There’s a common misconception that stablecoin cards work like debit cards, so when you spend money, the stablecoins are deducted from your balance. But that’s not how they work in the US. For regulatory reasons they are actually credit cards, and they require stablecoins as 100% collateral. No collateral, no payment. This gives stablecoin card programs the same funding headache as traditional credit card companies.
These card programs settle up with Visa daily in stablecoins, but the card issuer has to wait to collect periodic payments from the cardholder’s smart contract wallets. Large conventional credit card portfolios address this funding gap through lending warehouse lines or securitization. Stablecoin card programs often need only a few million dollars drawn and repaid daily, and may have less than a year of operating history. The economics of a documented bank facility do not work at that scale.
Visa announced on Monday that it has opened its settlement data to onchain lenders to help fill that gap. More than 160 stablecoin linked card programs now operate on Visa’s network, with payment volume growing nearly 200% year over year and stablecoin settlement exceeding a $20 billion annualized run rate.
Article continues …
Want the full story? Pro subscribers get complete articles, exclusive industry analysis, and early access to legislative updates that keep you ahead of the competition. Join the professionals who are choosing deeper insights over surface level news.
