Visa (NYSE:V) shares have been under pressure recently, with cryptocurrencies appearing to fulfill Bitcoin’s early promise of disrupting the legacy financial system. However, it’s not BTC that has sent V investors into retreat mode but rather the developments taking place in the world of stablecoins.
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The concept behind this kind of cryptocurrency is straightforward. Each stablecoin is pegged 1:1 with an asset, most commonly the US Dollar. This means each stablecoin is intended to maintain a value equal to one unit of the backing asset, helping to keep its price stable. Stablecoins are seen as a threat to payment processors like Visa because they enable fast, low-cost, and borderless digital transactions that could bypass traditional payment networks.
They gained further validation this week, when on Tuesday the Senate approved the GENIUS Act, a groundbreaking law that sets federal regulations for U.S. dollar-backed stablecoins for the first time and provides a formal, government-approved process for private companies to issue digital dollars.
There have been other developments in the stablecoin space recently, most notably, reports that Amazon and Walmart, two of the world’s biggest retailers, are exploring the launch of their own stablecoins. Meanwhile, Shopify – already handling substantial payment volumes – has partnered with Stripe and Coinbase to start accepting USDC payments.
So, does this all signal the death of payment processor giants such as Visa? Hardly, says investor YR Research. YR runs off a list of prior threats seemingly positioned to end the dominance of Visa (and peer Mastercard). These include digital wallets and open banking, buy-now-pay-later, retailer consortiums and local payment schemes. YR thinks that stablecoins could be “the biggest threat yet.” However, he goes on to add that “just like the other threats in the list above, the biggest misconception is Visa’s opportunities in the new line of business.”
Basically, Visa used the supposed threats to actually boost its business, likewise with stablecoins so far. For instance, digital wallets and tap-to-pay have become major growth engines for traditional payment networks. Visa is also seeing strong momentum in open banking, which is rapidly expanding within its Value-Added Services, while BNPL providers serve as important partners and local payment schemes are “big customers.”
As for the stablecoin space, Visa has already built a meaningful presence, forming key partnerships with Stripe, Bridge, and Crypto.com. It has processed over $225 million in stablecoin-based commerce payments and anticipates surpassing $1 billion within the next year. Additionally, Visa runs a treasury operation and offers stablecoin-linked cards. “Even if stablecoins become huge,” YR says, “I expect Visa will be a leader in the space, especially in everything related to commerce.”
With Visa’s fundamentals as strong as ever, YR recommends investors use the recent dip as a “buying opportunity.” Accordingly, YR maintained a Buy rating on V shares. (To watch YR Research’s track record, click here)
Wall Street’s analyst community agrees with that take. Based on a mix of 24 Buys and 4 Holds, the consensus view is that this stock is a Strong Buy. The average target stands at $388.85, suggesting gains of 14% are in the cards for the coming year. (See Visa stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured investor. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
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