Stripe’s Ambition for USDH
Stripe is encountering resistance in its ambition to launch a new stablecoin called USDH, intended for the Hyperliquid platform. This opposition comes from a consortium of cryptocurrency companies, including MoonPay, Agora, and Rain, who have put forth alternate plans alongside proposals from established stablecoin issuers like Paxos and Frax.
Hyperliquid’s Goals and Initial Proposals
In a message shared on Discord, the Hyperliquid team expressed its goal to develop a compliant and Hyperliquid-centric USD stablecoin identified by the ticker USDH. Reacting to this initiative, the Native Markets team introduced the initial proposal, which advocates for Stripe’s payment processor, Bridge, to handle USDH transactions. Their plan included a commitment to contribute a substantial portion of reserve profits to the Hyperliquid Assistance Fund, emphasizing adherence to regulations and the ability to mint directly within the Hyperliquid ecosystem.
Concerns from Agora’s Leadership
However, dissent arose from Agora co-founder and CEO Nick Van Eck, who challenged the viability of Stripe as an issuer. He posed a critical question regarding the wisdom of transferring control of Hyperliquid’s stablecoin to Stripe, which he suggested might create inherent conflicts due to its integrated role as an issuer. “If Hyperliquid relinquishes its canonical stablecoin to Stripe, a vertically integrated issuer with clear conflicts, what are we all even doing?” Van Eck asserted, urging caution against utilizing the Stripe platform (Bridge) for this purpose.
Van Eck further criticized Bridge for lacking adequate financial infrastructure and relevant experience, while also pointing out Stripe’s plans to develop its own blockchain, Tempo, which he warned could detract from the Hyperliquid ecosystem. He posed the question of how long it would take for Stripe to redirect users and transactions from other financial services to its own platform instead of promoting Hyperliquid.
Support for Alternative Proposals
In a statement made on Sunday, MoonPay’s president, Keyth Grossman, declared the payment provider’s alignment with Agora’s efforts to provide regulated infrastructure for USDH issuance, voicing strong objections to the proposal associated with Native Markets. “USDH deserves scale, credibility, and alignment—not BS capture. That is this coalition, not Stripe,” he stated, echoing the concerns raised by Van Eck.
Rob Hadick, a partner at the venture capital firm Dragonfly.xyz, also expressed support for the collaboration, highlighting MoonPay’s involvement as pivotal to reinforcing the strength of the USDH issuance proposal.
Competitive Landscape and Regulatory Environment
In addition to the competitive challenges posed by the Stripe-backed initiative, a proposal from Paxos was submitted on Sunday that promises to reinvest a portion of interest earnings from USDH reserves into buying back Hyperliquid’s native token, HYPE, and distributing it among users and validators. Furthermore, Frax’s proposal emphasizes a community-centric approach, pledging to return all profits generated from USDH to community members, arguing that they are offering something unmatched by competitors.
The rivalry over USDH issuance reflects an increasingly dynamic environment in the stablecoin market, particularly as regulatory scrutiny intensifies. Major financial entities such as HSBC and ICBC have shown interest in obtaining stablecoin licenses in Hong Kong, where a new regulatory framework was established on August 1. Meanwhile, Kazakhstan’s authorities have authorized the payment of licensing fees in stablecoins pegged to the US dollar. In the United States, Wyoming is set to authorize the Frontier Stable Token (FRNT), and a new venture, 1Money, has attained 34 money transmitter licenses across the US, alongside a Bermuda license.
Calls for Regulatory Action
Earlier this month, Christine Lagarde, the President of the European Central Bank, urged EU lawmakers to address regulatory gaps surrounding stablecoins. ECB executive board member Piero Cipollone had previously voiced concerns about potential financial migration from the euro area to the US due to differing regulatory approaches, highlighting the urgent need for comprehensive frameworks in this sector.
