Amazon Coin and Walmart Coin — Explaining the Retailer’s Stablecoins

Introduction

With the development of digital payment technology, leading retailers around the world have begun to turn their attention to stablecoins (digital currencies pegged to the value of fiat currencies). Recently, it was reported that US retail giant Walmart and e-commerce giant Amazon are exploring the feasibility of issuing their own US dollar stablecoins in the US market, hoping to simplify the payment process, reduce costs, and achieve breakthroughs in the field of financial technology through this move.

This article will deeply analyze the motivation and business logic of Walmart and Amazon's intention to issue stablecoins, envision the application scenarios of their stablecoins in their own ecosystems, evaluate the possible cost savings and efficiency improvements, compare the lessons learned from other related cases (such as Meta's Diem, PayPal USD, Circle USDC and Stripe's stablecoin integration), and explore regulatory challenges and response strategies. Finally, we will also evaluate the potential impact of this move on the global stablecoin market, traditional banking and payment systems, and decentralized finance (DeFi)/Web3 ecology.

1. The motivation and business logic of retail giants to issue stablecoins

Reducing payment fees and challenging the traditional payment system are the primary motivations for Walmart and Amazon to consider issuing stablecoins. It is reported that these large retailers pay billions of dollars in fees to traditional payment networks each year, of which credit card interchange fees (card swiping fees) account for a considerable proportion. By allowing consumers to switch to stablecoin payments, retailers hope to get rid of the high fees of card organizations such as Visa and MasterCard. Stablecoin payments do not require traditional card swiping and clearing processes, which can significantly reduce payment transaction costs. According to the Wall Street Journal, this move is expected to save Walmart, Amazon and others up to billions of dollars in fees each year.

At the same time, stablecoins can also provide faster settlement and reduce transaction arrival time. Traditional card payments often require T+1 or several days to settle, while blockchain-based stablecoin payments can complete fund transfers almost in real time. This is particularly attractive to merchants with a large number of overseas supply chains, because cross-border payment settlement can be faster and more efficient.

Controlling the flow of funds in the ecosystem is also an important business logic. By issuing their own stablecoins, Walmart and Amazon have established their own payment networks, keeping customer funds in their own systems. Consumers can pre-exchange US dollars for digital currencies issued by the company for shopping, and merchants can directly accept the stablecoin. On the one hand, this model reduces dependence on bank intermediaries and third-party payments, and separates user transactions from the traditional banking system; on the other hand, the company can obtain interest income and data value from the deposited funds.

For example, the balance of stablecoins that users do not consume immediately after purchasing will form a pool of funds, and companies can invest their reserves in low-risk assets such as government bonds to earn interest (similar to the operation of money market funds). In the current interest rate environment, this part of the income is considerable and has become a new source of profit for the company. More importantly, having its own payment currency can enhance user stickiness: consumers tend to use the stablecoin in the ecosystem in order to enjoy discounts or convenience, thereby reducing churn. As analysts point out, currency naturally has platform attributes, and it is easier for platforms with a large user base to issue currency to form network effects. Amazon has more than 200 million active buyers and a broad Prime membership base, and Walmart serves millions of customers every week. These "sticky" user groups give them the confidence to quickly roll out private digital currencies.

In addition, issuing stablecoins is also in line with the two companies' consistent strategy of entering financial services. Walmart has been trying to get involved in banking and payment (such as prepaid cards, remittance services, etc.) for many years, hoping to use its store network and customer flow advantages to provide financial products. As early as 2019, Walmart applied for a stablecoin patent, envisioning the launch of a US dollar digital currency for low-income people without bank accounts, using blockchain to bypass traditional payment intermediaries. The patent even mentions the possibility of paying interest to users' stablecoins, allowing users to use Walmart coins as a savings tool. This shows that Walmart hopes to use stablecoins to achieve inclusive finance and further monetize user resources. Similarly, Amazon is also constantly expanding its financial technology map, including its Amazon Pay digital wallet, credit card business, and merchant loan projects. Issuing its own stablecoin will be a strategic extension of its improvement of the financial ecosystem, which will help integrate payment, wealth management, lending and other functions, and provide consumers and third-party merchants with integrated financial services.

