Reasonable pricing risk, maintaining market operation.
Written by: insights4.vc
Translated by: Shan Oppa, Golden Finance
In the past decade, large funds have rapidly expanded, but a batch of "zombie unicorns" (startups valued over $1 billion but lacking clear exit prospects) and a long-term sluggish IPO/M&A market have made portfolios illiquid. Limited partners (LPs) are facing liquidity tightening, as evidenced by universities like Harvard and Yale selling billions of dollars in secondary market shares. Meanwhile, the hype in the generative AI field has attracted a massive influx of capital, delaying a comprehensive market adjustment. Bill Gurley warns that the liquidity cycle in the private equity market is being stretched unprecedentedly, with private equity giants replacing public listings with appointment-based transactions (e.g., Stripe's massive private financing), and companies are postponing or even abandoning IPOs.
At the same time, stablecoins are set to leap from a niche tool in cryptocurrency to a mainstream fintech driver by 2025. Dollar-pegged tokens like USDC and USDT currently have a circulation scale exceeding $250 billion, with a trading volume of about $30 trillion last year. However, the user identity and use cases of stablecoins remain highly opaque—Artemis research points out that tracking stablecoin usage is very difficult due to multi-chain fragmentation and pseudonymous addresses. Despite limited data, the core potential of stablecoins is undeniable: they can fundamentally simplify the traditional payment value chain. Fintech analysts believe that stablecoins allow any business to bypass card organizations and bank networks, directly transferring value through a ledger transfer model, a paradigm shift that could give rise to the first trillion-dollar fintech giant. This has also attracted the attention of regulators: in June 2025, the U.S. Senate passed the bipartisan "GENIUS Act," the first significant stablecoin legislation, requiring issuers to hold 100% reserves and disclose monthly, while explicitly restricting large tech companies from issuing stablecoins. This legislative momentum, along with Circle's impressive performance post-IPO (its stock price has increased about sixfold since listing), indicates that regulated stablecoins are becoming a new "funding channel" for internet finance, not limited to the cryptocurrency field.
This report explores the intersection of venture capital and stablecoins in the current market. We will analyze Gurley's pessimistic outlook on VC liquidity in 2025 (Section 1), and how stablecoins are rising as a disruptive force in the payment industry (Section 2); then delve into a case study of Stripe's crypto strategy in 2025, including the acquisition of Privy and the integration of stablecoins with Shopify, as well as the new merchant payment service launched by Coinbase (Section 3); Section 4 analyzes the intersection between the two—ranging from the flow of venture capital into crypto payment infrastructure (in contrast to weakened investment in new public chains) to trends in large secondary markets and cross-round financing that resonate with the instant transfer characteristics of stablecoins; finally, we will look ahead to several scenarios for 2025-26 (Section 5), including a baseline scenario, an optimistic scenario, and a stress scenario. The core conclusion is that venture capitalists must adapt to the new reality of elongated liquidity cycles and market differentiation, while the maturation of stablecoins will fundamentally change startup financing, capital utilization, and revenue models. These trends have far-reaching implications—from Sand Hill Road in Silicon Valley to Capitol Hill.
The State of Venture Capital in 2025: Gurley's Perspective
Bill Gurley on the Opportunities and Costs of Privatization
Bill Gurley recently summarized seven "market realities" affecting the venture capital industry in 2025. These interrelated factors provide a clear framework for the challenges faced by investors and entrepreneurs, as follows:
- The Era of Giant Funds: Top VC funds have dramatically expanded in size. Funds that previously focused on early-stage investments of $500 million are now raising billions and betting large amounts across all stages. Hedge funds like Coatue and Altimeter have also flooded into late-stage financing, with giants like SoftBank's Vision Fund spending lavishly. The result is a significant increase in capital supply, driving up valuations and expectations, while also increasing the risk of capital excess for companies. Some one-year-old startups can secure $300 million in funding, nominally labeled as "late-stage," but in reality, it is a rare super-sized check. This trend is redefining the industry landscape and signifies greater risks of capital misallocation.
- Accumulation of "Zombie Unicorns": The prosperity of giant funds has spawned a large number of overvalued and uncertain unicorn companies. In recent years, about 1,000 VC-backed companies have entered the $1 billion club, with total funding of around $300 billion. However, many of these companies raised funds at extremely high sales multiples during the bull market of 2020-21, and now, with growth slowing, their valuations are hard to replicate. Many companies have hundreds of millions in cash on hand, barely surviving or just managing to be profitable, but they can no longer grow to match their high valuations. Gurley refers to them as "zombies," meaning they are stuck in the past, neither dead nor alive, and LP funds are thus long-term trapped.
- Misaligned Incentives and Stalemate: These distorted incentive mechanisms have delayed the necessary market "rebalancing." The capital flood during the zero-interest-rate period pushed valuations to unsustainable highs; with rising interest rates and market downturns, a large-scale down round or liquidation should logically occur. However, many startups choose to tighten their belts to extend their capital lifespan, avoiding low-price financing, thus delaying value reassessment. Coupled with liquidation preference clauses, this leads to mergers or sales being unprofitable, creating a vicious cycle that freezes the market.
- Exit Desert: Exhaustion of IPOs and M&A: Exit channels are nearly closed. Gurley emphasizes that even if the Nasdaq rises by 30%, very few VC-backed companies go public, and there are almost no large mergers and acquisitions. This is partly due to the antitrust environment and the complexity of acquisition processes (for example, a $300 million acquisition can take a year), and partly because the costs of going public and the burden of disclosure are too high, resulting in a long-standing "exit desert" where funds remain trapped on the books.
- LP Liquidity Tightening: Limited partners who over-allocated illiquid assets during economic booms are about to face a debt crisis. With significant reductions in returns from venture capital and private equity funds, limited partners such as endowment funds and pension funds are facing funding shortages. In the first quarter of 2025, U.S. universities issued $12 billion in new debt, the third highest in history, mainly to cover operating budgets previously supported by endowment fund returns. Some top universities are now effectively borrowing money to meet capital needs. Notably, both Harvard and Yale announced plans in the first half of 2025 to sell off a significant portion of their private equity investment portfolios in the secondary market (approximately $1 billion and $600 million, respectively). Yale's move is particularly striking: as a pioneer of the endowment fund model, Yale is abandoning its previously advocated illiquidity strategy. Gurley sees this as a major shift—if the most influential limited partners begin to reduce investments, it indicates that the venture capital excess of the past decade is unsustainable. This means that new venture capital fundraisings may face more skeptical (or cash-strapped) limited partners, and some limited partners may trade at discounted prices in the secondary market, leading to losses. This dynamic forces venture capital firms to seek liquidity solutions for their portfolios to avoid weakening support from limited partners.
