Fiserv Launches Stablecoin for Banks. The Stock Is Rising. — Barrons.com

Nate WolfFinancial-technology company Fiserv will launch a stablecoin and digital-asset platform for its clients by the end of the year, the company announced Monday, sending the stock higher.The move will give Fiserv's network, which connects roughly 10,000 financial institution clients and 6 million merchant locations, the ability to transact existing digital tokens or Fiserv's new token, FIUSD. The company plans to enable the stablecoin through its current technology at no additional upfront integration cost."We feel like this is something that every financial institution should understand from a technology perspective," Sunil Sachdev, Fiserv's head of embedded finance, told Barron's. "I think this is a journey that we're on to basically enable more blockchain-related financial services."The company is partnering with stablecoin issuers Circle Internet Group and Paxos, and the blockchain platform Solana, on the project, though financial details are yet to be finalized. In a separate announcement, Fiserv and PayPal Holdings said they would make FIUSD and the stablecoin PayPal USD interoperable "to allow consumers and businesses to move funds domestically and internationally."Fiserv stock was rising 2.3% to $167.14, and shares of PayPal were up 0.9%. Circle climbed 5.6%.The venture marks another win for stablecoins, a type of cryptocurrency pegged to stable assets like the U.S. dollar, which have begun to spread throughout traditional financial markets and the broader economy.The overall stablecoin "market cap" sits at $260 billion today, Jeff Cantwell of Seaport Research Partners estimates. The firm projects the market will grow to $500 billion by the end of 2026 and potentially $2 trillion longer term, as more companies store the currencies in their treasuries or use them for payments."Our major takeaway here is that both FI and PYPL are moving quickly in the 'realm' of stablecoins to capture market share as the space starts to accelerate," Cantwell wrote in a research note Monday. He rates Fiserv stock at Buy with a $244 price target.Fiserv's moves likely won't impact the company's 2025 financials, but they're a sign of the company's ability to innovate and retain market share among banks and merchants, argued TD Cowen's Bryan Bergin. They're also, Bergin noted, "a timely series of announcements." He rates Fiserv stock at Buy with a $233 price target.That may be putting it lightly. Circle shares have been soaring after its blockbuster June 5 initial public offering, with shares up more than 650% from an offering price of $31. Circle issues USDC, a token pegged to the U.S. dollar that the company launched in 2018 in partnership with Coinbase.Retail giants Walmart and Amazon.com, meanwhile, have discussed issuing their own stablecoins to customers, according to The Wall Street Journal.Stablecoin bulls also got a crucial boost from lawmakers last week, when the Senate passed the Genius Act, a bill clarifying how stablecoins are regulated, requiring issuers to hold reserves of safe assets like Treasury bills, and creating a path for banks — like Fiserv's clients — to issue their own tokens.The advancement of the Genius Act, in particular, helped give Fiserv the regulatory clarity needed to feel comfortable moving forward with the announcements, Sachdev said.The company is still working out use cases and fee structures, but it sees itself as well-positioned in the ongoing stablecoin revolution given its role as a conduit between banks and merchants.Write to Nate Wolf at [email protected] content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.