13 ms·
Here's the play. It's very simple, and it's quite good. Stripe processes a LOT of money. The customers that get that money need to move it around. Often to ban
by apinstein 1y ago
Here's the play. It's very simple, and it's quite good.
Stripe processes a LOT of money. The customers that get that money need to move it around. Often to banks. Stripe makes no money on that.
Over the last few years, stablecoins have become a preferred means to hold and move money (for convenience, etc).
Stablecoin providers make money on their float -- selling stablecoins means you get free deposits, and risk-free rates are presently around 4%. For every $1M in stablecoins your customers hold, you can make $40k/year. Stablecoin providers like Circle pay about half of that back out to partners that sell the tokens.
Stripe is huge, and well-trusted by customers for handling payments. By adoption stablecoin infrastructure to control financial flows into stablecoins, they can amass huge amounts of stablecoin sales.
If even ~3% of their transaction volume gets held in Stablecoins, and they make 1% a year on that, it's about $1B a year in bottom line.
~$10e9 (daily avg vol) * 365 * 3% (converted to stablecoins) * 1% (net income) = ~$1B
- vagab0nd 1y agoThat doesn't make sense. You are basically making money on the interest of "in-flight" fund. What does it have to do with stablecoins?
- dmbche 1y agoBeautiful - clean and clear. Thank you. I'm not in that space, but how stable is that 4%? What is it correlated to?
- CamelCaseName 1y agoInterest rates. Their returns are dependent on what they invest in, which is usually US treasuries (since the token is pegged to USD)
- udev4096 1y agoBullshit. The biggest stable coin, Tether, is pure scam. They are essentially creating money out of nowhere. They were found guilty of massive fraud and were fined $18M [1]. They refuse to get audited by a third-party [2]. The ones that do audit them are just as sketchy as them [3]. I would recommend watching this video to grasp the scope of their fraud [4] [1] - https://coingeek.com/tether-bitfinex-prohibited-from-operating-in-new-york-pays-18-5m-settlement-in-nyag-case/ https://coingeek.com/tether-bitfinex-prohibited-from-operati... [2] - https://ecoinimist.com/2024/09/20/concern-over-tether-audits/ https://ecoinimist.com/2024/09/20/concern-over-tether-audits... [3] - https://finance.yahoo.com/news/sec-fines-tether-former-auditor-071504133.html https://finance.yahoo.com/news/sec-fines-tether-former-audit... [4] - https://www.youtube.com/watch?v=-whuXHSL1Pg https://www.youtube.com/watch?v=-whuXHSL1Pg
- smitop 1y agoThere are other stablecoins that aren't scams though, like USDC. I think Stripe would probably either create their own USD stable or partner with Circle.
- irusensei 1y agoIsn't coingeek big SV shills? The whole thing is a fraud starting with its creator Craig Wright.
- smoovb 1y agoCounterpoint. Tether has grown into one of the most profitable, well funded companies on the planet. Their past growing pains are irrelevant to where they are now. They make $30-50 million per day with just 200 employees. They are the 18th largest holder of US debt, ahead of UAE and Germany. Last year, Tether achieved $14 billion in profit, surpassing Pfizer, Tesla, and BlackRock. https://www.bitget.com/news/detail/12560604740855 https://www.bitget.com/news/detail/12560604740855
- taberiand 1y agoThe pinnacle of fake it till you make it. Still a scam.
- LMYahooTFY 1y agoHow exactly is it a scam now? Did they somehow fake treasury purchases? Can you describe something scam like about their business which doesn't also apply to JP Morgan?
- udev4096 1y agoIf you wouldn't be so goddamn lazy, you would know, after searching for a minute that there is NO dollar backing. It's all just words. They have been caught with their pants down numerous times. Either you are a paid tether shill or you are actually that dumb
- notatoad 1y agoi'm still unclear what the crypto really adds to this play. stripe customers need to move their money around, and they need a trusted source to hold money. stripe could just do that. why add crypto into the mix?
- anthonypasq 1y agototal shot in the dark, but im assuming there is much lower regulatory burden to holding lots of crypto than trying to be a bank
- smoovb 1y agoSaid another way, much lower legacy technical debt than trying to be a bank.
- brendanfinan 1y agoSome of the customer's money is already crypto though
- TechDebtDevin 1y agoThere's over 75 billion in daily tether turnover... do the math. Not everyone is a boomer..
- alchemist1e9 1y agoSo many of the crypto skeptic comments on this story are massively out of touch with the products and sophistication of the crypto industry. For those of us who aren’t, the question has basically been flipped to “what does a bank add to this situation?” . I’m typing this shortly after buying my groceries with a visa debit card that was funded 30 seconds before the transaction over Lightning Network with Bitcoin that was sold at a 0.1% fee for USD and immediately then transacted on Visa debit payment network. The reason banks are lobbying so hard recently to close “loopholes” in latest US legislation is because with stablecoins you even need them less and less to hold dollar exposure. The days of traditional banks are likely numbered and the crypto skeptics commenting on HN have their world models upside down. At least that is my view currently.
