Can Stripe build Circle before Circle builds Stripe? There’s an opportunity for someone to use a regulated, USD-backed stablecoin to significantly disrupt the global payments ecosystem. This is not a big direct revenue generation opportunity because the economics of stablecoins aren’t that good (especially if there’s any competition). However, it is a big indirect revenue generation opportunity if you can stack value-add services on top of a ubiquitous stablecoin rail. Circle is well on its way to owning that regulated, USD-backed stablecoin rail. More recently, it has been working to build out those value-add services (CCTP, CPN, USYC, agentic payments capabilities, etc.) Stripe obviously has a ton of value-add payments services already built. It has been working to retrofit those services for stablecoins and to build new, stablecoin-native value-add services. The problem for Stripe is that it doesn’t control the underlying stablecoin payment rail. Circle does and it has been working to vertically integrate it in order to lock the Stripes of the world out of the more lucrative opportunities higher up in the stack. Stripe’s initial response was to acquire Bridge and (through Bridge) to issue its own stablecoin (USDB). What Stripe seems to have realized is that this strategy for building out the Circle side of its business is going to take too long. Circle has too big of a lead. So, Stripe has taken a page out of the big banks’ book and has launched a consortium (Open Standard) which will develop its own regulated, USD-backed payment stablecoin (OUSD) to compete with Circle. It has convinced quite a few other companies to be a part of the consortium as well, including Adyen, Visa, Mastercard, American Express, U.S. Bank, Coinbase, Google, and Shopify. Stripe is incentivizing participation by creating a somewhat-decentralized governance structure for Open Standard and is incentivizing adoption by eliminating fees to mint and redeem and sharing nearly all the float revenue with the partners who are using OUSD. Essentially, Stripe is teaming up with everyone who makes money in any part of the payments stack (except Circle) and creating a new stablecoin business model that makes stablecoin issuance unsurvivable as a standalone business. This puts Circle in a tough spot, because, unlike Stripe, Circle can’t adopt a consortium-style approach to building out the Stripe side of its business. It needs to own that side of the business, which means it needs to build (or acquire) it itself. OUSD isn’t guaranteed to succeed. It has some massive execution and governance challenges ahead of it. And regulators will have their say, at some point. But it is an indicator of how important Stripe (and its partners) think regulated, USD-backed stablecoins are as foundational payments infrastructure.

Ramp just raised $750M at a $44B valuation, which is roughly 44x their current revenue. I'm impressed by the level of conviction Ramp has been able to instill in the investors that have poured roughly $3B into the company since 2019, including, most recently, the Ontario Teachers' Pension Plan. Personally, I'm not sure I get it. I admire Ramp. It's a super smart company that has a genuinely strong handle on AI and is growing and shipping product extremely fast, but $44B? That's more than PayPal, which currently has a market cap of $38B on $32B in revenue. "Fine," you might say. "PayPal is an absolute mess. Ramp should be worth more than it." OK, what about Fifth Third? It has almost $300B in assets and generated $9B in revenue last year (good for $2.5B in profit). Its market cap is currently the same as Ramp's valuation. "Yes," you acknowledge. "Fifth Third is a better-run company than PayPal, but it's a bank. It's slow. Looking forward, its growth trajectory is very modest. Ramp's growth potential makes it a much better bet." So, what about Affirm? Affirm is just as smart as Ramp. It has just as strong a handle on AI as Ramp. It's profitable and on track to generate more than $4B in revenue this year, which would be a 33% increase year-over-year. Affirm's market cap is currently $22B, half of what Ramp was just valued at. That just doesn't seem correct. Something is being mispriced and my hunch is that it's Ramp. But we won't know that until it goes public, if it ever does.

One unelected government official who is filling multiple high-level positions and using them to sabotage a government program that has strong bipartisan support from elected government officials seems like a good example of the "deep state" doesn't it? news.bloomberglaw.com/bankin…

This is a great article. The most interesting and disturbing part, by far, is the business model for this form of affiliate marketing, which includes the ability for the news outlet to get paid a percentage of gamblers' losses. 🤯

Did I create a graphic specifically around this Egyptian mythology analogy? Why yes. Yes, I did.

Strengthening the value prop for merchants is a smart direction to go.

The conditions are right for banking as a service (BaaS) to explode in the next few years. What will that look like? And what will happen next? I don't know, but here are 9 questions that are shaping my thinking on the future of BaaS. newsletter.fintechtakes.com/…