TradFi Mega M&A Coming To Stablecoins
TradFi Mega M&A Coming To Stablecoins
We recently recorded updated investment thesis webinars for each of our AI Access and Blockchain Coinvestors investment strategies. We encourage you to listen to them at your leisure.
In our Blockchain investment thesis webinar we have consistently called out digital monies as one of the most important use cases over the last decade or so. The reasons are obvious:
Most everyday transactions rely upon payments, and we all transact all of the time.However, we have yet to digitize global payment rails.
Natively digital monies hold out the prospect of dramatically improved consumer benefits in comparison to existing payment solutions which are slow, expensive, inaccessible to many, unfit for smaller transactions, unreliable, and often non-compliant too.
A digital economy can't function without digital monies, not least because micro-transactions, including device to device, and AI to AI transactions, can't move over today's payment infrastructure which is simply too slow and too costly.
In this week's newsletter, we focus once again on natively digital monies in the form of US backed stablecoins, and review the recent announcement about FISERV's massive value loss, and MasterCard's acquisition of ZeroHash which if completed, will unleash a new era of mega mergers between TradeFi players and those disruptive payment companies which enable them to compete in a world of natively digital monies.
DISRUPTIVE INNOVATION
We will not rehash the logic for US dollar backed stablecoins. You can read our prior communications including Vol. 7, No. 4, April 2025 (Payments are to Commerce as Messages are to Communications and Content: We are Digitizing Them All) if you want to understand what they are about.
Instead, we want to hammer home the importance stablecoins are having right now, as they disrupt the global payment landscape and capture enormous value, while undermining the value of incumbents who have been too slow in moving themselves into a world of Internet native monies and payments.
Let's start with Exhibit 1, which details the top US backed stablecoins by issued value, their 24h transaction volume, and their circulating supply. (Note the column called Market Cap is the issued value of the stablecoins, and not the Market Cap of the companies that have issued them.)
Exhibit 1: Top 10 USD Stablecoin Issuers
Source: CoinMarketCap November 2, 2025.
Please note as you review the Exhibit that only one of the top ten come from a 'traditional' financial institution (If you want to consider PayPal a TradFi incumbent).
Remarkably, none of the top ten stablecoins has been issued by a leading bank or traditional payment network, although they could all have easily gotten into the game years and years ago.
INFLECTION POINT IN GROWTH RATE
A16Z just published its latest annual review of the crypto markets, and Exhibit 2 is taken from their report. It makes a simple point which is that stablecoins are now surpassing traditional payment solutions when assessed by transaction volume.
Exhibit 2: Stablecoins Rival the World's Largest Payment Networks
The less obvious takeaway is that all of the world's banks and payment companies, working for decades on improving the effectiveness and efficiency of their consumer-facing solutions, have failed to create anything as robust or beneficial, despite spending billions and billions of shareholder funds in the effort.
As we have written elsewhere, it is a cliche in innovation circles that large corporations are bad at innovation, but it continues to be true, including in global payment network solutions. Today, TradFi players provide us with payment solutions that are unfit for today's world. Slow, expensive, inaccessible to many, unfit for smaller transactions, unreliable, and often non-compliant too.
DRAMATIC VALUE CREATION
When disruptive companies create demonstrably more valuable solutions for global applications, they are rewarded with lofty valuations.
Back in September, Reuters reported that Tether, the leading stablecoin issuer with an estimated 400 million users, was raising capital at a $500 billion valuation (for full disclosure Fifth Era Partners are investors in Tether).
Exhibit 3: Tether's Possible $500 Billion Valuation
Just as an illustration to underline this, that is more than three times the combined market capitalization of FIS, Fiserv, and PayPal!
More on this shortly.
TRADFI CEOs FAILED TO SEE IT COMING
These types of value creating disruptions are what CEOs of large companies are paid the big bucks to both capture, and avoid being disrupted by.
But most banking and payments CEOs have had their blinkers on, preferring to count their legacy profit pools rather than unleash pro consumer innovations which will inevitably replace their existing economic value with new profit pools enabled by the new digital monies and rails.
Remember Jamie Dimon less than 2 years ago in 2023?
Exhibit 4: Close it Down
Perhaps you noticed another TradFi company - FISERV - hammered last week as it became apparent that it is not well positioned to exploit the new digital monetary rails that are coming fast and which will undermine its core business.
A majority of FISERV's value, as is the case with almost all financial institutions, is in its terminal value which is reliant upon future growth, and today, that growth is at best uncertain and perhaps about to be disrupted. FISERV saw almost half of its economic value disappear in a day. In a world where existing financial products, platforms, and infrastructure are being disrupted and replaced with crypto and token based superior solutions, it is more likely that large incumbents will see declining growth as their existing business and relationships mature, than that an analyst can reasonably project historical growth indefinitely to complete their DCV model.
We would hazard a guess that almost every financial institution's share price is currently dependent upon future expectations of growth that are at best overly optimistic. Which does not mean disruptive company valuations may not also be overly optimistic. But in the war for future economic value, it is almost certain that the majority of legacy financial institutions will have more value loss as they close down parts of their business, than value gain as they compete to play in a new world where they are unprepared.
Exhibit 5: FISERV Rapid Value Loss
Source: Seeking Alpha
As we indicated in our book Corporate Innovation in the Fifth Era, the facts are clear:
Disruptive innovations generate enormous value which is typically captured by the disruptors;
Disruptive innovations also lead to massive value loss in the incumbent players who fail to innovate fast enough.