- "Privatization is the new public": The irony of the closed IPO window is that many successful startups no longer need to go public as they once did. Ample private capital means that late-stage companies can raise substantial funds to finance growth or provide liquidity for employees while remaining private indefinitely. Gurley quips that in today's environment, privatization is more attractive than going public for many growth companies. If you can still obtain cash, avoiding the compliance burdens of the public market and the scrutiny of quarterly earnings is very appealing. We have already seen the rise of the private secondary market and tender offers, which provide some liquidity for early investors without going public. Additionally, newcomers like Thrive Capital have created a "reservation-only" market for pre-IPO giants. Stripe is one of the most famous private decacorns, orchestrating a $6.5 billion financing round in 2023, equivalent to a private IPO, allowing employees to sell shares while bringing in large investors who might have participated in an IPO. Such transactions indicate that a quasi-public market is operating on an appointment basis, with select late-stage funds holding large stakes (10-30%) rather than publicly traded shares. This trend siphons off returns that were previously obtained by public market investors and challenges the venture capital model: venture capital firms may hold their profitable projects longer in these super-sized private financing rounds, or even partially cash out. In summary, the traditional venture capital timeline (approximately 8 years from Series A to IPO) has been distorted; companies may remain private for over 12-15 years under temporary liquidity mechanisms operating privately.
- The AI Boom Delays Market Clearing: The final reality is that just as the venture capital market was cooling in 2022-23, a new hype cycle emerged—generative AI. The launch of ChatGPT at the end of 2022 and breakthroughs in large language models sparked what Gurley describes as an extremely favorable wave of enthusiasm. By mid-2023, venture capital sentiment shifted again from fear to fear of missing out (FOMO), this time all centered around AI. Investors who had previously been pulling back suddenly flooded into AI startups, with valuations 10 to 20 times higher than normal. This influx of capital, including non-traditional sources from sovereign funds in the Middle East, effectively squeezed in new funds and supported the venture capital market during healthy pullbacks. While the technical excitement is justified, the timing means that the venture capital ecosystem has never fully "reset" all valuations. Many non-AI companies benefit indirectly—this rising tide generally boosted financing sentiment in early 2024. Gurley's point is not that AI itself is being overhyped, but that it has delayed the clearing date for those overvalued traditional unicorns. For venture capitalists, this means grappling with two conflicting trends: either invest in AI or risk missing out on opportunities; or the backlog of overvalued portfolio companies still needs to exit or down round financing. Gurley's warning to peers and founders is clear—do not mistake this AI-driven breather for a return to the conditions of 2021. Liquidity remains hard to come by, and strict selection is required.
Gurley's Conclusion
The venture capital industry in 2025 is filled with delayed consequences. Cheap capital and excessive enthusiasm have spawned too many unicorns and too few exits, leading to a market that is not experiencing a dramatic collapse but rather a prolonged bleeding process. The message Gurley wants to convey is that patience is crucial—funds may need to extend their investment lifecycles, carefully manage reserves, and GPs should communicate to LPs in advance that paper returns will remain dim for a long time until real exits materialize. Visionary funds are exploring new liquidity avenues (such as selling shares in the secondary market and structured deals) to adapt to the new normal. Overall, venture capital is undergoing a severe test not seen since the burst of the internet bubble, and this time the difference is that the private market is larger than ever before. So, what does this mean? Investors and founders must adjust their expectations: the path to monetization may be longer and more winding. In this context, VCs are beginning to shift their focus to sectors that can generate revenue potential in the shorter term, one of which is the financial infrastructure space. Stablecoins and the emerging crypto business ecosystem exemplify this trend, as they not only bring growth but may also mean (at least in terms of capital circulation) faster realization of liquidity. In the second part, we will enter the parallel world of stablecoins: a rapidly evolving market that is addressing some issues (such as slow and costly payments) in a different way, while the venture capital industry is also grappling with other challenges (such as slow and difficult exits).
Snapshot of Stablecoins in 2025—From Data Gaps to Mainstream Breakthrough
As venture capitalists regroup, the stablecoin sector is racing ahead, with its scale and legitimacy in 2025 far exceeding expectations from a few years ago. Stablecoins—digital tokens pegged to fiat currencies (primarily the U.S. dollar)—have become the "talk of the town" in the fintech circle. Almost every week there are new developments: Stripe enabling stablecoin payments, PayPal launching its own stablecoin on a new public chain, and the U.S. Congress pushing new legislation… This second part will focus on the state of the stablecoin market as of June 20, 2025, including: (a) data and usage trends, (b) the disruptive potential of stablecoins in the payment sector, and (c) the regulatory watershed moment unfolding in the U.S.
Rapid Adoption, Yet Data Remains Murky
By mid-2025, the total market capitalization of dollar-backed stablecoins has surpassed $220 billion, roughly equivalent to the combined market capitalization of the top 20 banks in the U.S. The market is currently dominated by two giants: Tether (USDT) and Circle's USD Coin (USDC), each with a circulation of approximately $60-100 billion, while others like PayPal's PYUSD and various fintech or DeFi tokens also hold a place. The usage volume is even more astonishing: Coinbase reported that stablecoin-facilitated transaction volume in 2024 was about $30 trillion, three times that of the previous year. This transaction volume primarily stems from crypto trading and DeFi activities (stablecoins are the standard medium in liquidity pools and lending protocols), but stablecoins are increasingly entering the real economy and remittance scenarios. Stripe indicated that global stablecoin payment settlements exceeded $94 billion over the past two years, with monthly payment volumes growing from less than $2 billion to over $6 billion.
