The crypto industry has long been searching for a “killer app” to bring digital assets into the mainstream. Recently, however, some are pointing to the growing popularity of stablecoins like Tether and USDC and saying the long-awaited use case is already here. Designed to trade 1:1 with major currencies like the dollar, stablecoins are finding increasing adoption in areas like cross-border remittances and DeFi payments – and some say this is just the beginning.
A startup called Bridge, co-founded by Square and Coinbase alumni Zach Abrams and Sean Yu, wants to take stablecoins to the next level. Leveraging its extensive experience in fintech, Bridge aspires to build a future global payments network around stablecoins to challenge everything from Swift to credit cards.
And unlike other crypto-native firms developing within the stablecoin ecosystem, Bridge is backed by some of Silicon Valley’s leading generalist venture firms, including Sequoia, Ribbit and Index, as well as blockchain-focused Haun Ventures. The company has raised $58 million in previously unannounced funding, including a new $40 million round led by Sequoia and Ribbit, and clients including SpaceX and Coinbase.
“Fintech is deeply rational,” Abrams said in an interview with Assets“If you can do something faster, cheaper and more economically, you’ve won.”
Explosion of stablecoins
While stablecoins have seen massive growth over the past two years – industry leader Tether has a market cap of around $118 billion, while USDC is at $34 billion – the asset class has also struggled with incidents that have raised doubts about whether they are truly “stable.”
In 2022, the collapse of TerraUSD — a so-called algorithmic stablecoin that maintained its peg to $1 through a related cryptocurrency rather than a fiat reserve — sparked a broader cryptocurrency collapse that led to regulatory investigations and congressional hearings. Then USDC briefly lost its peg in secondary markets in 2023 when it was revealed that its issuer Circle had parked billions of its reserves at the collapsing Silicon Valley Bank (USDC quickly recovered when it was announced that the FDIC would insure the bank’s deposits). And Tether, still the market leader, has long faced allegations of opaque accounting.
Despite the challenges and the continued lack of federal legislation to regulate the nascent sector, stablecoins have managed to get back on their feet, although questions still remain about how much volume comes from real users and how much from bots and wholesalers. TradFi companies like PayPal and VanEck have launched or supported their own stablecoins, while others like Stripe have begun to integrate products like USDC into their offerings.
Still, the challenge for many companies looking to use stablecoins is creating on- and off-ramps to move fiat currencies in and out of the crypto ecosystem while facilitating transfers between different types of stablecoins and blockchains. Dollar-backed options like USDC and Tether may be the most popular, but there are countless others pegged to the Mexican peso or a basket of assets — and a single stablecoin can be issued across a dozen different blockchains.
In an interview with AssetsChris Ahn, a partner at Haun Ventures who first invested in Bridge’s seed round while at Index, said there would be no need for Bridge if there was only one stablecoin on a single blockchain. Bridge’s added value is that developers can seamlessly switch between fiat and stablecoins and between different blockchains, he said.
The pitch is simple. “We built Bridge as a simple set of APIs that allows companies to use a stablecoin rail without thinking about it,” as Abrams put it. But why would companies want that?
Crypto advocates like to point out that fiat currency circulation is slow and expensive. Large transactions often require waiting for banks to open, and cross-border payments can involve high fees and endless wait times. Stablecoins offer, at least in theory, low fees and instant settlement.
In Bridge’s ideal future, stablecoins will act as a global payment rail, allowing developers to integrate seamlessly. In that sense, you can think of it as a Web3 analogue of Stripe, which helps businesses accept online payments, or Plaid, which makes it easy to connect an app to a bank account.
Investors said Assets that Bridge stands out from other crypto companies due to the fintech experience of its founders, who have worked at startups like Brex and Square. They believe this will help Bridge serve not only crypto companies, but also companies that primarily operate in fiat.
Bridge already has high-profile customers, including Elon Musk’s SpaceX, which uses Bridge to collect payments in different countries in different currencies and transfer them to its global treasury via stablecoins. Bridge is also working with crypto companies like blockchain Stellar and Bitcoin app Strike to provide the infrastructure for their own stablecoin payment features.
One client, Abrams’ former employer Coinbase, uses Bridge to help users transfer between Tether on Tron and USDC on Base, its own Layer 2 blockchain. “The work they’re doing to help traditional companies get on the blockchain is super important,” Jesse Pollak, the founder of Base and a former colleague of Abrams, told Fortune. “All companies are going to have all their assets on the blockchain because it’s going to be faster, cheaper and more globally available.”
Bridge has so far processed over $5 billion in annual payment volume.
A major focus for the company will be on the compliance side. While software development will consume much of the new resources, Bridge will also need to build relationships with global financial institutions to enable on- and off-ramps of various currencies, as well as blockchains and stablecoins for integration. Abrams said Bridge also has money transfer licenses in 48 states and a VASP license from Dubai, and is applying for additional licenses in New York, Europe and elsewhere.
While stablecoins may not have gained confidence among non-crypto companies yet, Abrams said the growing regulatory landscape – and fundamental economics – will convince companies. “My interest comes from money transfer,” he said Assets“It’s less blockchain specific.”
