Key insights
- Mastercard, SoFi, and Block are making significant moves in the stablecoin space. Mastercard secured a New York BitLicense, a major regulatory hurdle, to support stablecoin infrastructure. SoFi launched its own bank-issued stablecoin, SOFI USD, for its 15 million customers. Block is rolling out its stablecoin to nearly 60 million Cash App users. These developments signal increasing mainstream adoption and integration of stablecoins into traditional financial services and payment systems, potentially impacting the broader fintech and payments landscape.
Scott Melker discusses the latest push by big banks, including Mastercard (MA), SoFi (SOFI), and Block (XYZ), in the stablecoin arms race, which is accelerating quickly.
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Now, talking about this mainstream adoption and utilization of the chain and the plumbing being built, we have three announcements in a row that I want to show you about stable coins. So, first, MasterCard secures a New York bit license to support stable coin and digital payment infrastructure. And everyone knows that getting a bit bit license is like seeing a unicorn on the moon wearing a tutu. It's basically impossible to get uh this sort of stamp of approval in New York. Very few entities have gotten it. MasterCard, obviously, one that would be in the running to be able to get one because they have an established business for for so long. But big news for them on the stable coin front to get the bit license in New York. The next story here, Sofi launches S O Sofi USD, SOFI USD, Sofi Fidy.
Stable coin across Ethereum and Solana. So this is big news because they have, I believe 15 million customers and this is a bank issued stable coin. They're not adopting a circle or a USDT, they're launching their own stable coin and we'll be issuing that out to all of their own customers be able to use for payments. So this is a neobank, basically a Fintech that's launching their own stable coin. And then of course, this one which really, really, uh, which really got my attention. Block kicks off cash apps phase stable coin roll out to its nearly 60 million users.
So, hey, this is wild. So I wrote a whole newsletter on this actually. It went out this morning and this is was the title. Crypto was supposed to replace the dollar. It's replacing the wire transfer instead. And so the idea here is that, you know, Bitcoin was built to replace the dollar, become the global reserve currency. It didn't actually replace the dollar. What it did is built basically built the dollar a better delivery truck. Right? We're replacing wire transfers. We're replacing the way that dollars are moved with stable coins and crypto infrastructure, but not necessarily replacing the dollar itself. In fact, all this stable coin adoption is hyperdollarization and the irony should not be lost on anyone in crypto that the reason that Bitcoin was created was as a hedge, as an answer to hyperdollarization and Fiat and money printing. And stable coins are arguably have been the killer app for the technology underlying Bitcoin and they increase all the things that Bitcoin was created against. That said, the dollar clearly remains the main medium of exchange here, even, you know, in the war against Bitcoin, but Bitcoin will continue to win the store of value war in my opinion. But that story about the block
particularly interesting because that uh the block is Jack Dorsey, who was basically our last Bitcoin payments maximalist on Earth. and this is what he had said about it. He said, I don't like that we're going to support stable coins, but our customers want to use them. I don't think it's wise to go from one gatekeeper to another. But now Cash app supports USDC on four not non- Bitcoin change. And so even sort of the last hold out on the Bitcoin only thesis has given in. He has a fidu fiduciary duty to his shareholders, obviously, is going to do what's best for his platform and he should adopt stable coins, but it really shows you exactly what we're talking about. I mean, as we're talking about these massive outflows from ETFs of Bitcoin, you have the stable coin market reaching 322 billion and only rising. As I told you the other day, it exceeds the FX reserves of 95 nations including the UK and Canada. Tether itself holds $141 billion in US Treasuries, making it the 18th largest holder of US debt globally, and it's only rising. So yeah, the stable coins arms race is here and the banks are winning. We're not winning it in defi and decentralization. Once again, the banks are utilizing the technology to make their payments faster and cheaper.
Maybe that is not something that will necessarily be investible by us.