Stablecoin special: Zach Abrams (Bridge) and Henri Stern (Privy)
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Podcast Summary
This episode explores the current state and future of stablecoins through conversations with two leading crypto infrastructure founders. Zach Abrams, CEO of Bridge, discusses building stablecoin orchestration platforms for global payments and treasury management. Henri Stern, CEO of Privy, explains how crypto wallet infrastructure is enabling embedded digital asset accounts. Both companies recently joined Stripe via acquisitions and provide unique insights into how stablecoins are moving from trading assets to core financial infrastructure. (42:00)
- Main themes include stablecoin adoption beyond trading, the infrastructure needed for global payments, and how traditional businesses are starting to use crypto rails for operational advantages
Speakers
Zach Abrams
CEO and co-founder of Bridge, the leading stablecoin orchestration platform that enables developers to build with stablecoins. Abrams started the company in 2022 during crypto's downturn, initially focusing on NFT use cases before pivoting to stablecoin infrastructure. Bridge recently joined Stripe via acquisition and serves customers ranging from SpaceX to emerging market neobanks.
Henri Stern
CEO and co-founder of Privy, the leading crypto wallet infrastructure company that provides embedded wallet solutions for applications. Stern previously worked in crypto before founding Privy to solve wallet user experience challenges. The company enables developers to build digital asset accounts directly into their applications rather than requiring users to manage external wallets. Privy also recently joined Stripe through acquisition.
Key Takeaways
Cross-Border Payments Are the Primary Stablecoin Use Case
The dominant real-world application for stablecoins today is facilitating international money transfers, particularly from emerging markets. (06:47) Bridge's first customer, Zulu, demonstrated this by converting Colombian pesos to stablecoins, transferring through Bridge's APIs, then converting to US dollars - creating a faster, cheaper alternative to traditional banking rails. This use case has proven so compelling that companies like SpaceX now use stablecoins to repatriate funds from dozens of countries back to the US, replacing complex multi-hop SWIFT transfers with simple blockchain transactions.
Local Exchanges Have Created Alternative FX Markets
The infrastructure supporting stablecoin adoption has matured significantly, with robust local exchanges in Latin America, Africa, and Asia creating deep liquidity between local currencies and stablecoins like USDC and USDT. (09:03) These exchanges effectively function as alternative foreign exchange markets, enabling efficient currency conversion. However, a key limitation remains: while traditional FX markets offer better pricing for larger amounts, stablecoin markets currently see spreads widen with size, making them more efficient for startups than large enterprises.
US Dollar Dominance Reflects True Global Preference
Despite US dollars representing a smaller share of global currency balances, they comprise over 95% of stablecoin value - a phenomenon that reveals genuine market preference rather than artificial constraints. (13:49) This dominance stems from two factors: emerging market users genuinely preferring dollar-denominated assets for stability, and the business-to-business nature of most current stablecoin usage involving American companies. While local stablecoins will eventually emerge, dollar stablecoins will likely maintain outsized market share permanently due to network effects.
Embedded Wallets Enable Fintech Super Apps
The traditional wallet model requiring users to manage external crypto wallets is being replaced by embedded wallet infrastructure that allows any application to provide digital asset accounts natively. (17:46) This shift enables companies to maintain longer relationships with users and build comprehensive financial services within their applications. Rather than losing customers to banks after payment, companies can now offer yield-bearing accounts, lending, and other financial products directly, creating the foundation for globally-accessible fintech super apps.
Open Issuance Will Drive Stablecoin Proliferation
The regulatory clarity provided by recent legislation has enabled Bridge to launch an open issuance platform allowing any company to create their own stablecoins. (48:18) This addresses two key business needs: earning yield on customer deposits (currently captured entirely by existing stablecoin issuers) and maintaining control over financial infrastructure. Companies sitting on large stablecoin balances can now issue their own versions to capture the 4% yield and avoid platform dependence risks, similar to how Zynga faced changing economics on Facebook's platform.
Statistics & Facts
- Stablecoins are over 95% dominated by US dollar-denominated assets like USDC and USDT, despite US dollars representing a much smaller share of global physical currency balances. (13:49) This reveals genuine market preference for dollar stability, particularly in emerging markets.
- SpaceX processes payments in dozens of different countries and uses Bridge's stablecoin infrastructure to repatriate funds back to the US, replacing complex multi-jurisdictional SWIFT transfers that previously required routing through multiple countries. (07:39)
- Tether operates essentially as a "100 billion dollar hedge fund" by keeping all yield from their treasury operations rather than passing any returns to stablecoin holders, despite offering what amounts to a zero-percent yield product. (19:45)
