A recent study by Crypto ISAC revealed that cash remains the preferred criminal’s financial tool for criminal activities. Although cryptocurrencies have been linked to number of high-profile crimes, including exchange collapses and thefts, the actual portion is still significantly small.

Though it is difficult to track the exact amount of illicit activity in the traditional finance space, Crypto ISAC notes that the estimated amount of money laundered globally in one year is 2% to 5% of global GDP, which ranges between $800 billion to $2 trillion.

Out of that total number, only 0.34% of the transaction volume consists of cryptocurrencies. The U.S. Treasury also echoed these findings, stating that cash continues to be the primary preferred method for money laundering because of its anonymity, stability, and ubiquity.

Kashkari’s stance on cryptocurrency has remained the same in the past few years. In Feb. 2024, Kashkari said that Bitcoin(BTC) is a risky asset with no practical use in real economic scenarios, further questioning the cryptocurrency’s ability to be an effective hedge against inflation.

On Oct. 17, the Minneapolis Fed published a paper urging governments to either ban Bitcoin or enact a Bitcoin tax if they want to maintain their permanent primary deficits.

As of press time, the companies have yet to make an official statement about the purchase. 

Last week, crypto.news reported that the firms were in the final stages of negotiation, but a decision had not been made. Neither, Stripe, nor Bridge had confirmed the development at the time.

Founded in 2022 by former Coibase execs Zach Abrams and Sean Yu, Bridge facilitates the creation, transfer, and storage of stablecoins. The acquisition follows a $40 million funding round in August led by Sequoia, Ribbit, and Index.

Meanwhile, for Stripe, the investment aligns with its plans to expand its services in the crypto sector. The multinational payments processor initially introduced Bitcoin payments in 2014 but discontinued the offering four years later citing underutilization.

Fast forward to 2024, the company’s president John Collison announced its re-entry into the crypto sector with stablecoin payments, highlighting an uptick in demand for blockchain-based alternatives due to better transaction speeds and cheaper costs.

Stablecoins are digital currencies pegged to stable assets, often the U.S. dollar or other fiat currencies, to avoid the volatility seen in cryptocurrencies like Bitcoin. Their value remains stable, making them suitable for day-to-day transactions. 

On Oct. 15, Stripe started accepting Circle’s USDC stablecoin in partnership with Paxos, under its Pay with Crypto” option. Following the partnership, merchants across 70 nations were able to initiate fiat-settled stablecoin payments.

Previously Stripe has engaged with the cryptocurrency sector through various initiatives, like the introduction of payouts for creators on X via USDC, and the launch of fiat to crypto onramp service in 2022.

Stablecoin demand on the rise

The recent acquisition coincides with a surge in stablecoin usage, which reached an all-time high market capitalization of nearly $170 billion in Q3 2024. This market has the potential to hit $3 trillion by 2030, according to Ripple CEO Brad Garlinghouse. 

Recently, many traditional financial platforms have ventured into the competitive stablecoin market. For instance, in early October, the global payment network Visa launched a platform that allows banks to issue fiat-backed stablecoins after it observed that stablecoin transaction volumes were approaching levels close to that witnessed in traditional payment networks.

Last year, PayPal ventured into the stablecoin market with the launch of PayPal USD (PYUSD) on Ethereum to allow lower-cost transfers without a central intermediary. Since then, the stablecoin has expanded to Solana and boasts a market capitalization of over $627 million per Coingecko data.