Payment giant Stripe plans to go public: a look at its "return" to the crypto space

Author: Runsheng, ChainCatcher

Since "Iron Man" Musk took over Twitter last October, Twitter's pivot towards Crypto has been a focal point of interest in the crypto industry. Just last month, rumors emerged that Twitter might support the purchase of Twitter Coin with fiat currency through a partnership with payment giant Stripe.

Recently, sources have frequently revealed that Stripe is raising funds and planning to go public. However, its valuation has nearly halved from $95 billion in 2021, currently seeking to raise $3 billion at a valuation of $55-60 billion. Despite the poor market conditions, Stripe is still exploring the possibility of going public within the next 12 months and has hired Goldman Sachs and JPMorgan as advisors, considering options such as a direct listing instead of an IPO.

The last time Stripe attracted attention from the crypto industry was in March last year when Stripe co-founder John Collison announced on Twitter that the company would resume support for cryptocurrencies after a four-year hiatus, sparking heated discussions in the market. Along with payment giants like PayPal and Visa testing the waters, the crypto industry hopes that the entry of Web2 giants can bring real user growth and fresh capital.

In fact, the transformation of traditional Web2 companies is not a spur-of-the-moment decision; their moves often involve numerous choices. After the initial excitement, it is essential to reflect on their specific business and development situation to avoid blind optimism. Taking Stripe as an example, why did it choose to support cryptocurrencies again? What changes have occurred in its crypto business since its return? How does Stripe differ from other traditional fintech companies that have also transformed?

1. The Crypto Pioneer That Returned

After facing macro interest rate hikes and industry turmoil, if there was any good news in the bear market of 2022, it was undoubtedly the return of payment giant Stripe. In March 2022, Stripe co-founder John Collison officially announced on Twitter that the company would resume support for cryptocurrencies and seek communication and cooperation with Web3 builders.

Stripe is one of the highest-valued unicorns in the U.S., rapidly growing into the largest private fintech company in the country with its simple online payment solutions and excellent development performance. In a funding round in March 2021, its valuation reached as high as $95 billion, with investors including a16z, Sequoia, and Tiger Global.

Looking back at Stripe's history with cryptocurrencies, it was one of the first mainstream online payment platforms to accept Bitcoin payments, with support for Bitcoin dating back to 2014. In March of that year, Stripe revealed that it was conducting a Bitcoin testing program, supporting some merchants in exchanging Bitcoin for fiat currency, and opened this service to all users in February 2015.

However, this support was interrupted four years later. On April 23, 2018, Stripe officially discontinued its Bitcoin payment service. Stripe product manager Tom Karlo revealed in a blog post that the main reasons for the discontinuation were the volatility and low transaction efficiency of using cryptocurrencies for everyday payments, which made Bitcoin increasingly unpopular among Stripe's merchants and users.

It can be said that from abandoning its Bitcoin business in 2018 to re-embracing cryptocurrencies in March 2022, Stripe underwent a second decision-making process of returning. Such a significant change in attitude cannot happen overnight. ChainCatcher found that Stripe had never truly left the crypto space; instead, it had been continuously monitoring the development opportunities in the crypto sector, and its renewed support in 2022 was a cautious decision after long-term consideration.

The signals had always been there. During the four years after announcing the abandonment of Bitcoin, Stripe invested in crypto-related projects, was frequently reported to be collaborating with crypto projects, and recruited talent and engineering teams for crypto management.

In 2019, Stripe, as a founding member of Facebook's key crypto project Libra Association, planned to actively support this ambitious financial infrastructure project. Although it had to withdraw later due to regulatory pressures, this move reflected Stripe's proactive attitude towards crypto and its conservative strategy of participating in other crypto financial projects.

2021 marked a turning point, with Stripe's signals of embracing crypto becoming clearer until the official announcement. In February and July, Stone Ridge founder Ross Stevens and Uniswap growth lead Ashleigh Schap revealed Stripe's intention to return to crypto. In October of that year, Stripe's engineering director Guillaume Poncin announced the formation of a crypto engineering team with the mission of "building the future of Web3 payments." A month later, Paradigm co-founder and managing partner Matt Huang joined Stripe's board. Additionally, Stripe invested in open banking service provider TrueLayer and data identity bridge startup Burrata, both serving crypto startups in the second half of the year.

Why did Stripe turn back to the crypto world? The fundamental reason should still be the strong development momentum of the crypto industry. As Stripe co-founder John Collison stated, "We have always been watching Bitcoin, and developments in recent years, such as L2, new public chains, stablecoins, and DeFi, are particularly exciting." If the many issues exposed by the crypto industry in 2018 scared Stripe away, the increasing maturity of the crypto industry makes its return a natural trend.