Ironically, despite these tokens operating on publicly transparent blockchains, analyzing stablecoin usage has become more complex. A recent study by Artemis pointed out that due to data being scattered across dozens of blockchains and layer-2 networks, analysis has become extremely fragmented. USDC has been deployed on networks such as Ethereum, Solana, Polygon, Stellar, and Base, each with its own data structures and characteristics, meaning that tracking the overall usage of a stablecoin requires integrating multiple sources. Artemis humorously noted that we are experiencing a blockchain version of the "early PC era"—"each major network speaks a different language." For example, analyzing the flow of funds for PayPal's PYUSD requires understanding both Ethereum and Stellar (since PYUSD recently integrated with Stellar), and even grasping LayerZero bridging transactions. This means that even the most knowledgeable analysts struggle to answer basic questions like "Who is using this stablecoin, and for what purpose?" On-chain addresses are merely anonymous characters, lacking off-chain context such as exchange labels and merchant wallet information, leading to "a $100 transaction" being nearly indistinguishable from another. Artemis debunked the myth that "blockchain data is completely transparent"—in fact, understanding the flow of stablecoin funds requires extensive data enhancement and assumptions. Therefore, while market capitalization and transaction volume data are eye-catching, granular information (such as the retail-to-institution ratio, domestic versus cross-border usage, etc.) remains unclear in 2025. This is also one reason why regulators are cautious—it's hard to regulate what you cannot clearly measure.
Despite the lack of visibility, several qualitative usage trends are already evident: stablecoins are widely used in (i) cross-border payments and remittances (especially in emerging markets where obtaining dollars is difficult, such as Argentina and Nigeria, where stablecoins provide digital dollar liquidity without the need for a U.S. bank account); (ii) crypto trading and DeFi (stablecoins serve as entry and exit points and safe havens in volatile markets, with daily trading volumes in liquidity pools and lending protocols reaching billions); (iii) e-commerce and merchant payments (new scenarios in 2025, such as Shopify enabling USDC settlements); (iv) corporate funding and fintech applications (Stripe has launched stablecoin account services for businesses, allowing them to manage USDC and other stablecoins like fiat currency, which means stability in dollars and the instant settlement speed of crypto, especially for companies operating internationally or in unstable currency markets). These widespread application scenarios emphasize why the supply of stablecoins remains historically high even after the 2022 crypto bear market: they meet the fundamental demand for fast, programmable dollars.
Disruption in Payments: Bypassing Traditional Payment Systems
In April 2025, Rob Hadick provocatively pointed out that stablecoins herald the "collapse of traditional payment models." His argument is that stablecoins are not merely a trendy phenomenon in fintech or an ancillary function of existing payment networks, but rather a new end-to-end payment architecture capable of replacing the old patchwork of banks and processors. Today's card payment model involves a host of intermediaries—issuing banks, acquiring banks, card organizations, payment processors, gateways, etc.—each taking a cut of the fees. Merchants may have to wait days for settlement and lose 2-3% in fees. Stablecoin payments, however, are different; they can settle peer-to-peer on the blockchain in just minutes and for mere cents, without the need for intermediaries. If merchants and consumers use the same stablecoin (like USDC), then the payment is essentially just a ledger update—just as Hadick said, "Everything is a ledger transfer." This will fundamentally simplify the value chain: many outdated intermediaries and their fees can be completely bypassed.
The key is that stablecoins enable non-banks and tech companies to operate payment systems on a large scale. A startup can simply integrate a stablecoin wallet into its application and become its own "payment network," something that was nearly impossible in the card era without a bank license or partnership with a payment processor. We have already seen a wave of new companies centered around this idea: fintechs for payroll based on stablecoins, remittance companies arbitraging currency exchange with stablecoins, and merchants beginning to accept stablecoins as a payment method online. Hadick predicts that the first trillion-dollar fintech company will be one that fully embraces stablecoins and redefines payments. While this has not yet been realized, industry giants are also beginning to pay attention to this trend: Visa's CEO stated that stablecoins can enable round-the-clock settlements and is a "promising" innovation, and has initiated a pilot project for cross-border settlements using USDC. Similarly, in 2025, Mastercard also signed agreements to enable stablecoin payments based on its network for consumers and merchants. In short, this disruption theory posits that stablecoins can digitize and disintermediate the payment industry, reducing costs to nearly zero, much like VoIP did for telecommunications. Moreover, stablecoins also possess programmability: payments can be smart contracts, making new business models (such as micro-charging per API call, automatically releasing funds upon delivery, etc.) easier to implement than in traditional systems.
Hadick's views are not just theoretical; real-world signals are evident everywhere: PayPal launched its own dollar stablecoin (PYUSD) in 2023 and announced in 2025 that it would natively integrate the coin across multiple blockchains (Ethereum and Stellar); Stripe's business direction aligns with viewing stablecoins as a new payment track; and traditional cryptocurrency exchange Coinbase is also expanding merchant payments using stablecoins. All of these projects at least bypass one layer of outdated financial infrastructure, which is why Shopify's CEO recently pointed out that stablecoins are a "natural" solution for internet commerce—escaping the constraints of various national banking systems and exchanging for an interoperable dollar token undoubtedly reduces burdens. Of course, challenges still exist (volatility has been addressed, but issues like returns, fraud, and compliance still require new solutions within the stablecoin system), but this momentum is clearly strengthening.
Regulation and the GENIUS Act
In mid-2025, a significant development was that policymakers finally provided clear rules for stablecoins. On June 18, the U.S. Senate passed the "Government Electronic National Institution Stablecoin Unit Act (GENIUS Act)"—the first comprehensive stablecoin legislation in the U.S. This bill passed smoothly with rare bipartisan support (68 votes to 30) and is expected to gain approval from the House by late summer. Key provisions of the bill include: (a) requiring any payment stablecoin issuer to hold 100% of highly liquid asset reserves (such as cash, treasury bills, etc.) and to publicly disclose reserve status monthly; (b) restricting issuance rights to regulated entities and explicitly prohibiting large tech companies from issuing stablecoins; (c) defining clear redemption rights; (d) granting the U.S. Treasury or Federal Reserve corresponding regulatory powers. The market reacted swiftly: Circle, the issuer of USDC, saw its newly listed stock soar, and Coinbase's stock also jumped. Analysts indicated that stablecoins are expected to evolve from "the money track of cryptocurrency" to "the money track of the internet." The passage of the bill means that Washington will not ban or curb dollar stablecoins but instead choose to regulate them, providing legitimacy to the industry while raising the entry barriers for new entrants.
