In a significant move for the crypto industry, global payment giant Visa has announced it will now support USD Coin (USDC), a U.S. dollar-pegged cryptocurrency, for transaction settlements. This integration allows select partners to settle obligations with Visa using this Ethereum blockchain-based stablecoin, marking a major step in bridging traditional finance with digital assets. Crypto.com has been named as the first platform to pilot this new functionality with its Visa-branded payment cards.
What Is USD Coin (USDC)?
USD Coin (USDC) is a stablecoin co-founded by Circle and Coinbase and managed by the Centre Consortium. As the name suggests, it is a cryptocurrency designed to track the value of the U.S. dollar. Each USDC token is always redeemable for one U.S. dollar, which provides it with remarkable price stability compared to more volatile digital assets like Bitcoin or Ethereum.
To ensure this stability is maintained, the partners behind USDC follow a strict protocol. For every new USDC token issued, an equivalent amount of one U.S. dollar is held in a reserved bank account. These accounts undergo regular, transparent audits to verify that the total number of USDC in circulation is fully backed by the corresponding U.S. dollar reserves.
The Advantages of Stablecoins in the Digital Economy
In an era where money is increasingly digital, the value proposition of stablecoins becomes clear. They combine the benefits of digital assets—such as flexibility in sending, receiving, and storing value—with the price stability of traditional fiat currency.
Users are not required to have a traditional bank account to interact with stablecoins. Transactions can be programmed and automated with ease, offering a level of financial innovation that is difficult to achieve with legacy banking systems. This ecosystem operates without the need for direct integration with banks, potentially reducing transaction fees and streamlining cross-border payments.
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Visa’s Multi-Currency Settlement Infrastructure
Visa’s network already supports settlements in over 160 different fiat currencies worldwide. This extensive infrastructure is what allows a traveler to use their Visa card seamlessly in another country; the cardholder sees the transaction in their local currency, while the merchant receives payment in theirs.
The integration of USDC leverages this existing capability. For a partner like Crypto.com, this means it can now send USDC directly to a designated Visa Ethereum wallet address to settle transactions, instead of first having to convert the stablecoin into traditional U.S. dollars. This eliminates a step in the process, potentially increasing efficiency and reducing costs. The merchant then receives their payment in their local currency from Visa as usual. The company has indicated that more partners beyond Crypto.com will be added in the future.
USDC’s Expanding Multi-Blockchain Presence
While USDC was initially launched as a token on the Ethereum blockchain, its infrastructure has expanded to increase its utility and accessibility. It now also operates on other major blockchain networks, including Algorand and Stellar. This multi-chain approach allows users to choose the network that best suits their needs in terms of transaction speed, cost, and interoperability with other applications.
Frequently Asked Questions
What is a stablecoin?
A stablecoin is a type of cryptocurrency that is pegged to a stable asset, like the U.S. dollar or gold. This pegging mechanism is designed to minimize price volatility, making it more suitable for everyday transactions and as a store of value compared to other digital assets.
How does Visa’s USDC integration work?
Visa has enabled a new settlement channel that allows approved partners, like Crypto.com, to pay their Visa obligations using USDC. Instead of sending traditional U.S. dollars from a bank, the partner can send USDC directly to Visa’s digital currency wallet on the Ethereum blockchain. Visa then handles the conversion and pays the merchant in their local currency.
Why is this announcement significant?
This move is significant because it represents a major traditional financial service provider legitimizing and adopting digital currency for core operational functions. It bridges the gap between crypto networks and the global, established payment infrastructure, potentially paving the way for broader crypto acceptance.
Is USDC safe?
USDC is considered a reputable and trustworthy stablecoin because it is fully backed by U.S. dollar reserves held in audited bank accounts. Regular attestation reports are published by independent accounting firms to verify that the reserves match the circulating supply of USDC tokens.
Can I use USDC with my Visa card now?
Currently, this integration is for settlement between Visa and its business partners (like Crypto.com), not for direct consumer purchases. However, this infrastructure enables services like the Crypto.com Visa Card, which allows users to spend cryptocurrency, which may include USDC, in the everyday world.
What other blockchains support USDC?
Beyond its native Ethereum blockchain, USDC is also supported on the Algorand and Stellar blockchains, offering users alternatives with different transaction speeds and costs.