Stripe-PayPal deal could accelerate shift to blockchain-based money, Polygon exec says

If Stripe and private equity firm Advent International acquired PayPal, it would become a historic deal for the fintech space.

But what would the deal mean for the growing use of blockchain-based payment rails?

"My view is that within the next few years, the majority of money will live and move on blockchain in one form or another," Polygon Labs' Global Head of Business Aishwary Gupta told The Block. "This kind of move simply speeds up the transition."

Stripe and Advent International have reportedly offered to acquire PayPal for $53 billion, according to Reuters. Both Stripe and PayPal have expanded their stablecoin initiatives in recent years.

Stripe is one of more than 140 companies, including Visa, Mastercard and BlackRock, that have joined Open Standard to launch Open USD (OUSD).

The OUSD stablecoin, expected to launch this year, is built around a "pass-through" model that routes nearly all reserve yield to distributors while retaining a small management fee. Analysts have said the model could pose a competitive challenge to Circle's USDC and PayPal's PYUSD.

PayPal was the first major fintech firm to launch its own U.S. dollar-pegged stablecoin in 2023. Earlier this month, PayPal said PYUSD could be issued on Polygon.

"Stripe brings merchant depth and crypto momentum. PayPal brings hundreds of millions of users and its stablecoin efforts. Put the two together and you have a machine that can process serious global volume," Gupta said.

William Blair analysts took a more measured view about how impactful the deal could be including saying they aren't sure they see logic in such a deal.

"It is possible that a combined entity could have more stablecoin heft, but PayPal USD is just 4% of USDC’s market cap," William Blair analysts said in a note from Wednesday. "Bridge is an interesting stablecoin issuing platform, but Stripe does not need to own PayPal to advance its stablecoin ambitions."

Circle issues USDC, the world's second largest stablecoin with a supply of over $70 billion, compared to PYUSD's $2.8 billion market cap, according to The Block's data.

Stripe has previously expressed interest in acquiring PayPal. At the time, Mizuho analysts said Stripe, viewed primarily as a business-to-business payments provider, would gain a scaled consumer business by acquiring PayPal, which also owns popular peer-to-peer payment network Venmo.

PYPL surged about 17% in intraday trading, closing at $55.52, according to Yahoo Finance. Some analysts have noted the stock trades at a relatively low valuation, at about 10x earnings, and the has underperformed relative to other tech stocks.