Stripe's Strategic $1.1 Billion Acquisition of Bridge.xyz

Introduction

Stripe, a leader in the global payments industry, has made a groundbreaking acquisition of Bridge.xyz, a stablecoin-focused fintech company, for $1.1 billion. This move is Stripe's largest acquisition to date and signifies a deeper commitment to cryptocurrency integration. The acquisition provides Stripe with unprecedented stablecoin transaction capabilities, positioning it to strengthen its business-to-business (B2B) and business-to-consumer (B2B2C) models and expand its international reach.

This acquisition comes as Stripe ramps up its crypto-related services. The company recently partnered with Coinbase, incorporating the Base layer-2 network into its payment offerings and facilitating fiat-to-crypto transactions. This partnership aligns closely with Bridge's model and opens new pathways for Stripe to integrate stablecoin payments across broader platforms.

Bridge’s Unique Business Model: Stablecoin On-and-Off Ramp for Businesses

Bridge was founded by Zach Abrams and Sean Yu, former Coinbase employees who previously co-founded Evenly, a peer-to-peer payments company acquired by Square. Together, they now provide a powerful on-and-off ramp for stablecoins, enabling businesses to seamlessly convert between USD and popular stablecoins like USDC, USDT, and DAI.

Bridge’s offerings simplify the process for businesses to transact and settle in stablecoins by providing seamless conversion to and from USD. Their model focuses exclusively on enterprise-level clients, fostering direct B2B relationships while also enabling companies to integrate Bridge’s API and provide stablecoin conversion services to their end users.

Bridge’s suite of tools is designed for secure, scalable conversions across blockchain networks. At the core, their infrastructure supports various Ethereum Virtual Machine (EVM) blockchains like Ethereum and other blockchain ecosystems. Additionally, Bridge’s partnerships with stablecoin issuers such as Tether and Circle allow them to mint and burn USDC and USDT, providing secure, efficient stablecoin transactions across their networks.

This unique B2B and B2B2C model has allowed Bridge to carve out a distinctive role in the fintech sector as a specialized provider of stablecoin services. Through this infrastructure, businesses can confidently leverage Bridge’s enterprise-grade tools, supported by partnerships with major stablecoin issuers like Tether and Circle. To explore their offerings in detail, visit Bridge’s Website or consult their API Documentation.

Licensing and Compliance

Bridge’s regulatory strategy hinges on its registration as a Money Services Business (MSB) in the United States, with key licenses such as the Money Transmitter License in Florida. The company operates under licensing agreements with banking partners, likely allowing it to expand services nationwide. This model likely involves collaboration with larger financial institutions, enabling Bridge to deliver compliant transactions under established banking licenses.

Revenue Model and Client Base

Bridge has built a scalable revenue model through transaction fees, charging several basis points on each stablecoin-to-fiat or fiat-to-stablecoin transaction. Reported revenues reached $15 million, reflecting the high volume of transactions handled at low costs. Among Bridge’s major clients, SpaceX stands out, highlighting Bridge's appeal to high-profile enterprises looking to leverage stablecoin transactions for cost-effective, cross-border payments.

Why did Stripe Buy Bridge.xyz?

Reading about Stripe’s purchase might leave you wondering, why would they spend so much on a nascent volatile industry?” It is a valid question so let’s take a look at the data.

There are many inefficiencies in the traditional finance world, one of the main issues is sending money across the internet.

Stripe’s acquisition is likely motivated by Bridge's robust infrastructure, established clientele, and scalable model that facilitates low-cost, high-volume transactions. Bridge’s technology will support Stripe’s ambitions to offer stablecoin payments and cross-border capabilities to businesses worldwide. With Bridge’s infrastructure, Stripe gains a comprehensive stablecoin service ready to meet rising enterprise demand for digital assets and simplify international transactions.

In today’s SWIFT system, transfers between certain countries can take days to weeks to finalize. SWIFT is a global cooperative that allows banks in different countries to communicate and transfer value in multiple currencies across borders. This type of system is needed because, just like languages, banks in different countries natively can’t easily communicate with each other. There needs to be a middleman involved to facilitate this process. While this system has worked for many years, current technology allows for a better system, a system that is faster, cheaper, and more transparent.?

Stripe bought Bridge.xyz because they saw the future: stablecoins and real-world assets (RWAs). These types of assets create the connection between the traditional economy and the crypto economy. They allow access to unique opportunities that can’t be tapped into by current legacy systems. One of the easiest examples of an untapped opportunity is non-US citizens gaining access to US dollars.

Through tokens like USDT and USDC, citizens from different countries can choose to leave their local economies and save in US dollars. This has never happened before, previously when a person wanted better money, they needed to leave their local economy for somewhere better. With these USD stablecoins, those same people can stay in their homes and save in better money.

There is a huge demand for this programmable and permissionless dollar. From tens of millions of dollars to roughly $175 billion in 7 years, this sector has soared and will likely continue its growth.

“[Stablecoins] amounted to $8.5 trillion in transaction volume across 1.1 billion transactions in the second quarter of 2024 ended June 30. Stablecoin transaction volumes more than doubled Visa’s $3.9 trillion in transactions over the same period. That stablecoins have entered the same conversation as such well-known and entrenched payment services as Visa, PayPal, ACH, and Fedwire is a remarkable testament to their utility.” - a16z State of Crypto 2024 report

Stripe can take advantage of low-cost cryptocurrency transactions to lower their prices while increasing speed. Currently, Stripe charges anywhere from .5% - 2.9% on cards and 5.99% on Buy Now Pay Later transactions. By lowering internal costs, Stripe will be able to make these services cheaper for consumers, making this a win-win for the company and users. By purchasing Bridge.xyz, Stripe has uniquely positioned itself to take advantage of this growth and strengthen its business-to-business (B2B) and business-to-consumer (B2B2C) models internationally.

Conclusion

Stripe’s acquisition of Bridge.xyz marks a significant step in the payments industry's evolving relationship with stablecoins. By leveraging Bridge’s infrastructure, Stripe is not only expanding its crypto payment services but also making strides toward building a comprehensive digital payments ecosystem. For Stripe, this acquisition is about more than just crypto integration—it's about solidifying its position as a pioneer in digital payments that aligns with regulatory compliance and enterprise security. With Bridge’s expertise, Stripe is well-positioned to lead the next wave of B2B stablecoin adoption, fostering an innovative and secure financial environment for global transactions.

Written By: Christopher Perrotta , Chairman of the Rhode Island Blockchain Council and Drew Gillen , CEO of Abyiss