The biggest trap of stablecoins: 99% of companies issuing tokens are just "self-congratulating"

Written by: Mario Stefanidis

Compiled and Edited by: BitpushNews

Stablecoins are permeating the traditional financial sector in a patchy yet undeniably significant way.

Klarna recently launched KlarnaUSD on Stripe’s first-layer network Tempo, built specifically for payments; PayPal issued PYUSD on Ethereum, whose market cap doubled in three months, with stablecoins surpassing 1% market share and supply approaching $4 billion; Stripe has begun using USDC to pay merchants; Cash App expanded its services from Bitcoin to stablecoins in early 2026, allowing its 58 million users to seamlessly send and receive stablecoins within their fiat balances.

Although each company approaches the space differently, they are all responding to the same trend: stablecoins make capital flow extremely simple.

Data Source: Artemis Analytics

Market narratives often jump straight to “everyone will issue their own stablecoin.” But this outcome is unlikely. A world with dozens of widely used stablecoins is manageable, but if thousands emerge, chaos will ensue. Users do not want their dollars (yes, dollars, with over 99% dominance) scattered across numerous branded tokens, each on its own chain, with varying liquidity, fees, and exchange paths. Market makers profit from spreads, cross-chain bridges charge fees—this layered “cutting” of the pie is precisely what stablecoins aim to address.

Fortune 500 companies should recognize that stablecoins are highly useful, but issuing one is not a guaranteed win. A select few will leverage them to gain distribution channels, reduce costs, and strengthen their ecosystems. Many others may bear operational burdens without clear returns.

True competitive advantage comes from embedding stablecoins as “payment rails” within products, rather than simply branding tokens with their own labels.

Why Stablecoins Are Gaining Favor in Traditional Finance

Stablecoins solve specific operational issues that legacy payment rails have failed to address. The benefits are straightforward: lower settlement costs, faster fund availability, broader cross-border reach, and fewer intermediaries. When a platform processes millions of transactions daily, with total annual transaction volume (TPV) reaching billions or even trillions of dollars, small improvements compound into significant economic gains.

1. Lower Settlement Costs

Most consumer platforms accept card payments and pay interchange fees per transaction. In the US, these fees can be about 1%-3% of the transaction amount, plus fixed fees of around $0.10-$0.60 per transaction from major card networks (American Express, Visa, MasterCard). If payments are settled on-chain, stablecoin settlement can reduce these costs to just a few cents. For high-volume, low-margin companies, this is an attractive leverage point. Note that they do not need to replace card payments entirely with stablecoins—covering a portion of transactions suffices for cost savings.

Data Source: A16z Crypto

Some companies choose to partner with service providers like Stripe to accept stablecoin payments settled in USD. While not mandatory, most prefer zero volatility and instant fiat settlement. Merchants typically want USD to flow into their bank accounts rather than managing crypto custody, private keys, or reconciliation issues. Even with Stripe’s 1.5% floating fee, this is significantly lower than credit card alternatives.

It’s easy to imagine large enterprises initially collaborating with stablecoin payment solutions and later weighing whether to invest in building their own infrastructure. Ultimately, for small and medium-sized businesses aiming to retain nearly all economic benefits, this trade-off becomes reasonable.

2. Global Reachability

Stablecoins can move across borders without negotiating with each country’s banks. This advantage appeals to consumer apps, marketplaces, gig platforms, and remittance services. Stablecoins enable access to users in markets where financial relationships are not yet established.

FX fees for credit card users typically add 1%-3% per transaction unless using fee-free cards. Stablecoins incur no cross-border fees because their payment layer does not recognize borders; USDC sent from a wallet in New York to Europe arrives just as it would locally.

For European merchants, the only extra step is deciding how to handle USD-denominated assets. If they want to receive euros in their bank accounts, they must convert. If they are willing to hold USD on their balance sheet, no conversion is needed—and they might even earn yields if balances are idle on exchanges like Coinbase.

