Fintech Giants Eye $170B Stablecoin Market: Robinhood & Revolut Considering Entry

Major fintech players are exploring entry into the lucrative stablecoin market – and there is more to come.

Robinhood Markets, an US-based prominent trading platform, and Revolut, a UK banking entity, are considering offering their own stablecoins, Bloomberg reported, citing a source with knowledge of the matter. If confirmed, the two major fintech firms would join PayPal in one of the most lucrative and highly competitive markets at this time.

Yet there are “no immediate plans” to issue a stablecoin coin, said a spokesperson of Robinhood, which already offers trading in a wide range of digital assets, including Circle’s USDC stablecoin.

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Revolut did not comment on the potential move, but a spokesperson said that the company was looking to expand its cryptocurrency offerings.

The news comes at a time when stablecoins gain increased attention from financial institutions and leading companies. PayPal was among the first payment giants to enter the market with the launch of its PayPal USD, or PYUSD.

PayPal’s PYUSD stablecoin has already reached a $700 million market cap, becoming the fourth-largest stablecoin.

In the cryptocurrency sector, some entities are also bringing forward stablecoin plan. Ripple, the company behind the leading cryptocurrency in terms of market cap, is close to debuting its own stablecoin, the Ripple USD (RLUSD).

RLUSD is now being “rigorously tested” on XRP Ledger (XRPL) and Ethereum, where it will initially launch. Ripple is fine-tuning the mechanisms of minting and burning RLUSD before its official launch.

While the company has not confirmed the exact launch date, Ripple CEO Brad Garlinghouse has indicated that the product will come in the coming weeks.

Like Ripple, BitGo, the creator of the Wrapped Bitcoin, also plans to soon launch its stablecoin, USDS, as early as 2025. The company also aims to redistribute up to 98% of earnings to its network supporters, including institutions, exchanges, liquidity providers, and users.

EU Regulations and Tether’s Uncertainty

Stablecoins are becoming more widely used for payments, especially in emerging markets. The stablecoin market is also a highly profitable market. Tether reported $6.2 billion in net operating profits in 2023, largely from interest on the assets backing USDT’s value.

Tether and Circle are now controlling about 90% of the $170 billion industry. The arrival of newcomers could challenge the companies’ market share, especially as stricter regulations in Europe and elsewhere are believed to loosen Tether’s grip on the market.

Under the Markets in Crypto-Assets Regulation (MiCA), the European Union’s first established legal framework for digital assets, including stablecoins. Issuers will need to meet certain requirements to be able to operate in the area. However, Tether is now not registered under MiCA.

Tether CEO Paolo Ardoino previously expressed concerns about the risks of EU rules, but he noted the company is working on a solution to serve the EU market. Still, the future of Tether in the EU is uncertain as the MiCA regulations are expected to be fully implemented by the end of 2024.

Failing to comply with MiCA could force exchanges to delist stablecoins from issuers like Tether without appropriate permits. Some exchanges already limited USDT’s capabilities on their platforms.

The MiCA rules, however, are also anticipated to stimulate stablecoin activity. Legal clarity is the strength that any stablecoin issuers are looking for and the regulations indeed unify the fragmented regulatory environment across Europe, provide clarity and ensure financial stability and investor protection.

This can encourage more participants to enter the market, knowing they have a defined legal framework to operate within. As of now, Circle already has the required EU license.

USDT has not only faced competition from other cryptocurrency firms but also mainstream brands, neobanks, which are all considering entering the space. However, its head start gives it an edge over others. Despite the competition from PayPal, USDT’s market value has shown no sign of falling.