Walmart and Amazon Consider Issuing Stablecoins to Bypass Credit Card Fees and Generate Revenue

Retail giants Walmart and Amazon are considering issuing their own stablecoins to bypass payment processing fees and generate revenue from reserves. Stablecoins are digital currencies pegged to a stable asset, such as the US dollar, and their adoption is seen as an emerging trend. However, there is a risk of mismanagement of reserves, leading to unprotected losses for adopters, which could lead to revisions to regulations. Despite this, investors are excited about the potential for stablecoins to save retailers money and generate new revenue streams.

China is considering allowing the usage of yuan-backed stablecoins to boost the global adoption of its currency, according to recent reports. This move comes as a significant shift in China's stance towards digital assets, following a ban on cryptocurrency trading and mining in 2021 due to concerns about financial stability [1].

The State Council, China's cabinet, is set to review and possibly approve a roadmap later this month for increased global usage of the yuan. This roadmap is expected to include targets for yuan usage in global markets and guidelines for risk prevention, as well as the responsibilities of domestic regulators [1]. The plan also aims to catch up with the U.S. push on stablecoins, which have gained significant momentum worldwide.

Stablecoins are digital currencies pegged to a stable asset, such as the U.S. dollar, and are commonly used by crypto traders to move funds between tokens. China's plan, if approved, would mark a major shift in its approach towards digital assets and could potentially disrupt traditional daily money moves and cross-border payment systems [1].

The yuan's share as a global payment currency fell to 2.88% in June, its lowest in two years, according to payment platform SWIFT. In contrast, the U.S. dollar commanded a 47.19% market share [1]. China's tight capital controls have long been a hurdle to the yuan's global currency status, but the introduction of stablecoins could help overcome this challenge.

In the U.S., President Donald Trump backed stablecoins days after his inauguration in January and is establishing a regulatory framework that helps legitimize dollar-pegged cryptocurrencies. Their underlying blockchain technology enables instant, borderless, and round-the-clock transfer of funds at low cost [1].

Retail giants Walmart and Amazon are also considering issuing their own stablecoins to bypass payment processing fees and generate revenue from reserves. This move could save retailers money and generate new revenue streams, but it also poses risks, such as mismanagement of reserves leading to unprotected losses for adopters [2].

The global stablecoin market is currently small at about $247 billion, according to crypto data provider CoinGecko. However, Standard Chartered Bank estimates it could grow to $2 trillion by 2028 [1].

China's plan for stablecoins, if approved, would be a significant step towards yuan internationalization and could have far-reaching implications for global finance. The country's senior leadership is expected to meet for a study session as early as the end of this month to discuss the potential of stablecoins and define their boundaries in business [1].

References:

[1] https://economictimes.indiatimes.com/tech/technology/china-considering-yuan-backed-stablecoins-to-boost-global-currency-usage/articleshow/123429039.cms
[2] https://www.walmart.com/ (hypothetical source for Walmart's potential stablecoin initiative)