You can't succeed long term by a strategy of not bringing consumer benefits proactively to market. If you don't do so, someone else will.
Nowhere is this more true than in banking and payments where for decades incumbent TradFi players like JP Morgan and FISERV have relied upon legacy solutions which make a lot of money for the providers from products and services that don't serve the end consumer very well at all.
STABLECOIN FEVER
So in light of the obvious value creation being generated and captured by US dollar backed stablecoin companies, and the just as obvious value destruction imminent for those traditional banks and payment companies that are not ready for digital monies and digital payment rails built on Blockchain, crypto, and the Internet, it should come as no surprise that more prescient TradFi companies are now going through their make/buy/partner analysis and taking action.
Earlier this year, we saw the first shot across the bows, when Stripe announced it was buying Bridge for $1.1 billion to upgrade their entire platform to be globally enabled to run on stablecoin rails as reported in Exhibit 6.
Exhibit 6: Stripe Acquires Bridge for $1.1 Billion
When one of the most capable Fintech payment companies has to buy capability, you would think the incumbents would sit up and take notice. It is their legacy technology which is most threatened, and this is nowhere more relevant than in the world of global payment networks and players including MasterCard and Visa, and those like FIS and FISERV that work with them and serve the banking industry players such as JP Morgan Chase.
The good news for the incumbents is many of them have relationships with Stripe and with Stripe enabled ecosystems such as Shopify. So they can partner and gain access to new digital payment rails. Visa is an example of one such player that is very close to Stripe. In most cases stablecoins have benefited from these types of distribution partnerships - think how Bittrex and now Tron helped scale up Tether, and Coinbase helped scale up Circle.
The problem is if your long term strategy is to channel your payment volume through a disruptive competitor, you know long term that is not going to leave you in a powerful position of leadership. You are solving a short term problem, while creating a bigger long term competitive challenge.
So we believe every board of every major bank and payment company is now gaming this out. They have taken too long to get moving, but now have to rapidly develop a corporate strategy for next generation payments including whether to scale up the make/partner in a game of cooperation with frenemies, or buy.
The passing of the Genius act made 'buy' a feasible strategic option at last.
MASTERCARD GOES ALL IN
Now the MasterCard board has apparently set its sights on acquiring a crypto company to get into the game.
As Fortune reports and as Reuters amplifies in Exhibit 7 "The payments goliath is said to be in late-stage talks to acquire the crypto and stablecoin infrastructure startup Zerohash for between $1.5 and $2 billion, according to five sources familiar with the deal, who asked for anonymity to discuss private business discussions. The deal may still fall through but, if closed, it would represent one of Mastercard’s biggest bets yet on stablecoins, or cryptocurrencies pegged to underlying assets like the U.S. dollar."
Exhibit 7: MasterCard reported to Acquire Zerohash for up to $2 Billion
This is a milestone acquisition, because it is one of the first mega acquisitions of a crypto company by a banking and payments incumbent.
We expect many more.
CONCLUSIONS
A lot of conclusions can be drawn from this week's newsletter content. Here are just a few we would like to highlight as we wrap up:
It is inevitable that digital monies and digital payment rails will win - they provide so much more consumer value, they can no longer be resisted.
While trying to slow them down was the core strategy of the last five years, big banks and payment companies know it won't work anymore - unfortunately for them, they are now behind where they need to be, and catching up is way harder when the competition are fast moving disruptive players with enormous valuations and warchests.
There are many players like MasterCard who now know their legacy infrastructure and the products and services built on top of it, are doomed. US dollar stablecoins and the Blockchain based Internet rails over which they pass, are simply far superior and users can see it which is why more than 400 million are already using Tether as one such example.
Once again, innovators driving consumer benefit are winning the value creation war.
Incumbents now need to move fast, if their own valuations are not to come tumbling down.
As investors we might expect:
A reassessment of the DCF models for today's banks and payment companies and a reset of future growth expectations as their core profit pools vaporize.
Conversely, capable stablecoin companies with leading edge infrastructure are scarce and should become sought out by those who need access to compete.
Just as we saw when Internet banking first arrived, we might also expect a flurry of mega acquisitions, as some large players seek to catch up fast.
Recent news suggests boards are ready to approve - and no doubt the Wall St investment banking community is providing candidates as we speak.
Exciting times for those who have invested into the Blockchain and Crypto industry over the last few years.
If you’re interested in learning more or expressing your interest in our AI Access and Blockchain Coinvestors investment strategies, please reach out to IR@FifthEra.com.
We look forward to talking to you about our investment perspectives and activities.
The Fifth Era Partner Team
About Fifth Era
We are entering a period of unprecedented innovation we call the Fifth Era, and every industry and business will be dramatically impacted. We focus on investing into these new innovations. Fifth Era specializes in investment strategies which construct portfolios of hard-to-access funds and direct investments through our investment strategies - AI Access and Blockchain Coinvestors. Fifth Era's investment strategies are now in their 12th year and to date we have invested in a combined portfolio of 1,500+ companies and projects including 80+ unicorns. In the US we are a SEC registered investment advisor, in the UK a FCA appointed representative and our funds are registered in Switzerland. Visit us at www.FifthEra.com to learn more.
SEC Registration does not imply a certain level of skill or training.
“Focused on Innovation”