Additionally, other jurisdictions are also taking action: the EU's MiCA framework has included stablecoin rules, and many countries are exploring the coexistence of central bank digital currencies and private stablecoins. In the U.S., another impact of the GENIUS Act is the rekindling of corporate interest: several large financial institutions are exploring issuing their own stablecoins or tokenized deposits, and a large banking alliance launched a "deposit-backed stablecoin" pilot project in early 2025. The boundaries between crypto and traditional payments are rapidly blurring.
In summary, by mid-2025, stablecoins stand at a critical breakthrough point: mainstream tech and financial giants are integrating their use on a large scale, users have transmitted hundreds of thousands of billions of dollars through stablecoins, and regulation is beginning to standardize their role in the financial system. The remaining challenges—data transparency, anti-money laundering/real-name compliance, and user experience technology issues—are significant but are being actively addressed. Stablecoins, much like the development of digital wallets and emerging banks over the past decade, are expected to transition from the margins to ubiquity in the coming years. So, what does this mean for investors and policymakers? Stablecoins represent both an opportunity and a strategic variable: they can reduce costs and expand financial accessibility, but they may also redistribute profit pools and require updated regulatory frameworks. For venture capital, stablecoins are not only a new investment track but may also become tools for making capital management and circulation more efficient, thereby improving various aspects of fund utilization in the entrepreneurial ecosystem.
Stripe, Privy, and the Stablecoin Stack Implementation
In 2025, no company exemplifies the intersection of venture-backed fintech giants and stablecoins like Stripe. Once merely a traditional online payment processor, Stripe has decisively shifted towards crypto and stablecoin infrastructure over the past year. This section analyzes Stripe's strategy through its recent acquisition of Privy (June 2025) and a series of related actions, comparing Stripe's path with Coinbase's advancements in stablecoin payments.
Stripe's Crypto Reboot
Stripe ventured into Bitcoin payments as early as 2014 but abandoned the attempt in 2018 due to low market demand and high transaction fees. For years, Stripe remained on the periphery of the crypto space. However, at the end of 2024, Stripe CEO Patrick Collison announced the company's ambition to "build the best stablecoin infrastructure in the world," marking a strategic pivot. They quietly began piecing together various modules, attempting to make stablecoins a core part of their platform. In October 2024, Stripe acquired a startup called Bridge for a whopping $1.1 billion (the founder of Bridge was also a former Stripe member). Bridge is positioned as a "stablecoin orchestration" platform, essentially serving as a middle layer that helps businesses easily integrate stablecoin payments, custody, and exchange services. The technology developed by Bridge allows stablecoins to connect to fiat card networks, such as its collaboration with Visa, enabling fintech applications to issue Visa cards directly using users' stablecoin balances. In February 2025, Stripe completed the acquisition of Bridge and incorporated the team into its newly established crypto department. The effects of this integration quickly became apparent: in May 2025, Stripe launched Stablecoin Financial Accounts using Bridge's technology, helping businesses in over 100 countries hold funds in stablecoins (initially supporting USDC and Stripe's own USDB) and seamlessly make payments and settlements with these stablecoins. This effectively expanded Stripe's existing core payment services, which only processed fiat currency, into the realm of digital dollars, with Stripe handling the crypto complexities in the background.
Privy Acquisition (June 2025)
To complement Bridge, Stripe announced the acquisition of Privy on June 11, 2025, a startup focused on crypto wallet interfaces. Privy specializes in providing embedded wallet APIs for developers, helping any application create and manage blockchain wallets for users without requiring deep knowledge of crypto details. Before the acquisition, Privy had supported over 75 million accounts for fintech and Web3 applications and raised $15 million in funding from top investors like Sequoia, Coinbase Ventures, and Ribbit in March 2025, indicating investor confidence in this "water-seller" type of crypto infrastructure. Although the acquisition price for Privy was not disclosed, its strategic value is comparable to that of Bridge. Why did Stripe value Privy? Because Privy filled a critical gap: wallet infrastructure. If Stripe wants to fully support stablecoin payments, it must help merchants and users actually hold and manage these tokens. Bridge provides Stripe with stablecoin payment channels and bank integration; Privy adds a wallet layer on the user side. In the words of the Privy team, both Stripe and Privy aim to "blur the boundaries between crypto and fiat to the point of near disappearance." With Privy, Stripe can offer user wallet creation, key management, on-chain operations, and other services to any network merchant through a simple API.
Notably, Stripe currently allows Privy to continue operating as an independent product. This also follows the model established with Bridge—integrating its technology while also providing services externally. This dual-track strategy helps Stripe position itself as a one-stop crypto service platform: developers can use Stripe for credit card payments and also manage stablecoins and wallets through it.
Providing Stablecoin Payments for Shopify and Other Platforms
The results of Stripe's crypto integration quickly materialized: in June 2025, Stripe announced a significant partnership with Shopify to enable USDC payments for millions of merchants. This collaboration allows Shopify merchants in 34 countries to directly accept USDC, a dollar stablecoin, at checkout, with Stripe handling payment processing. Buyers can pay using Base (Coinbase's layer-2 network) and any compatible wallet. Stripe offers merchants two options in the background: one is to automatically convert USDC into the merchant's local fiat currency (such as euros or Indian rupees) for direct settlement into the merchant's bank account; the other is to deposit USDC directly into the wallet of the merchant's choice. All of this requires almost no additional action from the merchant, as they only need to toggle the feature in the Stripe console. Shopify's COO commented, "Stripe has always helped us handle the most challenging parts of payments, and now they have done the same for stablecoin payments," emphasizing that merchants can seamlessly tap into this "booming global crypto payment demand" without having to deal with exchanges or volatility risks.
