Chintan Turakhia recently ordered a $6.50 brown sugar milk tea with something called “cheese foam” at a boba shop in San Francisco. Instead of cash or a credit card, Turakhia opened an app from the crypto company Coinbase and paid with stablecoins.
“All I do is scan a QR code, right, that is at the register. I type in 6-dot-5-0, and hit send, and it’s done,” he said.
Turakhia is no ordinary boba customer. He works for Coinbase, where his job is basically to convince businesses that accepting stablecoins is really not that different from accepting Visa or American Express.
But unlike traditional payment systems, stablecoins move at the speed of the blockchain.
“It takes 200 milliseconds now and so when I hit send, it’s submitted to the blockchain, it’s confirmed quickly, and then it lands in the merchant’s wallet,” he said.
Traditional credit and debit card payments can take days to actually show up in a merchant’s bank account.
Speed is one selling point in the gospel of stablecoin. But the bigger lure for crypto-curious retailers?
“In traditional credit card systems today, there’s usually between a two to three percent fee. If stablecoins are used by existing companies they may add a small fee, but that fee is usually far, far, far less,” Turakhia said.
Businesses can either pass on that fee to their customers or just eat it. Which is why the National Retail Federation’s Stephanie Martz is excited about stablecoins.
“This would be much needed competition for the traditional credit card market,” she said.
Retailers paid $187 billion in swipe fees last year, mostly to Visa and Mastercard, which have been long criticized as having a duopoly on payment systems.
“Our strong hope and expectation is that this would finally result in credit card and debit card swipe fees going down,” Martz said.
The e-commerce company Shopify and payments company Stripe offer stablecoin options to online merchants. Walmart and Amazon have reportedly explored offering their own in-house stablecoins. But it’s still early stages for the technology.
“I mean, when was the last time you walked into a coffee shop or the grocery store and you paid with a stablecoin?” said Rubail Birwadker, global head of growth for Visa.
Birwardker said the speed and efficiency of stablecoins could improve payment networks, and Visa has already launched stablecoin-linked cards. But he cautions that beyond retailers, stablecoins also have to appeal to consumers who are used to getting miles with their purchases or easily disputing a transaction.
“Building acceptance is hard,” he said. “It has to be safe, it has to be secure, and it has to have the promise of making sure that a consumer can trust where their money is being used.”
The recently-signed GENIUS Act is intended to convince crypto skeptics that stablecoins are in fact safe. If a company issues $100 million in stablecoins, the new law requires that they actually have $100 million in safe assets like short-term Treasury bills in the bank, so that when you want to convert coins to actual real dollars, you can.
University of California, Berkeley, economist Barry Eichengreen fears what amounts to a stablecoin bank run.
“If there are worries about the survival of a business or the survival of a coin, and people begin to cash it in, the issuer is going to have to sell off the Treasury bill collateral,” he said.
Stablecoin issuers are already some of the biggest U.S. debt holders and they’ll likely be gobbling up more Treasury bills post-GENIUS Act.
Eichengreen said stablecoins could pose a threat to the deepest and most liquid bond market in the world. “We could be creating an exceptionally volatile source of demand for Treasuries,” he said.
And that could make for an exceptionally volatile financial system.
