Crypto’s stablecoin sector is becoming increasingly attractive to traditional financial services players, something that could have big implications for payments stocks, according to Wells Fargo. Stablecoins are cryptocurrencies whose values are pegged to that of another asset, usually the dollar. They are designed to bring the stability of traditional currencies to blockchain networks (praised for the speed and efficiency they provide money transfers). Traditionally used as bridge currencies for crypto traders, banks and payment firms are becoming interested in them as the Trump administration rolls back restrictive Biden-era crypto policies and Congress makes progress on passing stablecoin legislation by August. “Ultimately, the momentum around stablecoins has reached must-monitor levels , both quantitatively (evidenced by market caps of leading stablecoins) and qualitatively ( crypto-friendly rhetoric from Washington ),” Wells Fargo analysts led by Andrew Bauch said in a note Thursday. The market cap for stablecoins has grown 16% this year and 43% in the past year, according to CryptoQuant. Tether’s USDT dominates the market by 67.5%, followed by Circle’s USDC , which makes up about 27% of the market. “We see a healthy balance of threat and opportunity, with more significant implications for commercial cross-border & B2B rather than domestic consumer payments,” the note said. “While everyday adoption for consumers is likely a decade away, the advantages of stablecoins seem clear.” Specifically, they highlighted: Instantaneous authorization, clearing & settlement, reduced funding costs, and arguably most importantly; and open interoperability for smart contracts. Here are five stocks that most need or are likely to strategize around stablecoins, per Wells Fargo: Mastercard has built tools powered by stablecoins and formed partnerships with the popular Ethereum wallet MetaMask as well as the major crypto exchanges Kraken and Binance. That’s all part of an effort to bring consumers into the stablecoin ecosystem by letting them spend them using traditional cards. PayPal was at the forefront of stablecoin enablement when it launched PayPal USD (PYUSD) in 2023 . Although the coin makes up less than 1% of the stablecoin market, PayPal recently took measures , both internally and in its partnership with Coinbase , to increase the coin’s use and boost on-chain payment opportunities for consumers and institutional users. The most obvious use cases for stablecoins include peer-to-peer payments, business-to-business payments and cross-border payments and remittances, according to Well Fargo. Global cross-border revenue was roughly $44 trillion in 2023, according to McKinsey. Commercial payments accounted for about $33 trillion of that versus about $11 trillion in consumer payments, predominately remittances and cross-border commerce payments.