For Stripe, this integration is an important competitive differentiator. Stripe can now reach users who prefer to pay with cryptocurrencies, including a large number of Web3 native users and overseas buyers, which is also attractive to merchants looking to reduce currency exchange and card organization fees. For example, users in Argentina can pay U.S. merchants with USDC, avoiding the pain points of exchange rates and card fees. Given Shopify's vast merchant base, this means stablecoins are rapidly becoming a new force in e-commerce payments that cannot be ignored, rather than just a marginal pilot.
End-to-End Stack Synergy
By combining these components—Bridge's payment channels, Privy's wallets, and Stripe's existing merchant network—Stripe has effectively created a complete end-to-end stablecoin payment stack. Imagine the current scenario: a user on a marketplace platform can hold a USDC balance (managed by Stripe/Privy in the background), spend that money offline using a Visa card (through the Bridge-Visa integration), and check out at a Shopify store (through the newly launched Stripe checkout process), while the merchant can choose to either retain the crypto assets or instantly convert them into fiat currency. The entire process complies with regulatory and risk standards, with Stripe responsible for the user experience. This also means Stripe is positioning itself as the "AWS of the crypto world"—providing developers and merchants with a complete set of tools to seamlessly operate fund flows without needing to understand blockchain or deal with multiple intermediaries.
It is worth mentioning that Stripe's timing is very clever. They relaunched their crypto business just as regulations became clearer (the U.S. Treasury Secretary even predicted that the stablecoin market could reach $2 trillion by 2028), and real-world partnerships like Shopify emerged. Stripe has always been known for its enormous market ambition (to maintain innovation, they even deliberately delayed their IPO), and these actions ensure that it remains at the forefront of payment innovation. For venture capitalists, this is also a case of a mature unicorn achieving growth by entering emerging fields (Stripe's secondary market valuation is around $50 billion), as it incorporates what was once seen as a "risk frontier" into its growth flywheel.
Coinbase's Response
As the stablecoin payment space heats up, not only established fintech giants like Stripe and PayPal are joining in, but native crypto companies are also taking action. Just a week after Stripe announced its partnership with Shopify, Coinbase launched "Coinbase Payments" on June 18, 2025, aiming to leverage its advantages (such as the Ethereum layer-2 network Base and a large user base) to enter the global merchant payment market. The solution they described has also been launched in collaboration with Shopify, indicating that Coinbase is likely participating in the same stablecoin integration as Shopify, but providing services for merchants who prefer to choose Coinbase as their payment service provider. Coinbase's solution is slightly different: it emphasizes a modular stack, including a Stablecoin Checkout (a widget that supports payments from user wallets like MetaMask and Coinbase Wallet, with Coinbase covering Gas fees for a "zero Gas" experience for users), an e-commerce engine (providing merchants with APIs for handling refunds, reconciliations, etc., similar to Stripe Connect), and a Payment Protocol (supporting advanced on-chain features like delayed charges and dispute resolution through smart contracts). In other words, Coinbase is leveraging the programmability of smart contracts to move many traditional payment processes (such as delayed settlements and dispute arbitration) onto the blockchain.
From a market positioning perspective, the battle for stablecoin payments may resemble the existing business models of both companies: Stripe targets mainstream merchants who value ease of use and integration with existing payment infrastructures, while Coinbase focuses on crypto-native users and the ability to deeply integrate with the Base network ecosystem. Interestingly, the market is large enough to accommodate both directions—after all, Shopify aims to collaborate with more service providers to drive merchant payment growth. The real competition may lie in who can better capture the profits and user mindshare in this new payment track. Currently, both have received positive market feedback: Coinbase Payments saw its stock price rise after launch, while USDC issuer Circle also surged, reflecting investor optimism about the circulation and usage of stablecoins, which directly impacts Circle's revenue (through reserve interest income) and Coinbase's transaction fees.
Shopify, Coinbase, and Traditional Giants
Shopify has become a key node connecting traditional e-commerce with the emerging stablecoin network, and this is no coincidence—Shopify's total merchandise volume for 2024 is approximately $200 billion, effectively "defaulting" to support another payment channel parallel to Visa/Mastercard on its platform. Shopify CEO Tobi Lütke has also been a long-time advocate for crypto (personally holding BTC and ETH), and if the USDC pilot shows even minor success (such as improving checkout conversion rates in markets with low credit card penetration or reducing payment fees), it is foreseeable that Shopify will promote it on a larger scale, even encouraging more e-commerce giants (like WooCommerce, Amazon, Walmart, etc.) to follow suit to avoid falling behind.
Currently, all of this is still in its early stages, but the integrated picture (with Stripe, Coinbase, Circle, Visa, etc. joining forces) is pushing stablecoins into everyday business scenarios, no longer limited to the crypto circle.
Conclusion
The Stripe-Privy case clearly demonstrates how large, well-funded private giants can build a complete technology stack through mergers and acquisitions to seize emerging opportunities. Stripe exchanged venture-capital-level capital and equity for control over startups like Bridge and Privy, helping it rapidly achieve capabilities that would have taken years of independent development. Ultimately, it has brought the complete stablecoin payment ecosystem under its umbrella. For the industry, this also signifies that fintech and crypto are merging, and in the future, platforms that provide the smoothest and safest experiences for developers and merchants will win in the stablecoin payment arena. Stripe has a significant first-mover advantage in user experience and distribution capabilities, while Coinbase can showcase its strength in innovation speed through its crypto expertise and the Base network ecosystem. In the coming year, this race for stablecoin payments will undoubtedly enter a fast-paced, high-intensity iterative phase.
Intersection of Venture Capital and Stablecoins
At first glance, venture capital financing and stablecoins seem to be two unrelated fields: the former concerns how startups obtain funding, while the latter involves how payments are processed. However, by 2025, the connection between the two has become increasingly close. This section will explore two major intersections: (a) how venture capital is flowing into the stablecoin and crypto payment sectors (compared to other crypto sub-sectors), and (b) how the broad liquidity and financing dynamics of venture capital are drawing inspiration from the always-available global liquidity of stablecoins.
