Fidelity’s stablecoin move: Does testing phase signal market entry?
- Fidelity’s stablecoin was reportedly in advanced stages.
- Bitwise exec projected a likely dominance of stablecoins in cross-border payments.
According to reports, Fidelity Investments had planned tests in preparation for a potential debut into the stablecoin market.
The update, first published by the Financial Times and Reuters, noted that the firm’s digital assets division would run the tests but had no ‘immediate plans’ to release them.
Stablecoins are digital assets pegged 1:1 to reserve assets such as the dollar, gold, etc. Currently, the dollar-pegged versions, like the one Fidelity is reported to be testing, are the most popular.
Stablecoin frenzy
This was part of a growing trend by larger players. This week, President Trump-linked World Liberty Financials unveiled its controversial stablecoin, USD1.
Last year, in December, Ripple also launched its dollar-backed stablecoin, RLUSD.
PayPal made a similar move with PYUSD in 2023, marking the entry of cross-border payment players.
In addition, Stripe acquired Bridge, a stablecoin scaling platform, and stated that it was a way to ‘seamlessly handle cross-border transactions.’
In fact, in February, Matt Hougan, Bitwise CEO, projected that stablecoins would dominate the $44 trillion cross-border payment sector.
“Stablecoins are going to dominate $44 trillion cross-border retail B2B transaction market within the next 5 years. As merchants get comfortable to stablecoins, they will roll out across domestic retail transactions as well.”
For the U.S. government, dollar-backed stablecoins are viewed as a way to reinforce USD dominance, per Treasury Secretary Scott Bessent.
To this end, Congress has introduced stablecoin bills to help streamline the sector from a regulatory perspective.
That said, Tether’s USDT has remained the de facto king in the stablecoin sector, with a $144 billion market size. According to Coinmarketcap data, the overall stablecoin market size was $234 billion.