Can Robinhood and Revolt Find Stablecoin Success Where PayPal Stumbled?

Fintech heavyweight US investment app Robinhood and London-based crypto-friendly neobank Revolt are considering launching their own stablecoins, unnamed sources told Bloomberg this week.

With a market capitalization of $119 billion, Tether (USDT) accounts for 68 percent of the $173.5 billion category, while the giants are looking at a stable coin market.

Europe could usher in a new wave of competition from fintech giants by providing clearer regulatory frameworks. However, the question remains: can they break Tether's dominance or will they struggle like other giants before them?

Although both companies have not officially confirmed their plans, both companies are considering launching a stablecoin according to a report on September 26.

Robinhood has entered the world of stablecoins by listing Circle's USDC (USDC), which currently has a market capitalization of $36.3 billion.

Revolut is expanding its cryptocurrency offerings by opening up staking services for major tokens like Ethereum, which could lay the groundwork for a stablecoin launch.

Together, these two stablecoins provide the necessary liquidity for centralized remittance and decentralized finance (DeFi) applications, making it difficult to attract new entrants.

But breaking into this market means more than demand. The obstacles are steep, the competition is tough, and the tether is not only long but deep-rooted.

The PayPal PUSD issue highlights the challenges faced by new players. Despite PayPal's broad user base and strong brand recognition, its stablecoin supply remains at around $710 million — a tiny fraction compared to Tether.

Additionally, recent data shows that PYUSD's spread has fallen by 30% over the past 30 days, as DeFi production on Solana has declined, citing the volatility and risks that the stablecoin faces in the market.

Finder.com founder Fred Schebesta sees potential for Robinhood and Revolt, but acknowledges the challenge.

“Revolut and Robinhood definitely have a shot at clawing at USDT dominance, but it will take a lot of integration to get there,” he said. “USDT has a deep-rooted presence in the market, and people, for some reason, still have a rare trust in it.”

He said PayPal's stablecoin shows that “even the big players aren't getting much traction yet,” but added that Robinhood and Revolut have an opportunity to try a different approach.

“Their platforms are more integrated with retail investors,” Schebesta said, “and if they can leverage those ecosystems, they can get an edge that PayPal hasn't gotten into yet.”

Pav Hundal, market analyst at Australian crypto exchange Swyftx, agrees that scale will be critical.

“Stablecoins are a game of scale, or if you have relative scale,” he told Decrypt. “Robinhood and Revolut have some level of confidence in taking a piece of the Tether market because of their size and obviously their massive global networks.”

He added that the two companies have one major advantage: Both companies are already regulated in many jurisdictions around the world. “But right now, Tether is on a completely different plane of existence than its competitors,” Hundal said.

PayPal is not alone in its fight against PYUSD. Even giants like JPMorgan Chase, Meta (Facebook), and Binance have tried to conquer the stablecoin world—each with their own unique challenges and limitations.

JPM Coin found its place in domestic banking but failed to penetrate the wider retail or fiat markets. Once touted as the “future of money,” MetaDim faltered under regulatory pressures and never saw the light of day.

Binance's BUSD has grown, but remains a distant competitor to Tether, unable to topple the giant.

Crypto exchanges' main trading pair should match Tether's deep-seated new entrants. A stable coin market with deep liquidity pools, network effects and established trust creates a high barrier to new entrants.

Edited by Stacy Elliott.