- According to sources, Neobank Revolut is planning to launch a stablecoin, which it has been developing for some time.
- It would join Ripple and PayPal as the latest entrants in the stablecoin business as more compliant companies seek to replace the rogue USDT.
Yet another major global firm is joining the stablecoin bandwagon as the race to chip away at USDT’s dominance heats up. This time, it’s Revolut, the British neo-banking platform that has been warming up to crypto for years.
Sources with knowledge of the matter told one outlet that the company has been working on the stablecoin for quite some time.
Revolut didn’t confirm the reports, offering a generic reply to media outlets that inquired about the development. A spokesperson said the company is always looking to offer its users the best experience, and this includes its growing crypto clientele.
However, Revolut intends to pursue a ‘compliance-first’ approach, the spokesperson said in a thinly veiled dig at USDT and its issuer, Tether, a company that has grabbed the headlines for all the wrong reasons in the past few years.
The spokesperson added:
Crypto is a big part of our belief in banking without borders and we have a clear mission to become the safest and most accessible provider of crypto asset services.
Ripple, PayPal, Revolut: The Allure of Stablecoins
Revolut is not the first regulated legacy finance firm to venture into crypto. PayPal took the leap last year, launching the PayPalUSD, a regulated stablecoin that now commands a $733 million market cap, the fifth largest in the market after USDT, USDC, DAI, and FDUSD. PayPalUSD recently expanded to the Solana blockchain, as we reported.
Then came Ripple, the company closely linked to XRP, which announced the RLUSD this year. This regulated stablecoin will be issued on Ethereum and the XRP Ledger, and the company has already started minting it for trials with its partners. Ripple believes that its track record in the industry, its massive following by the XRP community and its regulatory compliance (especially following the conclusion of its SEC lawsuit), give its stablecoin an edge.
Even BitGo, the renowned crypto custodian, wants a piece of the stablecoin pie. The company revealed during the ongoing Token2049 in Singapore that its stablecoin will be dubbed USDS. BitGo used the same old line: we believe we can do stablecoins better than everyone else, and we have the users’ interests at heart.
However, the real motivation for all these new stablecoins is the profit margins that come with having a stablecoin. In essence, a stablecoin is a token that allows a company to pool billions of dollars together and invest as they deem fit while keeping all the profits. Unlike DeFi applications, where users can earn yield, Tether gets to keep 100% of the profit it mints from the $119 billion in fiat it has received from USDT owners. Circle has a $35 billion stash that it also invests as it wishes.
To further sweeten the pot, these companies are not regulated, at least not in the conventional way. For context, any bank that collects deposits from users and invests or lends out to other users has to abide by some strict rules, and noncompliance is heavily punished.
Stablecoin issuers have no such qualms. Tether, for instance, was found guilty of lying about the backing of the token in 2021—which means that it had used some of the funds it received when it sold USDT—and was only fined $41 million. To understand just how inconsequential this was, Tether made $5.2 billion in profits in the first half of 2024.
