Visa joins forces with Paxos in a stablecoin initiative, signaling the growing involvement of large financial institutions in the stablecoin space.
Paxos‘ Global Dollar Network (USDG) has welcomed its first traditional finance incumbent member, Visa, in a move that signals the growing involvement of large financial institutions in the stablecoin space.
The stablecoin business has long been dominated by the first and second largest issuers of USD-pegged tokens, Tether’s USDT and Circle’s USDC. However, with regulatory changes opening up new opportunities for firms to enter the market, the landscape is shifting. Stablecoins are designed to maintain a stable value relative to a fiat currency, typically the US dollar, making them an attractive option for companies looking to reduce their exposure to volatility.
Stablecoins are a type of digital asset designed to maintain a stable value relative to a fiat currency, such as the US dollar.
They are often pegged to the value of a reserve asset, which helps to stabilize their price.
This stability makes them attractive for use in trading, investing, and even everyday transactions.
Stablecoins can be issued by central banks, financial institutions, or private companies.
They are typically backed by a reserve of underlying assets, such as currencies, commodities, or other securities.
The ‘stablecoin business has long been dominated by the first and second largest issuers of USD-pegged tokens’ quote from industry experts highlights the growing importance of stablecoins in the market.
The Global Dollar Network (USDG) is a consortium of firms that aim to create a more liquid and connected market for stablecoins. Unlike some other players in the space, such as Tether, which retains the interest gained from its stablecoin reserves, USDG will share out yield to participant firms that can create connectivity and liquidity.
USDG’s initial cohort of members includes several notable firms, including Anchorage Digital, Bullish (the owner of CoinDesk), Kraken, Galaxy Digital, Nuvei, and now Visa. These partnerships demonstrate the growing interest in stablecoins among traditional finance institutions and fintech companies alike.
As the stablecoin space continues to evolve, it’s clear that large financial institutions are taking notice. With USDG at the forefront of this development, we can expect to see increased liquidity and connectivity in the market, potentially leading to more widespread adoption of stablecoins.
