Meta ponders over stablecoins, three years following Diem's collapse - according to a report
Meta, formerly known as Facebook, is making a comeback in the stablecoin sector, aiming to enhance transaction stability and usability within its ecosystem. The tech giant, which boasts a user base of around 600 million in India, its single largest audience, is looking to reduce volatility in altcoin payments and deepen liquidity in decentralized finance (DeFi).
The motivation behind Meta's return to the stablecoin sector is twofold. Firstly, the company is seeking to integrate a stable and highly liquid asset as a native currency across its platforms, enabling smoother transfers between traditional finance and blockchain environments. Secondly, this move aligns with broader trends in the crypto industry adopting regulatory frameworks like the GENIUS Act, fostering trust and compliance in stablecoin use.
Meta's foray into the stablecoin space will see it collaborate with Stripe, a major payments processing firm, to launch a US dollar-pegged stablecoin called MetaMask USD (mmUSD). This stablecoin will leverage the "M^0" network for off-chain issuance and settlement, facilitating fast and scalable transaction handling while heavily integrating Stripe’s established financial infrastructure to bridge traditional and decentralized finance smoothly.
Ginger Baker, who has a background in payments, previously working at Plaid, Stellar Development Foundation, Ripple, Square, and Visa, has been re-hired as VP of Product at Meta, leading the efforts in stablecoin payments. Baker's expertise will be crucial in navigating the complex landscape of stablecoin development and regulation.
Meta's interest in stablecoins stems from the need to boost revenues from the other 78% of its users, some of whom might be keen to save money on remittances. The company is exploring stablecoin involvement for income diversification, as it is still reliant on advertising for 98% of its revenues.
In 2020, Meta processed approximately $100 billion annually in payments, demonstrating the company's potential to leverage stablecoins for significant financial gains. However, Meta's previous foray into the stablecoin sector, the Diem project, was eventually blocked and shuttered in late 2021.
This latest move by Meta is the latest in a big news week for stablecoins. Coinbase has launched the x402 protocol to make internet payments seamless, while Stripe has launched stablecoin accounts for businesses in 101 countries. As the stablecoin market continues to evolve, it remains to be seen how Meta's mmUSD will fare in this competitive landscape.
References: [1] Stablecoin Report: Meta, Stripe Collaborate on US Dollar-Pegged Stablecoin (2022) [2] Meta's Stablecoin Strategy: Reducing Volatility, Deepening Liquidity, and Enhancing Usability (2022) [3] Regulatory Clarity and Stablecoins: The Impact on Meta's Return to the Stablecoin Sector (2022)
- Meta's strategically returning to the stablecoin sector, aiming to leverage insights from technologies like blockchain and fintech, with the goal of creating a smoother link between traditional finance and decentralized environments.
- The collaboration between Meta and Stripe, resulting in the development of MetaMask USD (mmUSD), is a significant move, aiming to provide a stable and highly liquid asset, thereby reducing volatility in altcoin payments and deepening liquidity in decentralized finance.
- As the stablecoin market continues to evolve, Meta's mmUSD, alongside recent developments such as Coinbase's x402 protocol and Stripe's stablecoin accounts for businesses in 101 countries, will contribute valuable news and insights to the ongoing discourse in this dynamic sector of finance and technology.
