The case for and against retail giants like Amazon and Walmart getting into stablecoins
Some of the largest retailers are reportedly considering a rising form of cryptocurrency that could help them bypass fees and delayed payments from banks and credit card networks.
Walmart and Amazon have been discussing whether to issue their own stablecoins, The Wall Street Journal reported on June 13, citing people familiar with the matter. This type of crypto is tied to stable assets, like the U.S. dollar, and is thought to be more secure than other volatile currencies like Bitcoin. Other companies such as Expedia Group and some airlines have also been discussing the technology, the newspaper added.
This comes as the federal government is beginning to take steps to provide a regulatory framework for the stablecoins. The retailers’ decisions, according to the Journal, would depend on the GENIUS Act — short for the Guiding and Establishing National Innovation for U.S. Stablecoins Act — to establish a regulatory framework for private companies to launch stablecoins. The bill passed the Senate on June 17 but has yet to pass the House.
Amazon representatives did not immediately respond to a request for comment. A Walmart spokesperson declined to confirm the Journal’s report and said in a statement to Modern Retail: “While we continuously explore new payment technologies in efforts to support our customers, we are not piloting any programs and do not currently have any plans in place to issue our own stablecoin. Walmart has also not taken a public position on the GENIUS bill.”
Stablecoins such as Tether, USDC and Ethena USDe have soared in popularity over the past few years. The total transaction volume of stablecoins over the last 12 months was $34.5 trillion, according to research from Allium Labs and Visa.
While companies may be allured to make their own coins by the prospect of a speedier and more open payment system, it remains to be seen what exactly what the real-world application by retailers would look like and whether or not it would be worth the cost and effort of implementation. For some, the coins could be part of a broader loyalty and rewards program. For others, it could be an entry point to offering a wider set of financial services.
Modern Retail spoke with crypto and retail experts to break down the arguments for and against retailers adopting the technology.
The case for stablecoins
Proponents say the benefits to retailers launching stablecoins would include that payments would process faster than traditional systems, that the technology would easily allow for global trading, and that they are more secure compared to other cryptocurrencies in that they’re backed by the U.S. dollar.
One advocate for the technology is Shopify, which announced on June 12 that it has already started allowing customers to pay with popular stablecoin USDC.
“By embracing stablecoins, merchants aren’t just adopting a new payment method, but they’re also tapping into global markets, opening the door to global customers and joining the future of borderless, accessible commerce,” Shopify said in a news release. “Small businesses should be able to sell to a customer on the other side of the world as easily as their next-door neighbor.”
Karen McHenry, vp of product for Metallicus, a blockchain services company that has its own stablecoin products, said retailers would be able to accept payments instantly at any time — unlike credit cards, which may take multiple days to process — and without foreign exchange fees. She noted that even with payments through services like PayPal, which to customers look like instant payments, funds hop between bank accounts before getting to the business itself.
“Stablecoin essentially moves at the speed of an email,” she said. “Because it’s global and decentralized, you’re not dealing with a centralized credit card issuer, a centralized bank. It’s a consumer sending money directly to a retailer without intermediaries.”
To launch a stablecoin, retailers would still likely work with a regulated financial institution to issue the branded stablecoins rather than doing it all in-house, Christian Catalini, founder of the MIT Cryptoeconomics Lab, said in an email.
“The key difference is that all of this technology is built on top of open and interoperable standards,” Catalini said. “You cannot get that level of interoperability and ‘permissionless’ ecosystem buildout through traditional rails and solutions.”
Because of stablecoins’ openness and the fact that they’re held on a public ledger in a wallet, McHenry said, retailers could create a rewards system usable at other companies.
“So let’s say Amazon wanted to partner with an airline,” McHenry said. “An airline could say that for anyone who holds Amazon stablecoins, we’re going to give them airline rewards. You can really create a very robust reward system.”
The case against stablecoins
The arguments against the idea of retailer-issued stablecoins largely stem from how early of a stage the technology is in and the uncertainty around how they may be implemented.
The lack of regulatory clarity for stablecoins so far has scared off some companies from adopting the technology, McHenry said. Melissa Minkow, global director of retail strategy for CI&T, said she is waiting to know how significantly the regulations yet to pass the House would benefit or impede retailers.
“It could either be regulations that are really lenient and in service of retailers, or they could be so strict that it doesn’t really actually encourage retailers to want to engage in [adopting stablecoins],” Minkow said.
Additionally, stablecoins have at times lost their pegs to the reference currencies that are supposed to make them more stable, such as during the crash of cryptocurrency exchange FTX, according to a 2023 blog post from Moody’s.
“Many investors have chosen to divest their stablecoin holdings, partly in reaction to lack of transparency around the underlying reserves that support many stablecoins,” according to the Moody’s post at the time. “In a rising interest rate environment, the appeal of higher yields offered by traditional assets is also likely contributing to a shift away from stablecoins.”
Minkow also doesn’t see an appeal of retailer-backed stablecoins to most consumers — only to a niche customer base of crypto fans. It remains to be seen how retailers will market them. MIT’s Catalini said only large retailers like Amazon or Walmart likely have the scale needed to operate a major stablecoin.
“This just feels like a lot of work for something that probably won’t be relevant that long,” she said. “I know that they’re meant to be stable, hence the name, and that they’re tied to fixed assets that retain their worth, but I just think a lot of these types of things tend to be fads that most consumers don’t engage with ever, and the ones that do don’t engage with for long.”