In short, the core business logic of Walmart and Amazon's planning of stablecoins is to reshape the payment link through technical means, save money, open source, and strengthen the ecosystem. Stablecoins are expected to allow them to break free from the constraints of existing financial intermediaries and directly control the transaction value chain, thereby gaining cost advantages and new profit points. This is not only a challenge to traditional banks and payment giants, but also a precautionary measure to adapt to the trend of the digital currency era.

2. Application scenarios of stablecoins in their own ecosystems

If Walmart and Amazon successfully issue and promote their own stablecoins, it will likely penetrate into the two companies' huge business ecosystems, covering multiple online and offline scenarios. The following are the main application scenarios:

• Payment and settlement of e-commerce platforms

On the Amazon website and Walmart online mall, stablecoins can be used as a new settlement currency. When customers check out, in addition to bank cards, PayPal and other options, they may see "Amazon Coin" or "Walmart Coin" as payment methods. Users can convert USD into equivalent stablecoins in advance and deposit them into their account wallets, and then pay directly with stablecoins when shopping. To encourage adoption, the company may offer discounts or cashback incentives: for example, paying for orders with Amazon stablecoins will enjoy a 2% discount on the price of the goods (equivalent to letting users share part of the savings in handling fees). This is similar to Amazon's current practice of giving discounts for payment with gift cards or co-branded credit cards, and stablecoins become a new marketing tool.

Similarly, Walmart can also launch a promotion of "pay with Walmart Coin and get x yuan off immediately." On the merchant payment side, third-party sellers on the Amazon platform or Walmart's suppliers can choose to accept part of the payment in stablecoins. In the early stage, in order to take into account the merchant's wishes, Amazon may only pay a certain percentage (such as 10%) of the sales to sellers in stablecoins, and the rest will still be settled in US dollars. Each seller will have a digital wallet to receive Amazon coins and can exchange them back to US dollars at any time with one click. As stablecoins become popular, sellers may gradually accumulate and directly use these digital coins to purchase advertising services or purchase goods within the Amazon ecosystem, thus forming a closed loop. Fast and secure on-chain settlement can also shorten the merchant collection cycle and improve capital turnover efficiency, which is good for e-commerce business.

• Offline store payment and omni-channel integration

Walmart has thousands of physical supermarkets across the United States, and Amazon has also deployed offline retailers such as Whole Foods. Stablecoins can be extended to offline scenarios through mobile payment methods to achieve a unified payment experience across all channels. For example, Walmart can add a stablecoin wallet function to Walmart Pay on its mobile app. Customers can show the App QR code when checking out at the store and complete the payment with the digital wallet balance (Walmart coin). In this way, transactions can be settled directly on Walmart's internal chain without the need for a card terminal. Compared with debit/credit card payments, merchants save 2-3% of card swiping fees, and customers may also receive points or discount rewards for participating in digital membership programs.

Amazon can integrate stablecoins into Amazon Pay. Users can not only shop online at Amazon, but also scan the code with their mobile phones to pay for Amazon stablecoins at offline partner merchants, realizing the convenience of "scanning and going around the world". At the same time, with the help of IoT technology, Amazon's unmanned convenience store Amazon Go, smart home device Alexa shopping assistant, etc., can all use stablecoins as a means of settlement, making consumption more seamless. The online and offline integrated payment system can also accumulate more complete user consumption data, making it easier for companies to portray user portraits and conduct precision marketing (pay attention to privacy compliance).