3. Instant Settlement

Stablecoins settle within minutes, often seconds, whereas traditional payments can take days. Additionally, stablecoins operate 24/7, unaffected by bank holidays, cut-off times, or other inherent banking system constraints. This eliminates these limitations and can significantly reduce operational friction for companies managing high-frequency payments or tight cash flow cycles.

How Traditional Companies Should Approach Stablecoins

Stablecoins present both opportunities and pressures. Some firms can use them to expand product reach or cut costs, while others risk losing economic benefits if users shift to cheaper or faster rails. The right strategy depends on revenue models, geographic footprint, and reliance on legacy payment infrastructure.

Some companies benefit from adding stablecoin rails because it reinforces their core products. Platforms serving cross-border users can settle funds faster and avoid friction with local banks. For those processing millions of transactions, keeping payments on-chain reduces settlement costs.

Many large platforms operate with razor-thin profit margins. If stablecoins allow them to bypass even 1-3 basis points of costs on a portion of funds, the savings can be substantial. On a $1 trillion annual TPV, reducing costs by 1 basis point is worth $1 billion. Leading adopters include fintech-native, low-capital-cost payment rails like PayPal, Stripe, and Cash App.

Other companies adopt stablecoins because competitors might use them to bypass parts of their business model. Banks and custodians face significant risks from stablecoins—they could lose low-cost deposit funding to stablecoins that take market share from traditional deposits. Issuing tokenized deposits or offering custody services could serve as early defenses against new entrants.

Stablecoins also lower cross-border remittance costs, which poses a risk to remittance businesses. Defensive adoption is more about protecting existing revenue than growth. Companies in this camp include Visa and MasterCard (charging interchange and settlement fees), Western Union, MoneyGram, and banks relying on low-cost deposits.

Given that slow adoption of stablecoins in payments could threaten survival—whether in offensive or defensive strategies—Fortune 500 companies face a key question: should they issue their own stablecoin or integrate existing ones? Which makes more sense?

Data Source: Artemis Analytics

Issuing a stablecoin is not a sustainable equilibrium for every company. Users expect frictionless experience; if they must choose from dozens of branded tokens, even if all are denominated in the same currency, they may prefer fiat.

Supply Trajectory

Companies should assume only a small fraction of stablecoins will maintain deep liquidity and broad acceptance. This is not a “winner-takes-all” industry. For example, Tether’s USDT was the first fiat-backed stablecoin, debuting in October 2014 on Bitcoin’s Omni Layer. Despite competitors like Circle’s USDC launched in 2018, Tether’s dominance peaked in early 2024 at over 71%.

By December 2025, USDT’s share of the total stablecoin supply remains at 60%, with USDC at 26%. This means other alternatives control about 14% of the roughly $430 billion total—around $43 billion. While modest compared to trillions in equities or fixed income markets, stablecoin total supply has grown 11.5x from $26.9 billion in January 2021, with a five-year CAGR of 63%.

Even at a conservative 40% annual growth rate, stablecoin supply could reach approximately $1.6 trillion by 2030—more than five times current value. 2025 will be a pivotal year, driven by regulatory clarity from the GENIUS Act and large-scale institutional adoption spurred by clear use cases.

At that point, the combined dominance of USDT and USDC may decline. With a current quarterly decline rate of 50 basis points, by 2030, other stablecoins could account for 25% of the market, roughly $400 billion, according to our supply forecasts. While significant, this is still insufficient to support dozens of tokens the size of Tether or USDC.

When there is clear product-market fit, adoption can happen rapidly, benefiting from broader stablecoin supply growth and potentially capturing market share from current leaders. Otherwise, newly issued stablecoins risk getting lost in a “big mix” of low supply and unclear growth stories.

Note that among the 90 stablecoins tracked by Artemis, only 10 have a supply exceeding $1 billion.

Corporate Case Studies

Companies experimenting with stablecoins are not following a single script. Each responds to specific pain points within their own business, and these differences are more important than their similarities.

PayPal: Defending Core Business While Testing New Rails

PYUSD is primarily a defensive product first, then a growth tool. PayPal’s core remains card and bank transfer-based, which accounts for most of its revenue. Branded checkout and cross-border fees are significantly higher.

