Stripe acquires Bridge for $1.1 billion. Why is the payment giant betting on stablecoins?

Author: Yash Agarwal Source: X, @yashhsm Translation: Shan Ouba, Golden Finance

Stripe acquired Bridge for $1.1 billion, let me explain to you why this company you may have never heard of is so important.

Stripe is making a big move in stablecoins

Stripe co-founder demonstrated the acceptance of stablecoins Solana using Phantom, earlier this year. –– Cryptocurrency payments/payments have been launched, that is, any US merchant can accept stablecoins such as USDC and settle in US dollars.

Despite the bear market, stablecoin trading volume continues to rise, coupled with the support of high-performance blockchains such as Solana and Base, they are very optimistic about the market fit (PMF) of stablecoins.

These will become the most iconic lines in financial history: “Stablecoins are room-temperature superconductors in the financial services sector.”

Why does Stripe need stablecoins?

Stripe is currently just a payment gateway and must rely on networks such as Visa/Mastercard: –– Extra charges of about 1-3% –– Dependence on banks/local partners –– Low authorization rate stablecoins can cut out all middlemen and thus own the stack.

However, if Stripe wants to own the stablecoin stack, they must build: –– On-ramps/off-ramps (fiat <> crypto conversions) –– Stablecoin issuance (e.g., Tether makes $10 billion per year) –– Complex stablecoin infrastructure (handling 20+ blockchains, 10+ stablecoins, etc.). They can spend years building this, or just acquire it.

Bridge was born

Bridge was founded in 2022 by the founder of a second startup (whose previous company was acquired by Square). The founding team members include former Brex Chief Product Officer (@zcabrams) and former Airbnb engineer Sean.

Their vision is to create various "APIs" for stablecoins. They first started by supporting stablecoin payments and infrastructure (similar to how Stripe does for traditional financial services).

In 2023, they completed an undisclosed round of seed financing (estimated to be around $18 million, led by Sequoia Capital). Over the past 2.5 years, they have built APIs for: –– Dispatch systems (on/off ramps, i.e. converting any form of USD to another. For example, converting USDC on Solana to USD) –– Issuance (minting stablecoins and managing reserve asset investments)

Their APIs have powered over $5 billion in trading volume, with clients including:

1. Stablecoin fintech applications like @getdolarapp (virtual accounts provided by Leeds Bank)

2. Global treasury operations like @SpaceX and the US government

3. Payments like @scale_AI (used to pay its contractors)

Bridge powers many on/off ramps and crypto cards. Who are their competitors? A lot!

• @ZeroHashX (larger, but less reputable)

• @Brale_xyz and @Paxos (stablecoin issuance; Paxos helped issue PayPal's PYUSD)

• @CoinflowLabs

and basically any on/off ramp and stablecoin infrastructure provider.

Why only Bridge?

–– API first: integration with Stripe’s tech stack –– Acquisition of future competitors (e.g., stablecoin fintechs that integrate Bridge, potentially disrupting Stripe’s market) –– Complementary products (e.g., financial management services + stablecoin issuance, banking as a service + BaaS + crypto payments) –– Co-investors: Sequoia + San Francisco tech founders .

Why pay $1.1 billion?

The main reason is the strong team — founders who have led or worked with top startups (Airbnb/Brex/Coinbase/Square) — they are the best people to lead “Stripe’s crypto infrastructure.”

Also, there are licenses, products, market traction, and customer base. I’m guessing the deal will be paid more in equity than cash.

From a strategic perspective, the acquisition of Bridge helps:

–– Accelerate progress to compete with crypto-friendly giants such as BlackRock, Revolut and PayPal –– 24/7 global operations; free from the constraints of localized payment systems (Stripe faces huge problems in expanding to long-tail markets such as Asia and Latin America)

Stripe’s next move? My guess: → Continue to promote on/off ramps and crypto payment acceptance, and take control of Bridge’s API → Deepen stablecoin infrastructure (enable global fintech companies to issue stablecoins, and possibly even launch their own stablecoin, STUSD, to vertically integrate the entire ecosystem?) → Become an advocate of stablecoin payments, so that every street shop can accept stablecoin payments. As a stablecoin enthusiast, I think this is a positive signal for the crypto space: This is the largest acquisition in the crypto space (expect more M&A activity) and Stripe’s largest acquisition ever (showing their vision for the crypto space) Will this be a historic acquisition like Instagram and truly increase the GDP of the Internet?