboration between Stripe and Bridge

The collaboration between Stripe and Bridge is essentially a continuation of the rise of stablecoins, and their integration will further assist Stripe in implementing its cryptocurrency payment strategy, allowing Stripe to handle stablecoins more easily, making transactions more transparent and secure.

The latest official statement from Bridge states:

"Bridge and Stripe will work together to accelerate the adoption and utility of tokenized dollars, making it easier for everyone around the world to transfer, store, and spend currency.

When we launched the API 18 months ago, the world was very different from now. Many people were questioning the practicality of the entire digital asset space, and stablecoins were also affected. Regulators, banks, and fintech companies were unable or unwilling to engage deeply with this new medium of exchange.

It was also from that time that some of the largest global financial institutions began to natively support stablecoins. Policymakers around the world are striving to provide clarity and support for stablecoin infrastructure, recognizing the strategic importance of this technology to the current financial system.

Behind the scenes, the adoption and use of stablecoins are rapidly accelerating.

Shortly after the launch, several cross-border payment companies integrated our API, demonstrating that stablecoins can be used to make global funds flow faster and cheaper. Then, we collaborated with government agencies to distribute aid funds, supporting thousands of frontline workers in Latin America. After that, we established virtual accounts that enabled fintech companies to allow global consumers and businesses to hold and spend US dollars.

Through each use case, we prove to ourselves and to people outside the company that stablecoins can become the core global funding flow infrastructure, and stablecoins represent a whole new payment platform. This is not because consumers or businesses inherently want 'cryptocurrency', but because stablecoins solve key financial problems. They make it easier to move funds, cheaper to hold, and more affordable to transfer.

Stripe and Bridge share a common vision that our increasingly globalized world needs better currency. We need currency that can flow across borders; anyone from any country/region can use it freely; and remittances should be almost free.

Moreover, it is crucial that we all believe that the significant transformation of financial services will not happen overnight. Change requires years of accumulation. Continuous improvement of products and platforms, as well as ongoing trust with customers, regulators, and partners.

Stripe's Cryptocurrency Layout

Previously, Stripe announced on October 10th the re-access of cryptocurrency payment gateway for American merchants, allowing American merchants to:

1. Accept USDC and USDP from over 150 countries through Ethereum, Solana, and Polygon;

2. Enterprises/merchants can receive it in US dollars;

3. Integration for checkout acquiring, payment components, and payment API will soon be applicable to the company's subscription features.

Stripe became the first large payment company to offer Bitcoin payments in 2014. However, due to the long confirmation times, high fees, and price volatility at that time, demand decreased, and the feature was gradually phased out in 2018.

However, this is not the first time Stripe has integrated cryptocurrency services in recent months. In July of this year, Stripe's EU company allowed users to purchase cryptocurrencies such as BTC, ETH, and SOL.

In June of this year, Stripe also signed a cooperation agreement with a certain cryptocurrency exchange platform, incorporating the platform's Layer 2 into its cryptocurrency payment products. At the same time, the platform allows users to use Stripe's fiat currency to access cryptocurrency, so that users can purchase cryptocurrency in their wallets.

The essence of Stripe's business (whether it is acquiring or transferring) is: 1) the exchange between fiat currency and cryptocurrency; 2) cross-chain settlement of cryptocurrencies/stablecoins.

Therefore, for the acquisition of Bridge,

• Be able to quickly fill in the functional requirements of this business.
• Better serve existing customers of the Stripe ecosystem;
• Expand beyond the Stripe ecosystem. Bridge's star client is the U.S. government.

Movements of Other Payment Giants

A certain payment giant launched its stablecoin on Ethereum for the first time last August, and then in June of this year, it introduced the same stablecoin on Solana. Outside of its own ecosystem, the company is also actively promoting the developer ecosystem for its stablecoin.

According to data from a certain data platform, in August of this year, the volume of the stablecoin on Solana accounted for 64% of the market share, while Ethereum only accounted for 36%. The total market capitalization of the stablecoin reached 1 billion USD in August.

The payment giant previously published an article clarifying the evolution of stablecoin payment towards large-scale adoption:

• The introduction of the concept brings cognitive awakening
• Integrate to achieve payment utility
• Stablecoin payments are everywhere.

Clearly, we are currently in the second phase and are moving towards the third phase.

Another payment giant is also a loyal supporter of Bitcoin, holding 8027 coins and has made numerous moves in the cryptocurrency field.

Conclusion

In the cryptocurrency space, the company with the most complex APIs and the best connections may become the industry leader. Bridge might be one of them.

We have just begun.

Future acquisition deals will be even more amazing.