Last week, the Senate passed the “Guiding and Establishing National Innovation for U.S. Stablecoins Act,” also known as the GENIUS Act, marking a key milestone on the path to regulatory clarity for stablecoins in the United States. At Visa, we support the Act, and we see the passing of stablecoin legislation as a potentially important moment in the history of payments. I say potentially, because a lot still has to go right for all of this to truly scale. Stablecoins represent an opportunity to usher in the next age of digital programmable money but there is still much work to be done.
Scaling new payments technologies is hard. Doing so requires building trust with buyers and sellers and payors and payees at ubiquitous scale. Building that trust happens over time and is rooted in a complex and interwoven set of capabilities that come together to deliver security, reliability, safety, fraud protection, dispute resolution, ease of use and relentless innovation.
For stablecoins to deliver as part of the world’s next generation of digital payments infrastructure, three layers must be present:
First, the technology layer
There must be a robust, scalable, flexible and open technical backbone that can safely and securely execute transactions at hyper speed and scale, with zero tolerance for failure, compromise or breach. Advances in blockchain technology have delivered promising solutions to this problem.
Second, the reserve layer
There must be trust in the value and stability of the medium of exchange. Regulated, reserve-backed stablecoins offer a solution to this problem.
Third, the interface layer
There must be a ubiquitous interface layer that participants actively want to take part in.
- This layer must deliver trust, rules, standards, security and meaningful value to participants on both sides of every transaction
- It must scale to cover billions of end-point participants
- It must provide an easy and convenient mechanism for users to convert value to their fiat currency of choice (i.e., users must be able to use the value that they receive in the places they can and want to use it)
Stablecoin infrastructure by itself provides no line of sight to solving for this last layer and without a solution, stablecoins will fall short of the aspiration to deliver a mainstream means of exchanging value.
They will certainly be used to solve narrow payments problems, power closed loop solutions and leveraged as behind the scenes infrastructure in wholesale money movement and capital markets… but they will not scale in mainstream payments.
Visa will help solve this problem. Visa has built the world’s most scaled, secure, trusted and recognized version of this third layer. And we have invested billions in adapting it over time to become increasingly agnostic to the underlying medium of exchange and to make it easy and flexible for all parties to integrate into the Visa ecosystem. Through the combination of our infrastructure, services and connectivity, we deliver seamless, secure digital payment experiences for billions of buyers and sellers worldwide, all at unparalleled levels of scale, reliability, and security. We call this powerful combination the Visa as a Service stack. From the smallest sellers to the largest banks and corporations, the world turns to the Visa stack when they need to scale payments solutions. And crypto native partners are no exception. For years now, we have been partnering with the leading crypto and stablecoin players and platforms to deliver access to the Visa stack and the payments hyper-scaling that comes with it. Since 2020, we have facilitated almost $95 billion in purchases of crypto currencies and over $25 billion in cryptocurrency spending — together, that’s more than $100 billion of flows.
I get asked a lot “but what is the problem that stablecoins are solving?” It is a very good question. Consumers and businesses across the globe see their 4.8 billion Visa credentials and the nearly 14 billion digital Visa tokens as the best way to pay and be paid by everyone, everywhere. Our stack delivers magical payments experiences, and we are constantly investing to make it the most cutting edge, secure and convenient way to pay. Visa users do not need to ask themselves questions like these before they make a purchase:
- Will my payment be accepted by this merchant?
- Do I need a specialized wallet to make a payment?
- Is my wallet funded with the right type of currency, and am I on the right blockchain?
- What will the gas costs of making this payment be?
- Will I have privacy? Once I buy something from a merchant, will everyone be able to see all of my transactions and my address without my permission?
- Will I get my rewards?
- How do I access my credit line?
- Who do I talk to if I have a problem?
- Is it safe?
The vast majority of consumers and businesses will continue to pay in fiat currency and enjoy the benefits of their Visa credentials. The same can be true for stablecoin powered solutions that connect to the Visa stack.
So, back to the problem stablecoins can solve. For a subset of use cases, including in emerging markets, stablecoins still represent an important opportunity. Particularly:
- Where users desire to hold but do not have easy access to USD
- Where local fiat currency is highly volatile
- For certain cross-border money movement use cases such as remittances or B2B payments
We see these use cases as new flows that we do not currently fully address today, providing a way for us to grow our business. Here, we plan to deploy the power of the Visa stack, in partnership with stablecoin native partners and platforms and our financial institution partners. It is less obvious that consumers and businesses will seek to make payments using stablecoins in developed markets such as the United States as there are already a wide array of competitive options to pay with “digital dollars” directly from a bank account.
The GENIUS Act brings the fit-for purpose regulatory clarity required for stablecoins, opening a potential path for further adoption. Visa is already very active in the stablecoin space across a variety of solutions, including:
- Deploying Visa credentials and Visa tokens to connect stablecoin and crypto platforms and their users to fiat currency and our global network
- Delivering native stablecoin settlement
- Enabling cross-border money movement solutions across stablecoin infrastructure
- Delivering programmable money solutions for our clients
- And much more under development
Of course, getting to true genius in stablecoins will take time — and we are just getting started.