Stripe's own need for a public listing also prompted its pivot. In January, The Wall Street Journal reported that Stripe was considering going public and had set a one-year deadline for a decision. However, tech news site The Information disclosed that Stripe had cut its valuation to $55-60 billion, and after laying off 14% of its workforce last November, turning back to cryptocurrencies as a new growth point for its business in pursuit of an IPO may be an important factor driving Stripe's renewed interest. Furthermore, Stripe co-founder and president John Collison has always claimed to be a fan of Bitcoin, and his influence should not be overlooked.

2. Caution and Dilemmas in the New Decision-Making

How is Stripe's renewed embrace of cryptocurrencies different from before 2018? Stripe co-founder John Collison revealed on Twitter, "The crypto businesses that Stripe now supports include: exchanges, gateways, wallets, and NFT markets. This includes not only deposits (pay-ins) but also payments (payouts), KYC and identity verification, and fraud prevention."

In other words, compared to its initial embrace of cryptocurrencies in 2014, Stripe is no longer limited to fiat and Bitcoin exchange services or merchant payment services; it has expanded its business scope and targets, leveraging its advantages in KYC, fraud, and compliance while also focusing on popular areas in the crypto industry such as exchanges, wallets, and NFTs.

Currently, Stripe has listed cryptocurrencies as one of its core solutions, positioning it as a "global payment solution for Web3." According to its official website, Stripe's crypto business includes: direct fiat-to-crypto transactions, using scalable fiat payment APIs to support crypto businesses, creating toolkits for crypto enterprises, and providing customized crypto strategies for clients. In December last year, Stripe launched customizable components called onramp, which can be directly embedded into decentralized exchanges, NFT platforms, wallets, or dApps, allowing customers to conveniently purchase cryptocurrencies within Web3 products.

Since announcing its renewed support for cryptocurrencies last March, Stripe has successively reached integration agreements with over ten projects, including Blockchain.com, Magic Eden, Orca, and OpenNode, most of which are built on Solana. However, it is worth mentioning that at the time of Stripe's comeback, FTX, which first extended an olive branch, and its closely cooperating partner Solana, later fell into crisis.

Another key direction for Stripe is the creator economy. It has enabled USDC payment functionality for freelancers, allowing them to receive funds in USDC. It has also partnered with decentralized music platform Audius to enable tipping for artists and collaborated with Twitter to support creators in monetizing their content through social media.

Additionally, Stripe launched its own NFT series "Cube Thingies," donating all proceeds to a medical nonprofit organization. Stripe and its executives have also invested in equity management startup Pulley, investment fund Entrepreneur First, and fintech startup lemon.markets, all related to crypto business.

However, Stripe is not the only traditional payment giant entering the crypto space. Back in 2014, when Stripe was testing Bitcoin services, PayPal also began limited trials of Bitcoin payment services and officially entered the crypto market in October 2020. PayPal's advantages include its early entry, and data platform RootData shows that PayPal's venture capital arm has invested in star projects like Aptos and LayerZero in the crypto field. Additionally, payment giants like Visa and MasterCard have also attempted to enter the crypto space by launching crypto debit cards and issuing NFT series.

In this competitive landscape, coupled with the unclear regulatory policies of various governments regarding crypto and the global economic recession, Stripe's prospects for expanding into crypto are not very clear. This has led Stripe to approach its re-entry into the crypto industry with caution, primarily serving as an entry point for fiat and cryptocurrency transactions without delving into the core of crypto. Of course, this is also a common challenge faced by traditional financial institutions undergoing transformation.

3. Conclusion

In the cold winter of the bear market, the return of traditional payment giant Stripe has brought a glimmer of warmth to the market. Just as there is attention on the entry of Web2 giants and traditional luxury brands, the market urgently needs support from new users and capital. Stripe has a smooth payment experience and a vast user base, along with a long-term accumulation of compliance capabilities, and its support for cryptocurrencies can naturally attract many new users, potentially becoming an important driving force in the next bull market. This is a win-win for Stripe, which stated that after supporting USDC payments, its cross-border payment coverage extends to over 4.4 billion people in more than 110 countries.

However, setting aside these optimistic logical deductions, the actual situation is much more complex. After all, the existing crypto bear market will make traditional Web2 users and institutions more cautious, and the issues faced by existing users are not solely about payment barriers. For Stripe, the recent layoffs and valuation cuts also indicate that the business growth challenges it faces will not fundamentally ease due to its crypto business, especially since it has only taken a small step. How the future unfolds—whether Stripe continues to expand its crypto business or abandons it again—remains to be seen.