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Fiserv Inc. and Circle Internet Group Inc. early Monday announced they will collaborate to build products based on stablecoins for banks and merchants in Fiserv’s client base. The announcement came at the same time Fiserv said it plans to launch its own stablecoin, FIUSD, by year’s end.
Simultaneously, Fiserv said it will work with PayPal Holdings Inc. to develop a link between FIUSD and PayPal’s stablecoin, PYUSD, to enable transactions globally.
Fiserv’s collaboration with stablecoin issuer Circle creates one of the strongest initiatives yet to issue and support stablecoins, which are digital coins whose value is tied to a national fiat currency, such as the dollar. It comes as companies long associated with traditional finance eye stablecoin acceptance and issuance and as Congress mulls legislation to regulate the nascent stablecoin market.
The move from Milwaukee-based Fiserv—one of the payments industry’s biggest processors—also comes as major payments players hear from clients and financial institutions looking to develop products and services related to stablecoins. “We came out with FIUSD because we recognized the demand we’ve had from financial institutions, fintechs, and enterprise merchants,” says Sunil Sachdev, head of embedded finance at Fiserv.
With stablecoins, “we feel much more comfortable we can develop a platform compliant with existing regulations,” Sachdev says, in contrast to cryptocurrency not tied to fiat money, such as Bitcoin. That link to the value of fiat money, he says, gives banks and other players a level of comfort regarding risk. “What we’re looking to do is create certainty, to build a platform where we can launch on-chain financial services,” he says. Many plans, he adds, are in flux. “We’ve got a lot going on right now,” he adds.
Fiserv’s action in the burgeoning stablecoin market represents one of the first moves by a major payments player since a bill that would regulate the stablecoin market passed the U.S. Senate last week and has moved to the House of Representatives. Observers cite the legislation, known as the GENIUs Act, as a much-needed set of rules that can guide issuers and processors and offer reassurance regarding what players can do and what they can’t.
The House, meanwhile, has developed its own set of stablecoin rules, the STABLE Act, setting up a move by both chambers to reconcile the two bills and draft a final act.
The advantage offered by stablecoins, observers say, is that their digital reflection of long-existing fiat currencies means compliance can be managed more easily than with other blockchain currencies whose value swings up and down daily. “We see stablecoins as a digital dollar,” says Sachdev. “We feel much more comfortable we can develop a platform compliant with existing regulations with speed, efficiency, and transparency.”
For now, Sachdev says Fiserv is focused on establishing and expanding its relationships with Circle and PayPal. “We’re excited about the opportunity,” he says. “We feel we have the right to win.”