Shift in VC Investment Direction: From Speculation to Crypto Infrastructure
After experiencing speculative booms in 2018 and 2021, venture capitalists have become more selective regarding the crypto space. The collapse of many tokens and exchanges in 2022-23 has cooled the market. The new wave of enthusiasm for the crypto sector in 2025 is primarily focused on infrastructure that can be implemented and has practical uses, with stablecoin-related startups being typical representatives. Rather than investing in another new Layer-1 blockchain or a meme coin, VCs are more willing to fund companies that provide the "shovels and picks" for the digital dollar economy. Privy (see Section 3) is one example: it is a B2B crypto infrastructure company that has no token issuance or speculative hype, yet it attracted top investors like Ribbit, Sequoia, and Coinbase, ultimately being acquired by Stripe under favorable terms. Similarly, stablecoin compliance tools, wallet integration API platforms, and stablecoin-based cross-border payment service providers can also secure funding and maintain healthy valuations, contrasting with purely speculative crypto projects.
According to PitchBook data, venture capital financing for crypto/blockchain infrastructure (including payments, custody, development tools, etc.) in the first half of 2025 is significantly more robust compared to consumer applications or new protocol tracks. In other words, many VCs are beginning to refocus on "shovels and picks 2.0" that lay the foundation for the digital dollar economy, helping mainstream companies adopt crypto assets (such as stablecoins and tokenized physical assets).
One reason for this is that these infrastructure startups often have real revenue or at least a clear business model (such as SaaS or transaction fees), which aligns well with the investment preferences post-2022: shifting from a pure growth pursuit to seeking sustainable business models. Another reason is strategic consideration: many traditional fintech investors now view stablecoins as a core component of the future of fintech, rather than as a marginal experiment. Therefore, investors who may have previously avoided stablecoins are now willing to lead financing rounds for stablecoin payment gateways, on-chain foreign exchange platforms, and more. This trend is reminiscent of the post-internet bubble: back then, investors shifted from websites to investing in cloud computing and other underlying services, achieving great success a few years later. Today, investing in stablecoin infrastructure may help them hit the next Stripe or PayPal.
Crypto Funds Also Shifting to Equity Investments?
Interestingly, crypto-native VC funds that raised significant capital in 2021 (such as Andreessen Horowitz's multi-billion dollar crypto funds) have also had to adjust their strategies. Due to the poor liquidity and high risk of token investments, these funds are now more frequently engaging in equity investments, such as investing in companies like Circle (now public), Ledger, and Fireblocks that provide infrastructure. Circle's IPO in June 2025 in New York was a liquidity feast for VCs: after the SPAC plan failed in 2022, this IPO provided long-term supporters (like Goldman Sachs, DCG, etc.) with an opportunity to cash out and established a comparable benchmark for stablecoin companies in the public market. After its IPO, Circle's market capitalization was approximately $44 billion (with USDC circulation around $61 billion), providing a reference standard for other stablecoin startups seeking funding, such as those issuing stablecoins in Asia or DeFi protocols heavily reliant on stablecoin liquidity.
Secondary Market and Liquidity Innovation
Another connection point between venture capital and stablecoins is the pursuit of liquidity. As mentioned in Section 1, limited partners (LPs) and VCs are seeking liquidity through the secondary market, which resonates with the characteristic of the crypto market being available for buying and selling at all times. For example, Yale University sold $6 billion in private equity shares, and such large secondary market transactions signify the emergence of a continuous trading market, with buyers potentially being specialized secondary funds, sovereign wealth funds, etc. This is similar to stablecoins: stablecoins provide 24/7 liquidity for global funds, and now the VC industry is also attempting to create a "continuous market" experience for startup equity through secondary markets and direct share transfers.
This reflects a shift in mindset: investors desire more flexible and rapid liquidity, rather than having to wait for a decade-long fund cycle, which aligns with the culture of the crypto market. Some crypto funds have even proposed tokenizing venture capital shares or using stablecoins to distribute quarterly dividends to LPs instead of bank wire transfers in fiat. While this trend is still relatively marginal, it indicates that the influence of stablecoin infrastructure on traditional capital operations is expanding.
Late-Stage "Private IPOs" and Insights from Stripe and Databricks
The previously mentioned seventh reality by Gurley—"a mega round of financing is equivalent to an IPO"—can also be considered alongside the stablecoin ecosystem. In the crypto market, anyone can trade tokens instantly; in venture capital, this means that an increasing number of investors are willing to price liquidity in the secondary market through private financing. For example, in 2023, Stripe completed a $6.5 billion Series I financing round, which was snapped up by major hedge funds and cross-industry investors, resembling a non-public IPO that created an exit window for existing shareholders. Similarly, Databricks also created liquidity that public markets could not provide with a $500 million financing round at the end of 2023. This serves as an effective "capital escape" channel for VCs and LPs, echoing how stablecoins bring liquidity to the digital dollar market.
Admittedly, these large private financings are still conducted through bilateral negotiations rather than public listings, unlike stablecoins, which are fully public and highly liquid transactions. However, as tokenization and partial equity trading platforms (like Forge, EquityZen) mature, there may even be liquidity similar to public markets in the future. This indicates that the VC industry is also moving towards the liquidity and instant trading characteristics of the crypto market, laying the groundwork for future capital market forms.
Investing in the Next "Stablecoin Version of Stripe"
Finally, it must be noted that the intersection between venture capital and stablecoins is not merely a convergence in the infrastructure track; there is also a competitive relationship. As stablecoins challenge traditional payment revenue models, many payment companies backed by venture capital (like Stripe, Adyen, Wise) must follow suit by investing in or developing this direction, which explains Stripe's rapid construction of its stablecoin stack through the acquisition of Bridge and Privy. Meanwhile, native crypto companies like Circle and Coinbase are also leveraging venture capital to promote the adoption of USDC in a partially public context, such as Circle's investment department specifically investing in startups that can facilitate the widespread use of USDC. Therefore, this is a mutually reinforcing relationship: VC capital drives stablecoin adoption, while stablecoins may also provide tools for VC investments themselves (for example, using stablecoins as a global funding and dividend channel in the future).
