SpaceX has adopted stablecoins in order to reduce foreign exchange volatility, said Silicon Valley venture capitalist Chamath Palihapitiya on the All-In podcast Friday.
The risk of loss that can arise due to drastic changes in currency is known as foreign exchange risk. A U.S. firm that has Brazilian customers who pay in Real (BRL), for instance, could face a loss of money when it converts to U.S. dollar.
Stablecoins can be used as a hedge
Palihapitiya says that SpaceX collects payment from Starlink’s customers. “long-tail countries,”Then, it converts the stablecoins into them. Starlink, which is wholly owned by Elon Musk’s SpaceX, provides satellite internet services.
Palihapitiya stated that the firm converts stablecoins into dollars in the U.S.
“When they [SpaceX] aggregate them [payments] in all of these long-tail countries, they don’t want to necessarily take the foreign exchange risk. They don’t want to deal with sending wires.”
Palihapitiya says that the U.S. should adopt stablecoins as the preferred method of trans-border payments. “us to chip away all of this decrepit infrastructure that the banks use to sort of slow down and tax a process that should never have been taxed.”
The stablecoin industry is competing with traditional financial institutions
Tether and Circle, two stablecoin providers that are on the rise as contenders in money-storage and money-transfer services will make banks look like amateurs.
But it’s not just the banks the stablecoin providers are competing with. Palihapitiya stated that stablecoin providers also compete with the traditional payment giants, MasterCard and American Express.
He added that reducing the cost of cross-border transfers by even 3%—which is what Stripe charges—”would be a boon to global GDP (gross domestic product).”
Aaron Levie from enterprise cloud provider Box also agreed that the use of stablecoins as a cheaper alternative to traditional currencies is a good idea. “makes total sense.”
Elon Musk runs SpaceX, and he is an avid fan of DOGE meme coins. It’s no surprise then that SpaceX has adopted stablecoins. Elon Musk’s Tesla invested heavily in Bitcoin—an investment that has clearly paid off with the investment value crossing the $1 billion mark last month as the price of Bitcoin (BTC) started surging after Donald Trump’s election victory.
Since taking over Twitter and rebranding the social media platform to X, Musk has enabled X users to send Bitcoin and other cryptocurrencies as ‘tips’ to other users. There has also been widespread speculation about crypto’s role in X’s upcoming payments feature.
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