Stablecoins threaten this stack by offering cheaper settlement and faster cross-border movement. PYUSD allows PayPal to participate in this shift without losing control over user relationships. As of Q3 2025, the company reports 438 million active accounts—defined as users who transacted within the past 12 months.

PayPal already holds user balances, manages compliance, and operates a closed-loop ecosystem. Issuing stablecoins naturally fits this structure. The challenge is adoption, as PYUSD competes with USDC and USDT, which already have deeper liquidity and acceptance. PayPal’s advantage lies in distribution, not price. PYUSD only works if it can be embedded into PayPal and Venmo workflows.

Data Source: Artemis Analytics

PYUSD, like Venmo, is a growth vehicle but not a direct revenue generator. In 2025, Venmo will generate about $1.7 billion, roughly 5% of its parent’s total revenue. However, monetization is underway through Venmo debit cards and “Pay with Venmo” products.

PYUSD currently offers a 3.7% annualized reward for holding the stablecoin in PayPal or Venmo wallets, meaning PayPal’s net interest margin (holding US Treasuries as collateral) is roughly breakeven. The real opportunity lies in fund flows, not idle balances. If PYUSD reduces PayPal’s reliance on external rails, cuts settlement costs for certain transactions, and keeps users within its ecosystem rather than flowing outside, PayPal benefits.

Additionally, PYUSD supports defensive economics. Open stablecoins like USDC face “disintermediation” risk; by issuing its own stablecoin, PayPal reduces the chance that its services become a paid or bypassed external layer.

Klarna: Reducing Payment Friction

Klarna’s focus on stablecoins is on control and cost. As a “buy now, pay later” provider, Klarna sits between merchants, consumers, and card networks. It pays interchange and processing fees on both ends. Stablecoins offer a way to compress these costs and simplify settlement.

Klarna helps consumers finance short- and long-term purchases. For plans within a few months, it typically charges 3-6% per transaction plus about $0.30. This is its largest revenue source, compensating for payment processing, credit risk, and increased merchant sales. Longer installment plans (6, 12, 24 months) also accrue interest similar to credit cards.

In both cases, Klarna’s focus is not on becoming a payment network but on managing internal cash flows. Faster, cheaper settlement with merchants improves margins and strengthens merchant relationships.

The risk is fragmentation—unless Klarna-branded tokens are widely accepted outside its platform, long-term holding of the token offers little benefit. In short, stablecoins are a tool, not a product, for Klarna.

Stripe: Building the Settlement Layer, Not Issuing Tokens

Stripe’s approach is the most disciplined. It chooses not to issue stablecoins but to focus on using existing stablecoins for payments and collections. This distinction is crucial because Stripe does not need to secure liquidity—only to facilitate fund flows.

Stripe’s annual TPV is projected to grow 38% in 2024 to $1.4 trillion; at this rate, despite being founded over a decade later, it may surpass PayPal’s $1.8 trillion TPV. Its recent valuation of $106.7 billion reflects this growth.

Support for stablecoin payments responds to clear customer demand. Merchants want faster settlement, fewer banking restrictions, and global reach. Stablecoins address these needs. By supporting assets like USDC, Stripe improves its product without requiring merchants to manage another balance or face issuer risk.

Earlier this year, Stripe acquired Bridge Network for $1.1 billion to reinforce this strategy. Bridge focuses on stablecoin-native payment infrastructure, including on/off ramps, compliance tools, and global settlement rails. Stripe’s acquisition of Bridge is not about issuing tokens but internalizing the pipeline. This gives Stripe more control over its stablecoin strategy and better integration with existing merchant workflows.

Data Source: PolyFlow

Stripe wins by acting as the interface for stablecoins. Its strategy reflects its market position—handling trillions in transactions with double-digit annual growth. Regardless of which stablecoin dominates, Stripe remains neutral and charges per transaction. Given the low underlying costs of stablecoin transactions, any fixed fee it charges will boost profits.

Merchant Pain Point: Simplicity Is Justice

Merchants care about stablecoins because of straightforward reasons: high and obvious costs.

