On March 29, global payments company Visa announced the use of Circle’s USD Coin to settle transactions on its network. Visa is launching a pilot program with the Crypto.com platform, which will settle payments over the Ethereum network.
In reaction to the big news, David Hoffman penned his latest Bankless DeFi newsletter titled “Visa is going to pay ETH holders.”
He explains how Visa using its own payments network, which can process 1,500 transactions per second, is a way to scale USDC payments on Ethereum.
Ultra Sound Money
Hoffman notes that Visa’s scaling capacity is only something a centralized service provider can offer at the moment. In a similar operation to Layer 2 rollups, which batch transactions into one and process them off the main chain, he commented;
“Thousands of transactions can happen internally on Visa’s network, and then Visa can make a single, batched transaction to Ethereum that updates the balances of its partners that leverage Visa for USDC transfers.”
While this does not directly scale Ethereum, it reinforces the premise that ETH is “ultra sound money.”
The blog post goes on to suggest how the development could be seen as “rugging the Fed.” The Federal Reserve and the U.S. Dollar have a monopoly as the greenback is the world’s reserve currency, and the Fed controls the ledger, he noted.
Visa settling USDC on Ethereum does not change this. All dollars settle back to the Fed. However, it does move a great deal of economic activity into the Ethereum ecosystem.
Visa is just a settlement platform without its own asset. So, when things grow beyond crypto banks and USDC there could be future integrations with decentralized stablecoins such as DAI or even wBTC.
There is much in store for Ethereum developments in the coming year:
Ethereum Price Reaction
Ethereum prices reacted to the news with an 8% pump to reach an intraday high of $1,830. Although prices have cooled off a little on Tuesday morning, the asset is still up 5.7% on the day. ETH was changing hands at $1,804 at the time of press, according to CoinGecko.
ETH prices have made 142% since the beginning of 2021. It’s even outperformed Bitcoin, which has made around 97% over the same period.