Key Insights:
- Walmart and Amazon are considering issuing their USD-pegged stablecoins.
- The GENIUS Act will provide crucial regulatory clarity for their plans.
- The move could reduce transaction fees and reshape payment systems.
Walmart and Amazon are exploring the launch of their USD-pegged stablecoins to reduce payment costs and speed up transactions. This move comes amid growing interest in digital currencies and improving regulatory clarity in the U.S.
The companies are waiting for the GENIUS Act to pass. This will regulate stablecoins and provide the framework for proceeding with their plans.
This development is likely triggered by President Biden’s recent speech at the Coinbase State of Crypto Summit. There, he discussed the need for clearer cryptocurrency regulations in the U.S.
Walmart and Amazon Explore Stablecoin Issuance
Both Walmart and Amazon are reportedly considering issuing their stablecoins to cut costs related to payment processing. Companies are looking into developing USD-pegged stablecoins for their customers.
This initiative would allow the two giants to bypass traditional banking systems, cutting down on fees and transaction times.
Stablecoins, digital tokens pegged to the value of a fiat currency like the U.S. dollar, are gaining popularity among retailers. Launching their stablecoins could simplify payments and save billions in transaction fees for major companies like Walmart and Amazon.
Regulatory Clarity from the GENIUS Act
The GENIUS Act is central to Walmart and Amazon’s stablecoin strategy. The bill has already cleared a critical Senate vote and aims to establish comprehensive rules for stablecoins.
If passed, it will require stablecoins to be fully backed by reserves and subject to oversight by federal or state regulators. This would provide the regulatory clarity that companies like Walmart and Amazon need to proceed with issuing their stablecoins.
The GENIUS Act is a necessary step for Walmart and Amazon. Bill Hagerty, sponsor of the GENIUS Act, says the bill will protect consumers and drive innovation.
It also aims to strengthen the international status of the U.S. dollar. This regulatory certainty gives big companies the green light to integrate stablecoins into their payment systems.
The Potential Impact on the Financial System
If Walmart and Amazon proceed with their stablecoin plans, it could fundamentally change how these companies handle payments. They would reduce reliance on traditional financial networks such as credit card processors and banks by issuing stablecoins.
Lower transaction fees enable faster settlements, improving efficiency. International markets would benefit from reducing the cost and delays of cross-border payments.
Amazon reported $638 Billion in annual revenue for 2024. Walmart surpassed $100 Billion in global e-commerce sales in 2023, marking strong growth.
The savings could be substantial for both businesses. They would gain control over their payment ecosystems, improving efficiency. Loyalty programs and refund processing would be managed more effectively.
Large retailers are discussing a stablecoin consortium for payments. They may create a shared blockchain infrastructure or adopt a unified stablecoin.
The project would enable such firms to cut out the middlemen and exert more control over their transactions.
What’s Next for Stablecoin in Retail Payments?
As large corporations like Walmart and Amazon explore stablecoin options, other companies in the retail space may follow suit. Shopify, CEO Tobi Lütke, announced plans to integrate USDC, a widely used stablecoin, into its payment system this year.
A successful stablecoin launch by Walmart and Amazon could shape the industry. Other major retailers like Target and Costco may follow their lead.
Nevertheless, the effectiveness of these stablecoin projects depends on the regulatory framework established by the GENIUS Act. In the meantime, businesses are waiting to observe what U.S. lawmakers will do.
With appropriate regulations, stablecoins may become a standard financial instrument of major retailers, changing the consumer-market payment infrastructure.
Disclaimer
This article is for informational purposes only and provides no financial, investment, or other advice. The author or any people mentioned in this article are not responsible for any financial loss that may occur from investing in or trading. Please do your research before making any financial decisions.
Olivia Stephanie is a FinTech enthusiast with a keen understanding of financial markets. Her passion for economics and finance has led her to explore emerging blockchain technology and cryptocurrency markets.