What Stripe’s acquisition of Bridge means for fintech and stablecoins

In February, Stripe completed its acquisition of stablecoin platform Bridge — its largest acquisition to date — following the reintroduction of crypto payments on Stripe for U.S. businesses last year. More broadly, after years of steady stablecoin growth, this acquisition represents the payment industry’s first big acknowledgement that stablecoins can go further mainstream. In 2024, stablecoins moved $15.6 trillion in value — putting stablecoin transaction volume on par with Visa’s.

But what are stablecoins? Stablecoins are crypto assets pegged to the value of fiat currencies, usually the U.S. dollar (USD). By far, the most common stablecoins are “fiat reserve stablecoins” — for instance, USDC (“USD Coin”), which is issued by Circle, is backed 1:1 by a mixture of short-dated U.S. treasuries and bank deposits.

Stablecoins saw significant consumer adoption over the past year, particularly in regions with volatile national currencies, like Nigeria or Argentina; where remittance pathways were expensive, like Colombia; and where there was low international card acceptance, like Pakistan. Stablecoins allow users to preserve the value of their assets in USD; transfer money globally, quickly, and cheaply; and spend on international websites where they are accepted (and local card payments are not).

Stablecoins also benefit businesses, from small shops to larger enterprises. Stripe CEO Patrick Collison described them on Twitter as “room-temperature superconductors for financial services,” further observing that “thanks to stablecoins, businesses around the world will benefit from significant speed, coverage, and cost improvements in the coming years.” Since Bridge is a developer-first payments company (much like Stripe) — making it possible for developers to easily convert between any two dollar formats with a single API, using stablecoins — Bridge offers three key services, as articulated by the company:

• Orchestration: Developers can move, store, and accept stablecoins with a few lines of code because Bridge handles all of the regulatory and compliance requirements, and abstracts away technical complexity.
• Issuance: Developers can issue their own stablecoin in minutes; Bridge then invests stablecoin reserves in U.S. treasuries and shares the economics with those developers.
• Money transfer: Developers can transfer funds across the globe, and offer USD and Euro accounts, for consumers and businesses globally.

Bridge’s current use cases include Starlink using Bridge to repatriate funds from Starlink sales in Argentina; consumers in Nigeria paying for YouTube Premium or ChatGPT with stablecoins; and small businesses in the U.S. taking payments from customers around the world.

Stripe’s acquisition of Bridge aligns with its mission to grow the GDP of the internet. Specifically, stablecoins offer Stripe two advantages: First, by supporting stablecoins, Stripe can transact across borders more cheaply in certain corridors with stablecoins, as well as reduce transaction failures and improve conversion rates in countries with underdeveloped payment infrastructures (that is, regions where the company has a limited presence or fewer payment partners). Second, stablecoins enable Stripe to offer their merchants a cheaper alternative to credit card payments, in some cases. In 2024, Stripe grew 38% — surpassing $1.4 trillion in total payments volume; the Bridge acquisition could therefore fuel further global growth through stablecoins.

From the broader fintech perspective, we see three industry barriers to further stablecoin adoption, including unclear regulatory frameworks around the world, although these are quickly improving; cumbersome user experiences, especially given they are not yet widely available through traditional banks and payment mediums; and some trust issues, which may slow some businesses and consumers on adoption. But stablecoins are a way to “reset” the currently closed, centralized (yet patchwork) global financial system, argues a16z General Partner Chris Dixon. He describes them as “the WhatsApp moment for money,” observing that stablecoins are our first real shot at doing for money what email did for communication: make it open, instant, and borderless.

Beyond applications like cross-border payments and others, stablecoins also offer new infrastructure to help AI agents transcend the limitations of today’s financial infrastructure, which was designed for humans, not AI. For example, when an AI agent wants to make a payment on your behalf, whose card or wallet does it use? Who authorizes the transaction? Where in the transaction does the risk sit? What if an AI agent wants to pay another AI agent? Stablecoins can help solve these problems because they are, by nature, programmable thanks to blockchains — which allow developers to set budget rules, automatically trigger payments based on specific criteria, and facilitate micropayments. Stripe has an existing solution to this problem through their agent toolkit, which allows AI agents to create one-time virtual cards to perform e-commerce transactions. The toolkit is currently being used by Perplexity to enable their autonomous shopping experience. Stablecoins would be an appropriate alternative or expansion building on this.

This post originally appeared in the a16z Fintech newsletter.

Editor: Sonal Chokshi