Overall, while the intersection of venture capital and stablecoins may not be an obvious direct overlap, it is rapidly strengthening. Venture capital is directing funds towards stablecoin ecosystems that can be implemented and have revenue models, while simultaneously drawing on the liquidity characteristics of the crypto market to reconstruct its exit and liquidity logic. What does this mean? It means that the venture capital industry can no longer ignore this trend: stablecoins and crypto finance have already integrated into the future landscape of commercial payments and capital flows, and forward-looking funds are investing in, collaborating with, and even using them to simplify operations, while those who cling to old models may miss out on a new round of significant returns and efficiency dividends.
Looking Ahead: Scenario Predictions for 2025-2026
Considering the complex background we described earlier—on one side, a stagnant venture capital industry, and on the other, a rapidly mainstreaming stablecoin market—how might the next 18 months evolve? In this final section, we outline three possible scenarios for 2025-2026 and assess their impacts on super funds, mid-sized venture capital, and stablecoin adoption.
Baseline Scenario: "Slow but Steady"
In the baseline assumption, current trends continue without significant shocks. The IPO market gradually warms up by the end of 2025, but only for high-quality companies (there may be a few landmark tech IPOs or direct listings breaking the ice). As interest rates stabilize and regulatory guidelines become clearer (for example, the new leadership at the FTC may be more willing to allow strategic mergers and acquisitions by large tech companies within a limited scope), M&A activity sees a slight increase. This means that some "zombie unicorns" may also find exit opportunities, but valuations will be relatively moderate—such as transaction sale valuations being 30%-50% lower than the most recent funding round, which is within LP (limited partners) expectations. In this scenario, super funds slow down their investment pace; they continue to invest in leading AI and fintech companies but with more realistic price demands. We may see some super funds choose to reduce the size of their new funds while focusing on managing existing portfolios (in fact, several well-known Sand Hill Road firms have already indicated that their next-generation fund sizes will be smaller than the peaks of 2020). Mid-sized venture funds ($200 million to $1 billion) will find their positioning through deeper engagement and specialized expertise—since capital remains abundant but exit opportunities are scarce, entrepreneurs are looking for investors who can provide tangible assistance beyond just funding. These mid-sized funds will differentiate themselves through industry expertise (such as life sciences, climate tech, or specific regions) and measures like helping founders arrange secondary market liquidity, assisting entrepreneurs through longer exit waiting periods.
In this baseline scenario, stablecoins continue to gain momentum but remain constrained by existing regulatory progress. The GENIUS Act is expected to become law by the end of 2025, establishing the first federal framework in the U.S. Implementation will take time, but major issuers like Circle and Paxos will comply with the new regulations, and new stablecoins issued by banks may also emerge. We do not assume that a central bank digital currency (CBDC) will be implemented during this period, so private stablecoins will remain the market's mainstay. The use of stablecoins in e-commerce and cross-border payments will steadily grow, especially as Stripe's integration with Shopify expands from early testing to a universal service for millions of merchants. While there may be some bumps along the way (such as technical failures or hacks of smaller stablecoins), there will be no systemic collapse. In this baseline scenario, the market capitalization of stablecoins may grow from about $250 billion to $400 billion by the end of 2026, primarily driven by an increase in the velocity of currency circulation (rather than mere buying and holding). Many consumers may not even realize they are transacting with stablecoins (just as many users do not know whether the backend of the applications they use is AWS or Azure).
For venture capital, this means a period of low but maintainable returns. Fund returns from 2019-2021 will be significantly below expectations, while investments made in 2023-2025 (at more reasonable valuations) are expected to yield solid returns after 2027. For LPs, fundraising will be relatively tepid—they will fulfill existing commitments but be more selective about new investments, leading to the exit of marginal managers. However, the direction of stablecoins and crypto financial infrastructure may become a highlight: if a few companies can achieve success similar to fintech, they may go public or be acquired (for example, Circle's IPO serves as a leading signal). Collaborations between traditional finance and stablecoin startups will deepen (such as the Visa + Stripe + Bridge model), and there may even be acquisitions of crypto startups by banks and payment giants, providing mid-sized exit channels for these VC-backed companies. Overall, "slow and steady" means no dramatic booms or busts, but rather that the venture capital market continues to slowly clear, with stablecoins steadily integrating into the financial system.
Optimistic Scenario: "Soft Landing and Rapid Rebound"
In a more optimistic outlook, multiple favorable factors converge. The global macro environment improves—inflation is controlled without triggering a deep recession, allowing central banks to moderately lower interest rates by mid-2026. Lower capital costs and increased risk appetite will reopen the IPO market: by spring 2026, tech companies will flock to go public, including previously troubled unicorns. This influx of listings meets investor demand, and landmark success stories (such as significant post-IPO surges for Instacart or Databricks) reignite market confidence. M&A activity will also accelerate as large tech companies receive clear permissions (perhaps due to clearer antitrust guidelines), prompting giants to make substantial acquisitions of mid-sized companies. In this scenario, super funds quickly seize opportunities: they may even launch new generations of growth funds, and existing portfolios can achieve long-delayed exits, providing substantial dividends for LPs. This "soft landing" will partially validate the previous strategies of super funds, although it may also lead them to inflate bubbles again if they become complacent. Mid-sized funds will similarly benefit: many previously shelved high-quality startups will find exit opportunities or integrate into later-stage financing on reasonable terms, and LPs will regain confidence due to the restoration of dividends, increasing their funding commitments in 2026.
In terms of stablecoins, this optimistic scenario is built on regulatory clarity that unleashes a new wave of large-scale adoption. Assuming not only the passage of the GENIUS Act but also the promotion of international coordination (with other jurisdictions adopting similar standards to reduce cross-border usage barriers), stablecoins will make significant strides toward mainstream use cases. For example, major tech platforms will incorporate stablecoins into payment options—imagine Apple Pay or Google Pay allowing users to settle with USDC, or Shopify expanding stablecoin payments from pilot programs to a default global feature. In the context of a soft landing, consumer spending will be robust; even if only a small portion of funds flows into stablecoin settlements, it will be enough to drive a surge in transaction volume. By 2026, the market capitalization of stablecoins may exceed $1 trillion, especially as institutional funds and tokenized bank deposits also flood into this space. At that point, as public companies, Circle and Coinbase may see their valuations soar—potentially encouraging more crypto companies to follow suit with IPOs (contrasting with the hesitance seen from 2022-2024). This optimistic scenario may also witness deep integration of stablecoins with traditional banks: for instance, large banks may issue their own stablecoins for institutional clients, and if the market operates smoothly, it will further reinforce the legitimacy of the concept.
