Stripe is encountering significant resistance in its efforts to roll out Hyperliquid’s proposed USDH stablecoin. A coalition of crypto firms, including notable players such as MoonPay, Agora, and Rain, has emerged with competing proposals, adding further complexity to the initiative. Notably, incumbents like Paxos and Frax have also put forth their ideas regarding USDH issuance.
In a recent announcement via Discord, the Hyperliquid team outlined their intention to create a “Hyperliquid-first, Hyperliquid-aligned, and compliant USD stablecoin” designated as USDH. This was soon followed by an initial proposal from the Native Markets team, which advocated for Stripe’s stablecoin payment processor, known as Bridge, to handle the issuance of USDH. The proposal highlighted a commitment to contribute a significant share of its reserve proceeds to Hyperliquid’s Assistance Fund treasury, along with promises of regulatory compliance and direct minting within the Hyperliquid ecosystem.
However, Agora’s co-founder and CEO, Nick Van Eck, put forth a counter-proposal, expressing grave reservations about associating with Stripe. He articulated his concerns over what he sees as apparent conflicts of interest arising from Stripe’s dual role as a potential issuer and its plans to develop its own Tempo blockchain. “If Hyperliquid relinquishes its canonical stablecoin to Stripe, a vertically integrated issuer with clear conflicts, what are we all even doing?” he questioned, urging caution regarding the use of Stripe’s Bridge for USDH issuance.
Adding to the coalition’s opposition, MoonPay’s president, Keith Grossman, publicly supported Agora’s proposal. He stated that MoonPay would step in to provide the necessary regulated payment infrastructure to empower the USDH initiative. Grossman echoed Van Eck’s sentiments, emphasizing the need for credibility and scale, which he believes are lacking in Native Markets’ proposal. He characterized the coalition behind Agora’s endeavor as the legitimate choice for USDH issuance.
Meanwhile, other proposals from established stablecoin issuer Paxos and the Frax blockchain are also in the fray. Paxos’s submission includes a pledge to allocate a percentage of interest earned from USDH reserves for the buyback of Hyperliquid’s native token, HYPE, to be distributed among users and partner protocols. In contrast, the Frax blockchain promises that all earnings generated from USDH, which will be backed by its frxUSD token, will be returned to the community.
The burgeoning competition reflects the escalating activity in the stablecoin market, particularly in light of increasing regulatory scrutiny. Institutions like HSBC and ICBC are reportedly gearing up to seek stablecoin licenses in Hong Kong, where a new regulatory framework was introduced recently. In Kazakhstan, financial regulators have begun allowing fees for license and supervision to be paid in US dollar-pegged stablecoins. Additionally, the US state of Wyoming is moving forward with plans to launch the Frontier Stable Token (FRNT), authorized by state governance.
The atmosphere around stablecoin regulation has further intensified as European Central Bank President Christine Lagarde has called for action to address regulatory gaps in the stablecoin ecosystem. The discussions are reflective of a broader trend where governments and financial institutions are increasingly aware of the implications of stablecoin adoption, particularly in the context of cross-border financial dynamics. As the landscape evolves, the engagement of various stakeholders in the stablecoin domain significantly highlights its potential to redefine traditional financial systems.