• Supply Chain Payment and Cross-border Trade

The global extension of Walmart and Amazon's supply chain involves a large number of cross-border payments and settlements. Stablecoins can play a role in the B2B field. For example, Walmart can use its own stablecoins to pay Asian manufacturers directly, no longer through bank wire transfers or the SWIFT network, thereby bypassing the cumbersome and expensive cross-border remittance process. Traditional cross-border payments often have high fees and slow arrival, while on-chain stablecoin transfers are almost real-time, with fees only for mining or blockchain transaction fees, which are much lower than bank wire transfer rates. For suppliers, they receive stablecoins anchored to the US dollar, which can be directly exchanged for local fiat currency or held as US dollar assets. Fast settlement is particularly attractive to merchants with overseas suppliers, which shows that this model can accelerate the capital turnover of international supply chains. Amazon can also use stablecoins to settle sales revenue for its global third-party sellers, especially those from developing countries. Stablecoins can provide a cheaper and faster option than traditional payment channels such as Payoneer. In addition, in terms of logistics and trade financing, stablecoins combined with the traceability of blockchain can realize the linkage between the status of goods and payment: when the freight reaches a certain node, it automatically triggers the smart contract to release part of the payment, and pay the supplier with stablecoins, improving the efficiency of supply chain finance.

• Consumer Loyalty Program and Points Rewards

Integrating stablecoins into membership systems and loyalty programs is a major scenario to encourage users to use them. Walmart and Amazon can consider using stablecoins as a form of shopping rewards or membership points. For example, Amazon Prime members can get a certain percentage of the consumption amount back when shopping, which is deposited in their digital wallets in the form of Amazon stablecoins, which is equivalent to direct cash back but denominated in digital dollars, and users can use it immediately for the next consumption. Compared with traditional points, the value of stablecoins is 1:1 anchored to the US dollar, which is transparent and free of conversion, and users perceive the value more directly. If members are allowed to use or redeem stablecoins at partners, this cross-platform universal "token points" will be more attractive. Walmart can also introduce stablecoin rewards in its "Savings Catcher" or refueling, pharmacy and other consumer rebates to increase user participation. In addition, the company can encourage users to hold stablecoins, such as providing annualized returns on balances as rewards like PayPal. Assuming Walmart promises an annualized rate of return of 2%-3% on WalmartCoin in the user's wallet, which is distributed monthly, this will encourage customers to keep their money in the Walmart ecosystem. By sharing part of the reserve interest with users, not only loyalty is enhanced, but also the function of bank savings is attracted to its own platform.

• Expanding financial services and innovative applications

Once they have a stablecoin platform, Walmart and Amazon can develop more financial technology products on this basis. For example, provide suppliers and third-party sellers with loans based on stablecoin flow: use the stablecoin transaction records and balance credit in the seller's digital wallet to issue small loans or prepayments, and the interest is charged in stablecoins. This is somewhat similar to Amazon's existing seller loan program, but both borrowing and repayment can be automatically executed through stablecoins. For another example, Walmart can digitize the remittance services of its stores at home and abroad - users can buy Walmart coins with cash in the United States, and then their relatives and friends in their hometown can exchange the equivalent amount through local cooperative retailers abroad, realizing cheap and fast cross-border remittances (similar to the stablecoin version of "Walmart to Walmart" remittances). In terms of digital content and community, Amazon owns the Twitch streaming platform. In the future, it may allow viewers to reward anchors and purchase digital items with Amazon stablecoins, unifying the current virtual currency system (Twitch already has "Bits" prop coins). AWS cloud service customers may also pay cloud computing fees through stablecoins to facilitate inter-enterprise payments. Even in the field of metaverse and NFT, these stablecoins can serve as circulation media, connecting Amazon and Walmart's e-commerce systems with the Web3 digital economy.

In summary, Walmart Coin and Amazon Coin have the potential to be implemented in all aspects such as consumer payment, supply chain settlement, membership rewards and financial services, and become the "blood" that runs through their business empire. Of course, factors such as technical integration, user education and partner acceptance need to be considered in the specific implementation, but these scenarios show the rich imagination space that stablecoins may bring.

3. Cost savings, efficiency improvements and capital control brought by the issuance of stablecoins

Cost savings are the most intuitive source of income for retailers to issue stablecoins. As mentioned above, Walmart and Amazon spend huge fees on traditional card payments every year. According to statistics, American merchants bear an average of about 2% of credit card fees, and large retailers have an annual transaction volume of hundreds of billions of dollars, so 2% means billions of dollars in costs. Stablecoin payments are expected to complete value transfers on the blockchain at almost zero cost, and the on-chain transaction fees are far lower than 2%. Even considering the small expenses of maintaining wallets and exchanges, it is still a drop in the bucket compared to the fees charged by traditional card organizations. Some analysts point out that stablecoin-based payment channels will provide lower-cost transactions, which can help large companies save billions of dollars in bank fees each year. Therefore, stablecoins can directly increase retailers' profit margins or give them room to pass on profits to consumers, thereby improving price competitiveness.

