Stripe Acquires Bridge for $1.1 Billion
Stripe has acquired Bridge for a price of $1.1 billion. Allow me to explain why this company is worth paying attention to, even if you may have never heard of it before.
Firstly, Stripe is heavily investing in the stablecoin space.
– Stripe’s co-founder demonstrated earlier this year how to accept stablecoins on Solana via Phantom.
– They have launched payment and collection features for cryptocurrencies, which means any US merchant can accept stablecoins like USDC and settle in USD.
Even during bear markets, the trading volume of stablecoins continues to rise, and with the support of efficient blockchains like Solana/Base, they are confident in the adaptability of stablecoins in the market.
These will go down as some of the most iconic statements in financial history:
“Stablecoins are the room-temperature superconductors of financial services.”
Why did Stripe choose stablecoins?
Currently, Stripe is just a payment gateway, relying on networks like Visa and Mastercard:
– Charging additional fees of around 1-3%
– Relying on banks and local partners
– Low authorization rates
Stablecoins can eliminate all intermediary steps, giving Stripe control over the entire technology stack.
However, in order for Stripe to have control over the stablecoin technology stack, they need to build:
– On/Off ramps (conversion between fiat and cryptocurrencies)
– Stablecoin issuance (e.g., Tether’s $10 billion annual profit)
– Complex stablecoin infrastructure (involving over 20 blockchains, more than 10 stablecoins, etc.)
They could spend years building these, or achieve them directly through acquisition.
Introducing Bridge
Founded in 2022, Bridge was created by two successful entrepreneurs (previously acquired by Square), with the founding team including former Chief Product Officer of Brex, @zcabrams, and Airbnb engineer Sean.
Their vision is to build various types of stablecoin APIs.
Initially, they operated by helping businesses accept stablecoin payments and building stablecoin infrastructure (similar to Stripe’s approach in traditional finance).
In 2023, they secured an undisclosed seed funding round (estimated at around $18 million, led by Sequoia).
Over the past two and a half years, they have developed the following APIs:
– Bridging (conversion between on/off ramps, converting any form of USD to another form, e.g., converting USDC on Solana to USD)
– Issuance (minting stablecoins and investing reserves)
They have facilitated over $5 billion in transactions for clients including stablecoin fintech applications like @getdolarapp (virtual accounts provided by Leeds Bank), global financial operations like @SpaceX and the US government, and payment services like @scale_AI paying their contractors.
They support various on/off ramps and cryptocurrency cards.
Who are their competitors?
There are many!
@ZeroHashX (larger scale, but lacking reputation)
@Brale_xyz and @Paxos (stablecoin issuance; Paxos assisted in issuing PayPal’s PYUSD)
@CoinflowLabs
And any provider offering on/off ramps and stablecoin infrastructure.
Why choose Bridge?
Prioritizing APIs; integration with Stripe’s technology stack
Acquiring potential competitors (e.g., integrating Bridge with stablecoin fintech companies planning to disrupt Stripe)
Offering complementary products (e.g., treasury services with stablecoin issuance, BaaS with cryptocurrency acceptance)
Having shared investors: Sequoia and tech founders in San Francisco
Having a concise social media username: @stablecoin
Thanks to @gizmothegizzer for contributing.
So, why spend $1.1 billion?
Mainly because of the strong team – the founders have held leadership or worked in top startups like Airbnb, Brex, Coinbase, and Square – they are the best choice to lead “Stripe Crypto Infrastructure.”
Licenses, products, market appeal, and customer base.
I speculate that this deal will be equity-driven rather than cash-based.
From a strategic perspective, acquiring Bridge helps:
– Compete faster with crypto-friendly giants like BlackRock, Revolut, and PayPal
– Achieve 24/7 global operations and break through limitations of localized payment systems (Stripe faced significant challenges expanding into long-tail markets like Asia and Latin America)
What’s next for Stripe? My speculation:
– Continue supporting cryptocurrency on/off ramps and acceptance while leveraging Bridge’s APIs
– Further develop stablecoin infrastructure (enabling global fintech companies to launch stablecoins, potentially issuing their own stablecoin, STUSD, to have full control over the ecosystem)
– Become an advocate for stablecoin payments, enabling every convenience store to accept stablecoins.
As a stablecoin enthusiast, I believe this is good news for the cryptocurrency market:
– It is the largest cryptocurrency acquisition to date (more M&A activities are expected)
– It is also Stripe’s largest acquisition (showcasing their grand vision for cryptocurrencies)
– Will this become a historic acquisition like Instagram and truly boost the internet’s GDP?
This article is a collaboration and repost from:
DeepCurrent
