US-based Revolut mirrors Robinhood’s plans to unveil stablecoin, prompting analysts to ponder if they could overcome the challenges derailing PayPal’s PYUSD.
The US investing app Robinhood revealed plans to unveil stablecoins coincidentally as the London-based crypto-friendly neobank Revolut harbours a similar initiative, per Bloomberg publication.
Revolut and Robinhood Eye Stablecoin Segment
The two companies eye a stake in the stablecoin market dominated by Tether (USDT), whose value hovers $119 billion. Tether has approximately 68% of the $173.5 billion market.
With the European territory enforcing Markets in Crypto Assets (MiCA) regulation, the fintech giants could leverage the clearer frameworks to bring new stablecoins. While new stablecoins could bring more competition, the primary question is whether they could break the USDT and USDC dominance.
While neither of the two companies has issued an official confirmation, the concerns remain on whether they will overcome the struggles that downed other issuers before them.
A Bloomberg publication on Thursday, Sept. 26, indicated while neither has issued an official confirmation, it illustrates consideration for stablecoin issuance. Robinhood recently made inroads into the stablecoin space by listing USDC ranked second-largest with $36.3 billion in market value.
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Revolut has recently expanded its crypto offerings, including unveiling staking services for leading tokens such as Ethereum. Analysts point towards staking as preparation for the stablecoin launch.
The USDT and USDC stablecoins guarantee essential liquidity for decentralized finance (DeFi) and centralized exchanges. Such makes it challenging for new entrants to gain meaningful traction. The stablecoins pair have a solid reputation for providing essential liquidity for centralized exchanges and decentralized finance (DeFi) ecosystems that new entrants struggle to match.
Attaining a meaningful stake in the market involves more than mere intent. The space has steep barriers, fierce competition, and deep-rooted Tether stablecoin. The failure of PayPal’s PYUSD reveals the challenges that entrants face.
Despite the vast user base, PayPal’s stablecoin supply hovers around $696 million per CoinGecko data. This represents a small fraction of the segment leader, Tether, who lacks Paypal’s solid brand awareness.
Giants Struggle in Stablecoin Space
The recent on-chain data shows a sharp decline in the PYUSD’s circulation by 30% in the month-long period as DeFi yields plunged on Solana. Such an outcome shows stablecoins face heightened volatility and risks in the digital assets market.
Finder.com founder Fred Schebesta considers Revolut and Robinhood potential in the stablecoin segment, though acknowledged the existing challenge. The executive considers while the duo has a shot at denting the USDT’s dominance, such will involve multiple integrations.
Schebesta notes that USDT is deep-rooted in the stablecoin market, and people place unusual trust in it. PayPal’s stablecoin case shows even the big players are struggling to attain traction. He adds that Robinhood and Revolut can leverage the opportunity to attempt a different approach.
Schebesta notes that the two companies have platforms already integrated with retail investors. Leveraging the ecosystems properly could distinguish them from PayPal, thereby having an edge over it.
Lead analyst at Australian crypto exchange Swyftx, Pav Hundal, echoes the argument that scale is crucial. He adds that stablecoins are a purely game of scale to to optimize the niche offering.
Like Revolut, Robinhood possesses scale and conviction level they can leverage from the huge global networks to attain a slice of USDT market share. The two companies have a critical advantage since their operations are regulated in multiple jurisdictions. Nonetheless, Hundal acknowledges that Tether exists on an advanced plane compared to the competitors.
Besides PayPal, other giants, including Meta, Binance, and JPMorgan Chase, have encountered struggles in their attempt to conquer the stablecoin segment. JPM Coin only curved a niche in internal banking, though it failed to establish a footing in the broader retail and DeFi markets. Meta’s Diem, though touted as the future of money, failed to overcome the reguatory pressures to never see the light of the day.
Binance’s BUSD has witnessed multiple challenges and remains a distant further to even topple the Tether. In particular, USDT’s entrenched position as the leading trading pair sets a high liquidity bar that new entrants would struggle to match. Besides deep liquidity pools, success in the stablecoin space mandates overcoming the high barriers in the network effects and established trust.
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