In 2024, US merchants paid $187.2 billion in processing fees for $11.9 trillion in customer payments. For many small and medium businesses, these fees are the third-largest operational expense after labor and rent. Stablecoins offer a feasible way to reduce this burden in specific use cases.

Beyond lower costs, stablecoins provide predictable settlement and faster fund availability. On-chain transactions are final, whereas credit card or traditional payment solutions may involve refunds or disputes. Merchants also prefer not to hold cryptocurrencies or manage wallets, which is why early pilots look like “stablecoin in, dollars out.”

According to Artemis’s latest survey in August 2025, merchants processed $6.4 billion in enterprise stablecoin payments, ten times the volume in December 2023.

Data Source: Artemis Analytics

This dynamic explains why merchant adoption tends to concentrate quickly. Merchants do not want to support dozens of tokens, each with different liquidity, conversion costs, and operational features. Each additional stablecoin introduces complexity and reconciliation challenges from market makers or bridges, undermining the original value proposition.

Therefore, merchant adoption favors stablecoins with clear product-market fit. Stablecoins lacking features that make transactions easier than fiat will gradually fade away. From a merchant’s perspective, accepting a long-tail stablecoin offers no significant advantage over not accepting any stablecoin.

Artemis’s stablecoin map illustrates how chaotic the current landscape is. Merchants won’t bother dealing with dozens of gateways, wallets, and infrastructure providers just to convert income into fiat.

Data Source: Artemis (stablecoinsmap.com)

Merchants reinforce this outcome by standardizing on assets they actually use. Payment processors support only the assets their customers need. Over time, the ecosystem will coalesce around a limited set of tokens worth the integration effort.

Why This Matters

All these factors create discomfort within the stablecoin ecosystem: simply “issuing” is not a sustainable business model.

A company whose main product is “we mint stablecoins” is betting on liquidity, distribution, and usage growing naturally. In reality, these only emerge when a token is embedded into real payment flows. The “if you mint, they will come” mentality does not apply here, as consumers face hundreds of issuers.

That’s why companies like Agora or M0, which only issue tokens, will struggle to demonstrate long-term advantage unless they significantly expand beyond issuance. Without control over wallets, merchants, platforms, or settlement rails, they are downstream of the value they seek. If users can just as easily hold USDC or USDT, liquidity will not be dispersed into another branded dollar token.

Conversely, companies controlling distribution, fund flows, or integration points become more powerful. Stripe benefits without issuing stablecoins; it sits directly on merchant settlement pathways and earns revenue regardless of which stablecoin dominates. PayPal can validate PYUSD because it owns wallets, user relationships, and checkout experiences. Cash App can integrate stablecoins because it already aggregates balances and controls user experience. These companies leverage their position through usage.

The key insight: if you are upstream in the stack but only have a bare token, you are in a highly integrated market.

Stablecoins reward your position in the architecture, not novelty.

Conclusion

Stablecoins change how money flows, not what money fundamentally is. Their value lies in reducing settlement friction, not creating new financial instruments. This fundamental distinction explains why stablecoins tend to proliferate within existing platforms rather than alongside them. Companies use stablecoins to optimize existing processes, not to disrupt their business models.

This also clarifies why issuing stablecoins should not be the default approach. Liquidity, acceptance, and integration capabilities matter far more than branding. Without sustained use cases and clear demand, new tokens only add operational burdens without creating advantages. For most companies, integrating existing stablecoins is more scalable—markets naturally favor a few assets that can be used across many contexts, rather than numerous tokens suited only for narrow scenarios. Before minting a doomed stablecoin, strategic positioning—offensive or defensive—must be clear.

Merchant behavior further reinforces this trend. Merchants always prioritize simplicity and reliability. They will adopt only payment methods that reduce costs and complexity. Stablecoins that can be seamlessly embedded into existing workflows will be favored; those requiring extra reconciliation, conversion, or wallet management will be phased out. Over time, the ecosystem will filter out stablecoins lacking clear product-market fit.

In payments, simplicity determines adoption: only stablecoins that facilitate smoother capital flows will survive; the rest will be forgotten.