The efficiency improvement is reflected in the speed of capital circulation and the optimization of operational processes. Traditional payment systems (especially cross-bank and cross-border) often have settlement lags: for example, credit card transaction merchants usually receive payments the next day, and cross-border remittances may take several days. Stablecoin transactions can achieve real-time settlement, greatly shortening the time of funds in transit. This is of great significance to the cash flow-intensive retail industry - faster collection of funds means lower working capital occupation and interest losses. When thousands of transactions are instantly credited, the company's finance department can allocate funds more flexibly, thereby improving overall operational efficiency.

In addition, automated smart contracts can also reduce manual reconciliation and errors: payment is settlement, and transaction records cannot be tampered with and are clearly traceable, reducing the labor cost of reconciliation and error disputes. For payments on the supply chain, stablecoins enable Walmart and Amazon to synchronize logistics and capital flows, simplifying the cumbersome letter of credit and bill processes. Overall, stablecoins are expected to reduce transaction friction and allow funds to circulate efficiently in a digital way, as smoothly as information is transmitted on the Internet.

Enhanced control over funds is another strategic benefit brought by issuing stablecoins. First, the company will control the deposited funds in consumers' wallets. When users exchange cash for Walmart coins/Amazon coins, these funds are temporarily stored in the issuer's reserve pool. According to the 1:1 reserve mechanism, these reserves are usually invested in safe cash equivalents (such as US Treasury bonds and money market funds). The issuer can legally obtain the investment income of this part of the funds and exercise a function similar to the "coinage right". This is regarded as a major source of income for the issuer of stablecoins in finance: for example, the issuers of stablecoins such as USDT and USDC receive considerable interest every year for holding reserve assets. Based on the current US short-term Treasury bond yield (about 5%), each $1 billion in reserves can earn $50 million per year. If the circulation scale of Amazon coins reaches billions, the interest income alone will be very considerable. This kind of income does not need to be charged directly to consumers, which is a diversion of traditional bank deposit business to some extent.

Secondly, stablecoins can also allow companies to obtain more in-depth transaction data. Through their own on-chain payment networks, Walmart and Amazon can obtain first-hand data such as user consumption habits and capital flows in real time, which has higher granularity and timeliness than obtaining data from banks or third-party payments. This is conducive to enterprises to carry out refined operations and personalized marketing (provided that data privacy regulations are complied with). Thirdly, stablecoins allow retailers to get rid of financial institution restrictions to a certain extent. For example, traditional payments are affected by bank business hours, while on-chain stablecoins operate 24/7 and are not subject to holiday breaks; for another example, when banks or payment companies adjust policy rates, retailers can only passively accept them, while their own stablecoin system is autonomous and controllable. This control extends to the international business level, where companies can freely allocate funds between different countries (depending on the supervision of each country), improving the mobility of cross-border operations.

Finally, stablecoins also have potential brand and strategic value. As industry leaders, Walmart and Amazon's issuance of digital currencies has itself consolidated their image in the field of innovation. Earlier, Facebook's Libra attracted great attention, and now the actions of retail giants mean that the dominance of payment innovation may shift to commercial companies. This will not only help attract young digital native consumers, but may also occupy a place in the future financial landscape. From a strategic point of view, early deployment of stablecoins can prevent being preempted by other technology companies and ensure their own voice in payment and digital economy. Therefore, from the perspective of comprehensive cost, efficiency, benefits and strategic control, issuing stablecoins is a good deal for retail giants, provided that the accompanying regulatory and operational challenges can be resolved.

4. Comparison with other cases: Meta's Diem, PayPal USD, Circle USDC, Stripe stablecoin integration

It is not the first time that large companies have entered the field of stablecoins. Looking back at the cases of the past few years, we can provide valuable lessons for Walmart and Amazon. Below we compare and analyze Meta (formerly Facebook)'s Diem project, PayPal USD stablecoin, Circle's USDC, and Stripe's stablecoin integration strategies, and summarize the key factors of success and failure.

