The London-based payments company Revolut is reportedly developing a new stablecoin in a bid to expand its footprint in the crypto market.

A report from CoinDesk published on Wednesday cited four people with knowledge of the project as sources for these rumors. It is Revolut’s apparent goal to further integrate crypto into their platform.

The story is popping up just four months after the company launched a crypto trading platform called Revolut X that caters to experienced traders primarily, allowing them to buy and sell crypto easily within the United Kingdom.

A Revolut spokesperson emphasized the company’s broader crypto strategy, stating: “Crypto is a big part of our belief in banking without borders and we have a clear mission to become the safest and most accessible provider of crypto asset services.”

It makes sense for Revolut to step into the stablecoin market as multiple competitors including PayPal, Ripple, and BitGo are also venturing to launch their own fiat-backed tokens.

The sector is currently dominated by two companies, Tether and Circle. which issue the stablecoins USDT and USDC respectively. The space has proven to be highly lucrative as Tether reported net profits exceeding $5 billion in the first semester of 2023.

The sources cited by CoinDesk asserted that Revolut’s stablecoin offering aims to comply with the latest regulatory frameworks approved in Europe such as the Markets in Crypto Assets (MiCA) rules – which provide further clarity on how stablecoins should be issued and commercialized to investors.

Revolut’s Stablecoin Could Be Rapidly Embraced by Its More Than 45M Users

Not many details are known about the Revolut stablecoin, but industry experts have started to speculate that the company may be aiming to integrate this digital asset into its growing ecosystem.

A stablecoin would allow Revolut’s value proposition of “banking without borders” to reach a new level as users may be able to execute cross-border transactions like sending payments and wiring money to family and businesses at a lower cost.

Revolut could rely on its newest crypto exchange to rapidly fuel adoption for its new stablecoin, possibly offering traders lower trading costs if they embrace the digital asset. This could quickly increase its liquidity.

The company currently has a user base of over 45 million customers, meaning that it would be easy to market the product and position it as a leading force in this nascent and growing market. That said, Revolut would have to find a way to differentiate itself from other prominent players that have similar plans such as PayPal and its PYUSD stablecoin.

The latter token has rapidly positioned itself in the stablecoin market as its market capitalization stood at over $700 million as of this week. This makes PYUSD the fourth largest stablecoin in the space.

However, opportunities in this market abound as it has reached a market capitalization of over $160 billion recently. Users find stablecoins particularly useful to send payments, trade digital assets, engage with decentralized finance (DeFi) protocols, and even save money in economies where the local currency is severely impacted by inflation and government controls.

Countries like Argentina and Venezuela have become good examples of the benefits that blockchain-based US-dollar pegged tokens can bring to the table as consumers have turned to these products to bypass their local government’s forex controls.

Revolut Leaps into Banking Space with UK License

The regulatory environment for a stablecoin in Europe is still a bit uncertain. However, Revolut has in its favor that it obtained a banking license in the United Kingdom earlier this year.

This achievement may provide a solid foundation for the company to market this type of product to UK consumers and investors. However, the digital asset may not be available to individuals or organizations in the United States as the company no longer offers its services in this country after facing a challenging regulatory landscape.

Back when Revolut obtained its UK banking license, Francesca Carlesi, the company’s UK CEO, said: “Today’s announcement is a significant step forward for Revolut and for our customers. It is a tremendous responsibility to be a bank in the UK and we will work relentlessly to offer products and services that improve the financial lives of everyone who uses Revolut.

Revolut continues to expand its footprint in the crypto world with the launch of its X crypto platform. The new interface allows users to trade over 100 tokens and offers competitive fees and advanced real-time market analysis tools.

Leonid Bashlykov, Head of Crypto Exchange Product at Revolut, said in July when the platform was launched: “We put the customer at the heart of everything we do, and understand that competitive fees as well as easy on and off ramping are at the heart of what experienced traders want from a crypto platform.”

Meanwhile, Revolut’s rumored move into the stablecoin market comes at a time of strong financial success for the company. In its 2023 financial accounts, Revolut reported that Group revenues surpassed $2.2 billion, with record profits before tax of $545 million. This financial strength provides Revolut with the resources it needs to invest in new ventures like this.

Another Bold Move into the DeFi Space for Revolut

Revolut’s reported plans to launch a stablecoin represent a bold move for the fintech giant and could position it as a pioneer in the nascent DeFi space. The company still has to prove that it has the right plan to overcome certain challenges including regulatory hurdles to fuel adoption in Europe and fierce competition from well-established players.

When it comes to stablecoins, the most important aspect to consumers is safety. Being a well-established corporation with a banking license, Revolut may be allowed to offer a robust product backed by proven reserves that eliminate the most common concerns that users have when it comes to embracing stablecoins.

These are just rumors for now and Revolut still has to come forward to confirm that they are working on this product. However, it is highly likely that this is the case as the company needs to stay on top of its competitors as they continue to leap into the crypto space and its wide range of opportunities.

The success of a Revolut stablecoin will depend on its ability to leverage its existing large user base, navigate regulatory challenges, and offer unique features that differentiate its stablecoin from its rivals.

If successful, Revolut’s stablecoin could potentially accelerate the adoption of digital currencies in everyday financial transactions and further blur the lines between traditional and decentralized finance.