- bigyabai 1y ago> Over the last few years, stablecoins have become a preferred means to hold and move money Moving money, sure. Holding money, only for chumps. The oldest grift in the cryptocurrency book is "unpegged no-audit stablecoin" and vanishingly few tokens actually put their money where their mouth is. Anyone can spin up money out of nowhere, but only a few businesses can survive a true bank-run scenario. This seems like a threat to put pressure on CBDC to be pro-business or else the private sector will take over part of their job for them. A rational administration would probably want to put a stop to this, letting the private sector print it's own money will invariably end in heartbreak.
- j2kun 1y ago> Over the last few years, stablecoins have become a preferred means to hold and move money (for convenience, etc). For avoiding regulation.
- _zoltan_ 1y agoscrew regulation when a bank transfer isn't instant and the bank can do all kinds of checks and hold your money hostage for days or weeks.
- rebolek 1y agoIn EU, regulations are heavy and the result is I can send money instantly for free. That’s actually what the regulations are for. To protect free trade from bad actors.
- logicchains 1y agoTry sending money to a supplier in Iran or Russia and tell me how helpful those EU regulations are.
- wpm 1y agoWhy would they need to send money to a supplier in a country that couldn't ship goods to them anyways?
- mrzool 1y agoDon’t get suppliers in Iran or Russia. Easy.
- lacy_tinpot 1y agoJust don't trade. Easy. We're actually supporting free trade by restricting free trade. Because when the government controls what you trade that's what free trade actually is. What an amazingly blatant example of Orwellianism.
- knorker 1y ago> Over the last few years, stablecoins have become a preferred means to hold and move money (for convenience, etc). Huh? In the western world this is nonsense. I move 6-7 digits regularly, internationally, even between continents, for free. Convenience of cryptocurrency? Lol. Maybe if I want to send money to Nigeria or North Korea. Cryptocurrency was never more convenient. It's cheaper than Western Union when that's the only alternative, but boy is that a low bar and an edge case. Traditional banking is getting faster and cheaper by the year, so your claim is getting less true every day, not more,
- hippo77 1y agoYou literally describe the problem in your comment: banking works in the western world. It doesn't work for the rest of the world (which is a lot of people) but maybe you don't care about them.
- knorker 1y agoI literally did, yes. That was not by accident. I spent two sentences on that. That's not a "gotcha". Does this mean that you agree with me that when sending money within the developed world and its functioning banking system, cryptocurrency makes no sense? I ask this because many times when people say "but what about sending money to the unbanked, or developing world without modern banking?", they don't actually mean it. They just want to drop that there, and then use that as a reason to try to convince you that cryptocurrency is awesome for sending money from New York to San Francisco. > maybe you don't care about them. Cryptocurrency people absolutely do not care about them. Not at all. I do. I don't want them poisoned with that terrible burden. It's incredibly condescending to say that modern banking is good enough for us in the west, but poor countries should just be given garbage instead. So: Are you highlighting that part of what I said honestly? And we can then talk about the unbanked without implying that developed banking, where it exists, is anything but superior? If yes, then the solution is clearly to bring modern banking to the unbanked, not to give them second class status with cryptocurrencies. At least in the long run. If no, well then I don't see how you highlighting this use case is honest. And I see many cryptocurrency advocates being dishonest on this issue. I'll assume that you're being honest, and replied yes. So what do we do about sending money to Nigeria or North Korea? I'll admit to not knowing first hand the practicalities of that, not having actually done it. Have you? US sanctions still allow up to $5000 per year to family or friends in DPRK. A quick Googling from other countries to DPRK quotes me ~0.7%, with no transaction fee. Western Union seems to charge 4% (actually I expected worse). If 0.7% is accurate and includes currency exchange, then that's actually not that bad. Credit cards here can have worse foreign transaction fees. But OK, let's say the choice is WU or cryptocurrency, nothing else being available. If you're unbanked, do you have a computer, and the skill to manage a cryptocurrency wallet? If not, then I guess you'll need to find a middleman. WU seems to charge 6% to Nigeria. I don't have data about what an agent / middleman would charge, but chatgpt says it'll be about 5-15%. And even if it were 5%, would you trust one of these agents as much as you would trust Western Union? For this 1% discount? Can you trust them not to screw you, and trust them to not get hacked? For 1%? I'd be happy to hear better data on this, if you have it. So again, what is the solution for Nigeria? Is it to go cryptocurrency with its enormous complexities, costs, and trust issues, or is it to bring them modern banking? Again: > stablecoins have become a preferred means to hold and move money lol. What do you think the unbanked would like more: A cryptocurrency wallet to manage directly, a guy in the village with a computer he's "pretty good with", or modern banking with FDIC deposit insurance?
- chinathrow 1y ago> Stripe makes no money on that. They do if you charge in a foreign currency, e.g. in USD and transfer it to the bank account abroad, e.g in CHF.
- koolba 1y ago> Stablecoin providers make money on their float -- selling stablecoins means you get free deposits, and risk-free rates are presently around 4%. For every $1M in stablecoins your customers hold, you can make $40k/year. Stablecoin providers like Circle pay about half of that back out to partners that sell the tokens. These numbers only work while short term rates are high (relative to recent history) and the share percentage is low. The lower the rates and the tighter the margins, and it drops like a rock. Nobody with a sizable balance is going to accept the risk of a system like this without being paid a premium over traditional bank deposits. If my bank gives me 4% I’m not going to give stripe half of that in exchange for losing FDIC protections.