Meta's Libra/Diem: Lessons.

In 2019, Facebook launched the Libra cryptocurrency plan in a high-profile manner, intending to launch a global stablecoin anchored to a basket of currencies, which triggered strong resistance from regulators in various countries. Although Libra later adjusted its strategy and renamed itself Diem and changed its anchor to a single dollar, it still failed to eliminate concerns and was eventually forced to terminate in 2021. The main reasons for the failure of Libra/Diem are regulatory resistance and trust deficit. Congressional hearing records show that lawmakers asked Facebook not to act rashly before obtaining full regulatory approval, and Facebook did not dispel its doubts at the time. Central banks around the world are worried that if Libra is adopted by billions of users, it may weaken their monetary sovereignty and interfere with financial stability.

In addition, Facebook's own credibility issues (user data privacy scandals, etc.) have led to a lack of trust in its currency issuance by politicians and the public. Once major partners and payment companies (such as Visa, Mastercard, etc.) withdrew from the alliance under pressure, Libra actually lost its landing basis. The lesson of Libra is that being too radical and trying to establish a new global currency unit independent of sovereign currencies is difficult for regulators to accept; at the same time, the bad record of large companies in the past will amplify the outside world's doubts about their financial innovation. For Walmart and Amazon, learning from the failure of Libra means that they need to take a more cautious and compliant path - sticking to the US dollar and other fiat currencies (not challenging monetary sovereignty), fully communicating and obtaining regulatory approval before the official issuance, and operating in a highly transparent and secure manner to avoid repeating the same mistakes.

PayPal USD: Pioneer experience.

Global payment giant PayPal is the first major fintech company in the United States to issue its own stablecoin. In August 2023, PayPal launched the stablecoin PayPal USD (PYUSD), which is anchored to the US dollar and issued by Paxos, a regulated trust institution in New York State. This is an important milestone in the combination of traditional payment companies and the crypto world. PayPal has chosen a robust and compliant path: PYUSD is fully guaranteed by safe assets such as cash and short-term treasury bonds at a 1:1 ratio, and its reserves are regulated by the New York Department of Financial Services. After the issuance, PayPal first supported PYUSD for transfers and consumption on its own PayPal and Venmo platforms, and gradually expanded its applications to the outside world. For example, in 2024, PayPal announced that it would connect PYUSD to the Solana high-speed blockchain to reduce transaction costs and increase speed. However, the market response to the initial launch of PayPal USD was relatively mild, and its circulating market value grew to about US$1 billion within a year before entering the platform period. To promote user adoption, PayPal began to provide an annualized 3.7% return reward for balances holding PYUSD in 2025, with monthly interest paid in the form of stablecoins. The move aims to increase the penetration of stablecoins in its payment ecosystem, while competing with bank deposit rates to attract users to retain funds.

PayPal USD's experience shows that it is entirely feasible for large companies to issue stablecoins, but it takes time and incentives to cultivate user habits and enrich scenarios. Under regulatory permission, small-step iterations and internal first and external later are effective strategies. And with PayPal's demonstration, the public and regulators are also becoming more receptive to other companies issuing stablecoins. For Walmart and Amazon, they can learn from PayPal's approach: choose compliant partners (such as licensed trust companies) to jointly issue to ensure transparent and safe reserves; in the early stage, mainly circulate in their own scenarios, and gradually open up and be compatible with more blockchain networks after maturity; at the same time, design incentive mechanisms that benefit users and merchants (such as payment discounts, balance interest, etc.) to promote liquidity. These measures contribute to the virtuous cycle of the stablecoin ecosystem.

Circle USDC: A model of compliant stablecoins.

