Sequoia Capital Poised to Earn 100 Million From Stripes Acquisition of Stablecoin
Stripe has recently completed a $1.1 billion acquisition of Bridge with the aim of enhancing its global stablecoin payment capabilities. According to Bloomberg, Sequoia Capital, a venture capital firm, is set to earn over $100 million from the deal as it holds a 16% stake in Bridge. Other venture capital firms such as Ribbit Capital, Bedrock Fund Management, Index Ventures, and Haun Ventures are also expected to receive significant returns on their investments in Bridge. Ribbit Capital owns approximately 10% of Bridge, Bedrock Fund Management holds over 6%, and both Index Ventures and Haun Ventures own around 6% and 4% respectively.
Bridge, a stablecoin platform founded by Zach Abrams and Sean Yu, raised $40 million in a funding round led by Sequoia in August, bringing its total capital raised to $58 million. The company aimed to use the funding to upgrade its infrastructure and simplify cross-border money transfers and access to financial services. Bridge has experienced rapid growth, attracting high-profile clients such as SpaceX.
Stripe’s acquisition of Bridge for $1.1 billion in cash and stock is pending regulatory approval. The deal will allow Stripe to integrate Bridge’s infrastructure into its existing fiat payment processing systems. This acquisition reflects Stripe’s efforts to expand into the crypto markets, particularly the stablecoin market, which had a market cap of over $175 billion as of October 28. Analysts predict that the stablecoin market could reach a market value of $3 trillion by 2030. Currently, Tether (USDT) and USD Coin (USDC) dominate the stablecoin market, with USDT holding around 68% market share and USDC holding approximately 20%.
Stablecoin adoption has grown significantly in recent years, with these digital currencies being used as a reliable alternative to local currencies in regions facing economic instability. Major financial institutions and fintech companies, including PayPal and Stripe, are entering the stablecoin space, legitimizing their use and expanding their applications.
The acquisition of Bridge comes at a time when the cryptocurrency industry is facing increased regulatory scrutiny. While stablecoins play a crucial role in facilitating trading and providing liquidity, they are also sometimes used for illicit activities. Tether, in particular, has recently faced scrutiny from federal prosecutors in Manhattan regarding its potential involvement in financing drug trafficking and terrorism. However, Tether has denied these accusations, stating that there is no ongoing investigation against the company.
Despite the regulatory concerns, governments and regulators worldwide recognize the benefits of stablecoins and are working to establish clear frameworks for digital assets. The implementation of MiCA is expected to set the groundwork for the regulation of stablecoins globally.