In such a case, venture capital investing in fintech and crypto may enjoy a "golden age." The recognition given to stablecoin companies in the public market, along with real revenue growth, will spawn multiple unicorns and decacorns. We may witness the rise of a new generation of players—such as a startup becoming the "Stripe of stablecoin payments" in a particular region or industry, successfully going public in 2026 with substantial transaction volume and a sustainable business model, delivering outsized returns to the venture funds holding its equity. Additionally, as public market dividends drive investors to re-enter, LPs may increase their commitments to venture capital, providing ample "gunpowder" for VCs. Of course, this favorable scenario also carries risks—cheap capital flowing back in could inflate bubbles, pushing up startup valuations and cryptocurrency prices, meaning venture capitalists must exercise restraint. However, in the short term (2025-2026), a soft landing means that the venture capital and stablecoin sectors are perfectly aligned with market trends, laying a solid foundation for long-term collaboration between the two.
Stress Scenario: "Regulatory Shock and Market Reset"
In a pessimistic setting, the market faces regulatory or macro shocks, causing setbacks for both the venture capital and crypto industries. On the venture capital side, if inflation proves more stubborn or geopolitical risks lead to significant market aversion—resulting in persistently high interest rates or even a rise by the end of 2025—the stock market may plummet. This will further compress market valuations and could trigger a genuine revaluation of the private market. Many unicorns may have to finance at over 70% discounts (or even shut down), and super funds may make large-scale write-downs of their portfolios and pause new investments, with well-known funds potentially significantly reducing their sizes or completely exiting the market (for example, a large growth fund dissolving or a cross-industry investment fund ending its venture capital operations). Mid-sized funds will also struggle—fundraising will nearly come to a halt, with only those top 10% funds that have clear investment logic or outstanding past performance able to secure capital, while the rest may quietly wind down.
In the stablecoin sector, this stress scenario may involve regulatory backtracking or credibility shocks. For instance, if the U.S. Congress fails to pass the GENIUS Act, stablecoin regulation may become stalled, with states creating cumbersome rules independently; or a major stablecoin issuer may face a reserve management scandal or suffer losses due to a cyberattack, leading to panic selling by users and a sharp decline in stablecoin market capitalization. Furthermore, if global coordination fails and countries act independently, the EU or China may prohibit the use of non-CBDC stablecoins domestically, leading to market fragmentation. This series of events will make merchants hesitant to adopt stablecoins, and early adopters may retreat due to rising compliance costs. In a more extreme scenario, regulators may impose bank-level capital requirements on stablecoin issuers, severely restricting their growth, similar to the stringent regulations imposed on banks, thus slowing the industry down completely.
Market tightening will also impact the crypto industry itself, with valuations of companies like Circle and Coinbase plummeting, dragging down industry financing and investor confidence, potentially leading to a winter similar to 2019 (Crypto Winter 2.0), where venture capitalists shy away from the crypto sector, and related projects may stall due to unprofitability or lack of clear prospects.
Of course, even in this pessimistic scenario, not everything is bleak. Some argue that genuine economic turmoil may drive users toward stablecoins as a safe haven (for example, users in emerging markets opting for dollar-pegged stablecoins to avoid currency depreciation), maintaining market demand from the grassroots level. However, for venture capitalists, such growth is difficult to translate into predictable investment returns. Therefore, the stress scenario implies rare exits, widespread write-downs, and heightened vigilance toward all risk and regulatory uncertainty in the sector.
Interestingly, such stress tests may catalyze the fundamental clearing that Gurley spoke of: the bursting of bubbles forces the industry to reorganize, pushing out subpar projects and clearing the way for the next recovery. The stablecoin industry may also accelerate the rollout of central bank digital currencies (CBDCs) due to regulatory crises, fundamentally altering the market landscape. Venture capitalists must also adjust accordingly, reconsidering their sector direction (for example, shifting toward CBDC-based applications) to seek opportunities under new rules.
Summary of Scenario Impacts:
- In the baseline scenario, super funds proceed steadily, mid-sized funds find space through deep engagement, and stablecoins gradually enter the financial ecosystem.
- In the optimistic scenario, market liquidity rebounds, venture capital flourishes, and stablecoins rapidly move toward mainstream adoption, creating golden opportunities for fintech innovators and investors.
- In the stress scenario, the industry undergoes a major reshuffle, stablecoin adoption falters, many investments incur losses, and market rules may be completely rewritten, with only the most resilient companies and investors surviving.
For policymakers and investors, these three scenarios each offer insights. Regulators should recognize that providing a clear framework (as in the optimistic scenario) helps unleash innovative potential, while regulatory uncertainty or excessive restrictions (as in the stress scenario) may stifle new avenues that could enhance economic efficiency. Investors should prepare for the long term (baseline scenario), act decisively when the market warms up (optimistic scenario), and also have contingency plans in place for a potential market downturn (stress scenario). For example, funds currently raising capital might consider incorporating flexible authorizations into their charters to expand secondary market trading or token investments based on different market scenarios, ensuring they can respond calmly regardless of how the future unfolds.
Conclusion
The intersection of the new reality of venture capital and the rise of stablecoins is reshaping the landscape of financing, payments, and liquidity in real time. The next five years will be a critical moment to test whether Silicon Valley and the crypto community can adapt flexibly to these changes. Currently, addressing this situation requires a dual mindset: on one hand, cautiously acknowledging that the era of "everyone's celebration" has temporarily ended; on the other hand, firmly believing that truly transformative opportunities are sprouting from the ruins of the old script, such as building a genuinely global stablecoin payment network. An investor once said, "Price risk reasonably and keep the market running"—as long as this is achieved, innovation and capital can find a balance again.
The coming years will reveal whether 2025 becomes a turning point for a new wave of productivity and financial innovation or a warning signal that forces the industry back to fundamentals. Visionary investors are positioning themselves for the former while also preparing defenses for the latter. As venture capital and stablecoins intertwine at the forefront of technology and finance, an unprecedented complex is taking shape.
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