Fintech giants Revolut and Robinhood are reportedly considering launching their own stablecoins.
According to Bloomberg, both companies are looking into the idea, though no firm decisions have been made yet.
A spokesperson for Robinhood said that there are “no imminent plans” to issue a stablecoin, but they did not deny that the company is considering the possibility. Revolut, on the other hand, is also exploring the idea but hasn’t officially confirmed anything.
One of its representatives said the company wants to “further grow” its range of cryptocurrency products, and a stablecoin could be part of that strategy in the future.
Competition in the stablecoin market
Revolut and Robinhood wouldn’t be the first fintech companies to launch a stablecoin. PayPal, another major player in the digital payments industry, launched its own stablecoin called $PYUSD in August 2023.
The entry of more companies into the stablecoin market is adding to the competition, especially against Tether ($USDT), which is currently the largest stablecoin on the market.
Tether has a massive lead, with a market circulation nearing $120 billion. This accounts for more than two-thirds of the entire stablecoin market, with Tether holding a 69.14% share, according to data from DefiLlama.
In July, Tether announced a record profit of $5.2 million in the first half of 2024, largely due to its US Treasury portfolio, which is valued at $97.6 billion.
These impressive figures may be encouraging companies like Revolut and Robinhood to consider entering the stablecoin sector, particularly if Tether’s dominance starts to decline.
Bloomberg’s report suggested that both companies are monitoring Tether’s position closely. If Tether faces challenges due to upcoming regulations, Revolut and Robinhood might see a chance to compete more effectively in the market.
Regulatory challenges
However, stablecoins like Tether could soon face difficulties due to the European Union’s new Markets in Crypto-Assets (MiCA) regulations.
These rules, which are set to be introduced soon, will require stablecoins to hold at least 60% of their reserves as bank deposits. This could make it harder for Tether to operate smoothly in the European market.
The CEO of Tether, Paolo Ardoino, has expressed concerns about these new regulations, pointing out that it could increase the risks for stablecoins. The requirement might also lead to Tether being delisted from European cryptocurrency exchanges if the company does not comply with the new rules.
Meanwhile, Circle, the company behind the second-largest stablecoin USD Coin ($USDC), has already secured the necessary licences to operate under these regulations in the European Union.
This gives Circle a competitive advantage over Tether, which has yet to meet the new regulatory requirements.
Global stablecoin market on the rise
The stablecoin market is expanding rapidly worldwide. In many emerging economies, stablecoins are being used as a store of value and for everyday transactions. Their use in bypassing sanctions has also caught the attention of users, adding to their popularity.
The Chief Product Officer at Sygnum, Thomas Eichenberger, highlighted the growing interest in stablecoins by saying,
“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 launch of new stablecoins is not limited to companies like PayPal. Recently, Ethena Labs introduced a new stablecoin that is backed by the BlackRock USD Institutional Digital Liquidity Fund ($BUIDL).
This stablecoin is designed to maintain a stable value by being tied to US dollars, short-term US Treasury bills, and other financial agreements.
This global expansion of stablecoins has attracted investors who are interested in breaking the duopoly of Tether and Circle. PayPal, for example, launched its stablecoin last year and has quickly grown to nearly $1 billion in circulation.
Although Tether remains dominant with nearly $120 billion in market cap, experts believe that upcoming regulations could open the door for new players in the stablecoin market.
At this time, neither Revolut nor Robinhood have announced concrete plans for their stablecoins. Robinhood, in particular, has also been looking into cryptocurrency futures trading in the US and Europe, though a spokesperson confirmed that there are “no immediate plans” for this service.
