Visa and Mastercard are planning to shake up the stablecoin market—but pulling it off won’t be easy

The stablecoin market, which has been dominated for a decade by Tether and Circle, could look very different in a year. The leading legacy players in payments, Visa and Mastercard, have been circling the sector for some time and are reportedly cooking up a plan with other big players to put their own spin on stablecoins. According to a Coin Desk report, the credit card giants are in talks with Stripe and Coinbase to launch a stablecoin platform. The report, based on anonymous sources, offered little in the way of timeline or details. I looked into this and learned there is indeed talk of a new consortium, and that additional companies may be involved in the talks. If anything comes of this, it will have big implications for a stablecoin market whose value is above $300 billion. For starters, the new partnership would accelerate the adoption of stablecoins throughout the retail payment system, where the trio of Visa, Mastercard, and Stripe already carry out a huge chunk of everyday transactions. There’s also the question of what this means for Circle, whose flagship USDC token accounts for the majority of regulated stablecoin activity in North America and Europe. The chatter around the would-be consortium is about a stablecoin “platform,” but it’s a safe bet that Mastercard, Visa and Coinbase would use this arrangement to nudge their millions of merchant clients to use some sort of in-house token. Doing so would open up a stream of new revenue opportunities from reserve interest and more. As for Coinbase, it’s tougher to see what it would gain from opening a stablecoin platform with Stripe and the credit card giants. Currently, the company is enjoying a sweet deal thanks to a 2023 contract with Circle that lets it collect the lion’s share of the interest from USDC reserves, while the latter looks after most of the operational and regulatory responsibility. This arrangement is not permanent, though, and no doubt Circle will be feeling less generous when it’s time to ne