USDC is a US dollar stablecoin launched by fintech company Circle and Coinbase in 2018. Since its birth, it has always pursued high standards of compliance and transparency and has now become the world's second largest stablecoin. At the regulatory level, USDC operates through trust licenses in various states of the United States and is subject to the supervision of NYDFS in New York State. It is regarded as one of the "clean" and trustworthy stablecoins in the industry. Its reserve asset composition and audit reports are regularly disclosed to the public, winning the confidence of users and institutions. The key to USDC's success lies in its first-mover advantage and open cooperation: it established a broad cooperative alliance (Centre) earlier, becoming a universal stablecoin for many exchanges, wallets, and DeFi protocols, and is compatible with multiple mainstream blockchains such as Ethereum. This has rapidly expanded its circulation and created a good reputation in the field of compliance. USDC has also cooperated with Visa on a pilot project to use USDC on Ethereum for Visa's cross-border payment settlement, exploring the introduction of stablecoins into traditional payment networks. However, the development of USDC has also encountered challenges. For example, the collapse of Silicon Valley Bank, where part of its reserves were deposited in 2023, triggered a short-term liquidity panic, causing USDC to be de-anchored for a time. This exposed the dependence of stablecoins on the traditional banking system and the risk transmission problem. Circle's response is to increase reserve diversification and establish a more direct clearing channel with the Federal Reserve.

For retailers, if they do not want to build all their own issuance capabilities, adopting or alliance existing stablecoins is also one of the paths. Walmart and Amazon can choose to cooperate with institutions such as Circle to directly support USDC payments on their own platforms, thereby immediately enjoying the benefits of low fees and fast stablecoins. There are even reports that these companies are considering joining a merchant stablecoin alliance led by a stablecoin issuer to jointly promote a unified third-party stablecoin as a payment medium. This alliance approach can avoid the fragmentation caused by multiple companies issuing different currencies and improve user and merchant acceptance. Of course, the disadvantage is that companies cannot fully control the rule-making and profit distribution of the currency (for example, the interest income of reserves belongs to the issuer rather than the merchant). Therefore, whether to issue it yourself or embrace existing stablecoins depends on the company's balance between control and compliance costs. The USDC case shows that adhering to compliant operations, transparency and a strong cooperative network are the cornerstones of the success of stablecoins, and are also the principles that Walmart and Amazon need to follow if they issue their own currencies.

Stripe's stablecoin integration: technology empowerment.

Payment processing company Stripe did not issue its own stablecoin, but as early as 2022, it began to integrate stablecoins into its global payment network, reflecting a "no currency but also benefit from the currency" idea. Stripe is the first to support the service of paying content creators in stablecoin USDC: for example, it provides cross-border income settlement in the form of USDC for bloggers and freelancers on social platforms. Users can receive USDC on the Polygon blockchain and then decide to hold or exchange it for legal currency. This service solves the problem of high fees and slow arrival of traditional cross-border small-amount payments, allowing Stripe to expand its business in the crypto field.

Some experts commented that the integration of stablecoins by companies like Stripe and PayPal is one of the main catalysts for the rapid growth of the stablecoin industry in recent years. In addition, Stripe has also launched a conversion API for fiat currency and cryptocurrencies to facilitate the integration of merchant websites and accelerate the circulation between stablecoins and fiat currencies. Stripe's case shows that even if companies do not issue currencies themselves, they can improve the efficiency and scope of their services by supporting existing mainstream stablecoins. This provides a reference for companies that do not want to bear regulatory pressure for the time being - Walmart and Amazon can try to accept USDC, PayPal USD, etc. as payment options before issuing their own stablecoins, and use other people's currencies to verify market effects and cultivate user habits. If it is found feasible, it will go further and issue the currency. On the other hand, if these technology retail giants eventually issue their own currency, payment service providers such as Stripe may also become their important partners, helping to connect Walmart Coin and Amazon Coin to more online merchants and scenarios to achieve interconnection.

Key success factors and failure lessons: Based on the above examples, we can extract the key to the success or failure of corporate stablecoin projects.

(1) Compliance and regulatory communication: Whether it is the failure of Libra or the success of PayPal, it proves that compliance is the lifeline. Obtaining support from legislation and regulatory agencies (or at least not opposing it) is a prerequisite for the implementation of the project. Large companies should be willing to accept the financial regulatory framework (such as treating stablecoins as money market funds and being regulated by the SEC, etc.).

