Stablecoins on the march: Government green light and AI drive growing enterprise interest in digital currency

A major shift in U.S. government sentiment toward cryptocurrencies combined with innovation from AI are making the stablecoin market an emerging force in the digital asset economy. Indeed, there is mounting evidence that crypto is having its “ChatGPT moment” and stablecoins are leading some of the largest companies in the world into programmable finance.

Apple Inc., Amazon.com Inc., X Corp., Airbnb Inc., Meta Platforms Inc., Google LLC and Uber Technologies Inc. are all reportedly exploring the integration of stablecoins on their platforms. Ten major banks, including Bank of America and Deutsche Bank, are also investigating whether to issue stablecoins as part of their offerings. Stablecoins are digital assets pegged to the value of fiat currency, often the U.S. dollar.

“It seems like everyone is launching a stablecoin,” said Amy Kalnoki, co-founder and chief operating officer of Bitwave Inc. “Investing in digital assets has gone mainstream. It’s no longer a question of whether enterprises will adopt digital assets, but when.”

GENIUS Act redefines financial rules

Kalnoki spoke Thursday at the BuildETH Conference in San Francisco, a gathering of leaders in the Ethereum decentralized blockchain community. She noted that stablecoin transfer volume now exceeds that of global credit issuers Visa and Mastercard, reaching $27 trillion last year.

A major reason for the tailwind behind stablecoins is the emergence of a U.S. law establishing the first comprehensive regulatory framework for the fledgling currency. The Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act was signed by President Donald Trump in July and reduced regulatory uncertainty for financial institutions, issuers and investors.

The GENIUS Act, coupled with a “Project Crypto” initiative by the Securities and Exchange Commission to modernize rules and regulations that will enable crypto trading, have infused real financial power in the issuance and settlement of digital currencies, according to Gary Yang, founding partner at Eureka Finance.

“The GENIUS Act and Project Crypto are redefining the rules of the financial game,” Yang told the BuildETH audience. “If everyone can print money, then you have to build up the pricing power of your money. This is what the GENIUS Act is doing.”

Missing from this recent wave of regulatory permissiveness is the answer to a key question: How will consumers be able to use stablecoins as a ubiquitous currency if they are dependent on each issuer’s platform? This question of interoperability has not been resolved by the U.S. government, and it’s a prime topic of interest to those in the crypto world today.

Amy Kolnaki of Bitwave described the growth of stablecoin adoption.

“The key question is will stablecoins be interoperable or will they be siloed?” Kalnoki noted. “It is a really interesting time of how fractioned things are right now. It’s an interesting time to see who will win the stablecoin race.”

Quest for payments standard

The influence of AI in the crypto industry may push digital currency providers to build interoperable models for stablecoins. This is currently playing out as major players grapple with implementing a consistent payments standard, potentially using the x402 open protocol that has existed on the internet for decades.

The x402 protocol is a “payment required” status code that sits on top of HTTP. Last month, Cloudflare Inc. and Coinbase Inc. launched the x402 Foundation to further the development of an open internet standard for payments.

There is some urgency behind this initiative, as enterprises continue to adopt and implement AI agents. It’s expected that agents ultimately will shop, make buying decisions and execute payments on behalf of users. The x402 standard, along with the Agents Payment Protocol or AP2 under development by Google, provide early looks at how AI will automate consumer purchases.

Kevin Leffew of Coinbase highlighted enterprise interest in the x402 standard.

“The goal for x402 is to be something analogous to Kubernetes,” Kevin Leffew, go-to-market lead for the Coinbase Developer Platform, told the BuildETH gathering. “It’s driving value across platforms.”

For the x402 standard to succeed as the agentic payment protocol, it has to be fast. This is not a simple problem to solve inside the crypto world which was built on the often-cumbersome application of per transaction settlement fees called “gas.”

At the software company Edge & Node, developers are working on an enhancement for x402 that will allow for deferred payment schemes via signed vouchers that reduce gas costs and settle micropayments on-chain. The company previously built the Graph infrastructure for indexing on-chain data and views the agent payment protocol as a significant next step.

“Trillions of dollars will flow agent to agent,” according to Edge & Node CEO Rodrigo Coelho. “We’ve got to surf this wave rather than being inundated by it.”

Overcoming security and privacy concerns

The current momentum behind stablecoins and the crypto world has also brought renewed scrutiny on the industry’s privacy and security. If the floodgates open for agentic payments in decentralized finance, there is also a risk that users will end up disclosing far more than they bargained for.

The blockchain uses a “mempool,” a public queue of unconfirmed transactions waiting in line for addition to the next available block. Malicious actors can exploit this process, known as a MEV or Maximal Extractable Value exploit, by remining blocks for theft or leveraging the visibility and force victims to sell at a lower price.

Losses in this category are beginning to pile up. There have been reports that Coinbase lost $300,000 to MEV bots in August, and one user was victimized by a MEV exploit for $1 million in stablecoin last month.

SKALE Labs Inc. has developed a BITE Protocol designed to encrypt blockchain transaction details before they are sent to the chain. It’s what co-founder and CEO Jack O’Holleran called passing the “Barista Test.” You want to buy coffee from your friendly barista, but you don’t want to expose all of your financial details in the process.

“There’s so much innovation happening, but at some point you’ve got to deliver and reach the masses,” O’Holleran explained. “You are going to have a lot of robot baristas. We need to live in a world where you can buy things with stablecoins and not expose what you own.”

Social engineering attacks and inadvertent disclosure of private keys have also exposed new vulnerabilities in the crypto world. That was reinforced in February when alleged hackers from North Korea stole $1.5 billion from an Ethereum wallet controlled by Bybit Technology Ltd., an exploit believed to be the largest cryptocurrency heist to date.

Yevheniia Broshevan of Hacken outlined security risks confronting the crypto world.

“Getting access to private keys is something we keep seeing over and over,” said Yevheniia Broshevan, co-founder and CEO of Hacken. “Be really cautious what you are clicking and who it is coming from.”

Despite setbacks and ongoing risk in the cryptocurrency market, enthusiasm for stablecoins and mainstream growth in decentralized finance continues to grow. The optimism is fueled by a desire to become a force in “forex” or the foreign exchange market, which has a daily trading volume of $9.6 trillion and a total value range of $3.4 quadrillion to $3.9 quadrillion. By any measure, that’s real money.

“The foreign exchange market is ultimately the only market these stablecoins are going after,” said Matthew Chruscielski, ecosystem lead at ZetaChain Inc. “Who wouldn’t want to be a part of $3.9 quadrillion?”

Image: SiliconANGLE/Microsoft Designer; photos: Mark Albertson