Stablecoin Market- Can Robinhood and Revolut Challenge Tether’s Dominance?
Stablecoin Market– Fintech heavyweights Robinhood, a U.S. investing app, and Revolut, a crypto-friendly neobank based in London, are reportedly considering launching their own stablecoins, according to unnamed sources cited by Bloomberg this week. This potential move highlights a significant shift in the stablecoin landscape, which is currently dominated by Tether (USDT), holding a market capitalization of approximately $119 billion and accounting for around 68% of the $173.5 billion market.
The Competitive Landscape
With Europe offering clearer regulatory frameworks, the entry of these fintech giants could usher in a new wave of competition in the stablecoin market. However, the crucial question remains: Can Robinhood and Revolut break through Tether’s stronghold, or will they face the same struggles that other major players have encountered in the past?
While neither company has officially confirmed their plans, a report from September 26 indicates both are seriously considering stablecoin issuance. Robinhood has already taken steps into the stablecoin arena by listing Circle’s USDC, which is currently the second-largest stablecoin with a market cap of $36.3 billion. Meanwhile, Revolut has expanded its crypto offerings, including staking services for major tokens like Ethereum, potentially laying the groundwork for a future stablecoin launch.
Challenges in the Market
Despite these efforts, breaking into the stablecoin market poses significant challenges. The barriers to entry are steep, and competition is fierce, with Tether not only leading but deeply entrenched in the ecosystem. The case of PayPal’s PYUSD exemplifies the hurdles new entrants face. Despite PayPal’s extensive user base and strong brand recognition, its stablecoin supply hovers around $710 million—merely a fraction when compared to Tether.
Moreover, recent data shows that PYUSD’s circulating supply has dropped by 30% in the past 30 days, reflecting the volatility and risks that stablecoins face in a fluctuating market. Fred Schebesta, founder of Finder.com, acknowledges the potential for Robinhood and Revolut but emphasizes the challenges ahead. Revolut and Robinhood definitely have a shot at making a dent in USDT’s dominance, but it’s going to take a lot of integration to get there, he noted.
He further pointed out that USDT has a deep-rooted presence in the market, and people, for some reason, still place an unusual amount of trust in it.
A Path Forward?
Both Robinhood and Revolut have a unique opportunity to differentiate themselves. Their platforms are more integrated with retail investors, which could give them an edge that PayPal hasn’t tapped into yet. Pav Hundal, a market analyst at Australian crypto exchange Swyftx, agrees that scale will be crucial for success. He stated, Stablecoins are a game of scale, or relative scale if you have a niche offering. Robinhood and Revolut possess scale in abundance and clearly have some level of conviction that they can leverage their huge global networks to take a slice of Tether’s market.
Importantly, both companies are already regulated in many jurisdictions, providing them with a significant advantage. However, Hundal cautions, For now, Tether exists on an entirely different plane of existence to its competitor.
Other major players like JPMorgan Chase, Meta (formerly Facebook), and Binance have also struggled in the stablecoin space. JPM Coin found a niche within internal banking but failed to gain traction in the retail or DeFi markets. Meta’s Diem, once envisioned as the future of money, crumbled under regulatory pressures and never launched. Even Binance’s BUSD, while growing, remains a distant competitor to Tether, unable to disrupt the giant.
In summary, while Robinhood and Revolut may have the ambition and regulatory support to enter the stablecoin market, they will face significant challenges in overcoming Tether’s entrenched dominance. The stablecoin market’s deep liquidity pools, network effects, and established trust create high barriers that new entrants must navigate carefully.
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