(2) Trust and reputation: The trust of users and partners in the issuer is crucial. Meta’s historical reputation issues have hindered Libra, while PayPal, Circle and other brands that are more trusted in the financial field are more likely to win support.

(3) Reserve transparency and asset security: Successful stablecoins all ensure 1:1 sufficient reserves and disclose them regularly to enhance the confidence of coin holders.

(4) Ecological network effect: Rapid promotion using the existing large user base and cooperative network (the so-called "flywheel effect"). Amazon and Walmart have inherent advantages, but they also need strategies to incentivize users and merchants to join, such as payment discounts, interest rewards, etc. to drive adoption.

(5) Phased advancement: From internal pilot to external expansion, gradually establish the use scenarios of stablecoins. Avoid being too ambitious in one step and causing resistance. (6) Risk management: Including technical security (anti-hacking, anti-fraud), market risk (preventing bank runs and currency fluctuations), etc. In general, if Walmart and Amazon want to succeed on the road to stablecoins, they need to combine the above experience and act prudently. They must have both the speed of Internet companies and the stability of financial institutions.

5. Regulatory challenges and response strategies: Feasibility under the progress of US stablecoin legislation

Any innovation involving currency issuance and payment systems will inevitably face regulatory scrutiny. For Walmart and Amazon's plan to launch stablecoins, the evolution of the US regulatory environment is a key factor in determining its feasibility. Currently, the U.S. Congress is advancing the first comprehensive legislation for stablecoins, the "GENIUS Act" (Stablecoin Regulatory Framework Act), which was passed by a procedural vote of 68 to 30 in the Senate in June 2025 and is considered to be almost a done deal for final legislation. The GENIUS Act aims to clarify the regulatory standards for the issuance of private stablecoins and pave the way for companies like Walmart and Amazon to participate in the stablecoin business. According to reports, the two retail giants are waiting for the framework to be implemented before advancing their plans. It can be said that regulatory legislation progress is a necessary prerequisite for their actions.

Even with legislative protection, Walmart and Amazon still need to overcome multiple regulatory challenges:

• License qualifications and institutional definition: The essence of stablecoin business involves the issuance of redeemable stored value. Supervision may require the issuer to obtain a license similar to that of a bank, trust company or a specific stablecoin issuance license. Walmart and Amazon are neither banks nor licensed financial institutions. If they want to issue directly, they may need to set up regulated financial subsidiaries. For example, they can consider applying to become a regulated trust (similar to the Paxos model) or a special purpose depository institution. If regulations require stablecoins to be issued by federally regulated institutions, it may be necessary to work with banks or promote legislation to relax non-bank issuance. The GENIUS Act is expected to provide for this, and the current version is said to allow qualified non-bank companies to issue stablecoins, subject to capital and liquidity requirements. Walmart applied to establish an industrial bank (ILC) in 2021 but was blocked, so it needs to choose carefully on the compliance path.

• Reserve supervision and fund security: Regulators are concerned about the security and transparency of stablecoin reserves. Issuers must ensure 1:1 reserve assets, which may be limited to safe assets such as cash, central bank reserves and short-term Treasury bonds. The bill may give the Federal Reserve or other institutions oversight of reserves and require regular disclosure and audits. For Walmart/Amazon, it must be willing to put the issuing department under strict supervision to ensure sufficient reserves and smooth redemption mechanisms to prevent the risk of bank runs. Especially after the scale is expanded, the stablecoin reserve pool may reach a systemic level (tens of billions of dollars). How to ensure that these funds are safe and not misappropriated, and not implicated by the issuer's own operating problems, is a key regulatory concern. Investment restrictions are also one of the topics: legislators such as Senator Elizabeth Warren have criticized the GENIUS Act for allowing stablecoin issuers to invest their reserves in "risky assets", fearing that this will cause systemic risks. Therefore, the final regulations may require highly conservative reserves and issuers' returns. Although this reduces risks, it also reduces the spread income of Walmart/Amazon, which requires a trade-off.

