Sequoia Capital Set to Make $100M On Stripe’s Stablecoin Buyout

Stripe recently completed a $1.1 billion deal to acquire Bridge. The company is setting a target for enhanced global stablecoin payment capabilities.

Sequoia Capital is earning over $100 million as payments giant Stripe sealed a deal to acquire stablecoin platform Bridge, according to a new report from Bloomberg.

The venture capital firm, holding a 16% stake in Bridge, invested $19 million in the company’s Series A round last year. The latest acquisition is now a win for several venture capital firms. Not only Sequoia but also Ribbit Capital, Bedrock Fund Management, Index Ventures, and Haun Ventures are also poised to receive major returns from their investments in Bridge.

Big Returns For Early Backers

Ribbit Capital owns roughly 10% of Bridge. Bedrock Fund Management holds over 6%, while Index Ventures and Haun Ventures each own approximately 6% and 4%, respectively.

The stablecoin-focused startup, founded by Coinbase and Square alumni Zach Abrams and Sean Yu, raised an additional $40 million in a funding round led by Sequoia in August. That brought its total capital raised to $58 million, according to several reports.

At the time, the Bridge team aimed to use the fresh funding to upgrade its infrastructure. The company looked to simplify the movement of money across borders and improve access to financial services.

Bridge’s platform for stablecoins has seen rapid growth and that may have attracted Stripe’s attention. Its client base includes some of the highest-profile names like SpaceX, which reportedly adopted the service.

Stablecoins In Demand

Earlier this month, Stripe reportedly agreed to acquire Bridge for $1.1 billion in cash and stock. The deal, pending regulatory approval, allows Stripe to integrate Bridge’s infrastructure, which facilitates the use of stablecoins for payments, with its existing fiat payment processing systems.

The acquisition also reflects Stripe’s ongoing efforts to expand its footprint into the crypto markets, particularly the stablecoin market, whose market cap surpassed $175 billion as of October 28. Analysts estimate that the stablecoin’s market value could hit $3 trillion by 2030.

Currently, the market is dominated by two key players, Tether (USDT) and USD Coin (USDC). CoinGecko data shows that USDT takes around 68% of market shares while USDC holds about 20%.

Stablecoin adoption has grown dramatically over the past few years. These digital currencies are increasingly used in regions facing economic instability as a reliable alternative to local currencies.

Apart from that, major financial institutions and fintech companies, including PayPal and Stripe, are entering the stablecoin space. The arrival of big players has legitimized its use, as well as expanded its applications.

The acquisition comes at a time when the cryptocurrency industry faces increased regulatory scrutiny. While stablecoins play a pivotal role in facilitating trading and providing liquidity in various markets, they are also commonly used in illicit activities.

Last week, the Wall Street Journal reported that Tether was under scrutiny by federal prosecutors in Manhattan. The financial watchdogs were said to investigate Tether for its potential involvement in financing drug trafficking, terrorism, and other illicit activities.

Tether Is Still On Top

Tether quickly denied those accusations. Its CEO, Paolo Ardoino, claimed that the reports were based on “old noise.” He stressed that there was no indication of an ongoing investigation against the company.

Prior to that, there were numerous reports pointing to the U.S. Treasury Department’s consideration of sanctions against Tether due to its widespread use by sanctioned entities. The situation led to fluctuations in cryptocurrency prices, with Bitcoin and other major cryptocurrencies experiencing declines following news of the probe.

Still, governments and regulators worldwide do not completely neglect the benefits of stablecoins. Global lawmakers are working to establish clear frameworks for digital assets, including stablecoins. The full implementation of MiCA is expected to lay the groundwork for the rest of the globe to come up and complete their framework to regulate stablecoins.