• Anti-money laundering (AML) and user identity: The circulation of stablecoins involves a large number of anonymous addresses transferring value, and the government requires issuers to implement KYC (know your customer) and AML regulations. For retail stablecoins, user access will be a sensitive issue: is it open to anyone on the chain to hold freely, or is it limited to customers who have registered with real names to use in their own apps? It is very likely that the regulator will require the adoption of a "closed loop + whitelist" model, where only users with real names through the issuer's wallet can hold and trade the stablecoin, otherwise it is easy to be used for illegal purposes such as money laundering and terrorist financing. In this way, Walmart and Amazon need to establish or expand existing compliance teams to authenticate digital wallet users, monitor transactions, and report suspicious activities, similar to banking functions. This is a new challenge for non-financial companies, but it is not insurmountable - the two companies have a huge number of users and already have an anti-fraud system, plus technical means to meet regulatory requirements. At the same time, there is also a compromise: limit the scope of use of stablecoins, such as only using them for commodity transactions in the early stage, and not supporting free on-chain transfers to reduce the risk of anonymous abuse. However, in the long run, in order to maximize the effectiveness of stablecoins, it is necessary to balance openness and compliance, which tests the issuer's technical strategy (such as using smart contracts that can freeze blacklisted addresses, integrating traceable digital identity protocols, etc.).

• Consumer protection: Regulators will worry about the risks of ordinary consumers. When the stablecoin issuer goes bankrupt or the reserves are in deficit, are the coin holders protected? Legislation may require redemption commitments and protection mechanisms for extreme situations (such as independent custody of reserves or consideration of joining federal deposit insurance). Walmart and Amazon may need to make it clear in their publicity that stablecoins are not deposits and may not be insured by the FDIC, and communicate risks transparently. At the same time, in order to enhance public confidence, they may voluntarily take some protective measures, such as establishing a reserve guarantee fund, an immediate redemption commitment, or even some kind of insurance, to gain regulatory approval and user trust.

• Competition and antitrust: When large technology retail companies get involved in finance, antitrust and fair competition issues also emerge. The banking industry is worried that these giants will compete unfairly with their user and data advantages, and regulators may introduce restrictions to prevent "large non-bank technology companies" from excessively controlling the financial market. For example, during the legislative process, the banking industry or card organizations may lobby to add clauses to limit the scope of stablecoin operations or force compatibility with existing networks. However, the merchant camp is also actively lobbying, hoping that legislation will pave the way for them. Walmart is even lobbying to add requirements to the bill to increase competition in credit card networks. It can be seen that this is the result of multi-party game. Walmart and Amazon need to unite the merchant alliance to play against the vested interests of finance in order to promote the introduction of policies that are beneficial to themselves. For example, they can win the support of legislators on the grounds of "reducing consumer costs and promoting digital innovation of the US dollar". In specific operations, they should also avoid monopoly pricing and forcing merchants or users to use their currency to avoid triggering antitrust investigations. Appropriate concessions and openness will help shape the positive image of their stablecoins serving the public interest.

• 

To cope with the above challenges, Walmart and Amazon can adopt the following strategies:

• Actively participate in legislation: At present, the merchant alliance has been in close communication with legislators on the content of the GENIUS Act. Walmart and Amazon should continue to influence the details through lobbying so that the regulations can both ensure the security of stablecoins and not overly restrict innovation. For example, in terms of reserve requirements, strive to obtain part of the returns by investing in highly liquid assets, and set up a feasible license path in the licensing process. Seize the opportunity of rule-making and take the initiative into your own hands.

• Choose a compliant issuance path: Just as PayPal adopted the Paxos trust license, Walmart and Amazon can cooperate with licensed institutions to conduct pilot issuance first and enter the market with lower regulatory friction. Once the law is clear, consider applying for your own license to switch to independent issuance. In addition, you can also consider acquiring a regulated financial institution as a carrier (such as a small bank or trust company) to quickly obtain qualifications.

• Excessive compliance and transparency: In order to dispel regulatory concerns, you can take the initiative to commit to measures that are stricter than legal requirements. For example, 100% of the reserves are invested in US bonds and central bank reserves, and the liquidity coverage ratio exceeds 100%; daily disclosure of reserve asset details and third-party audit results; establishment of a real-time transaction monitoring and freezing mechanism to prevent criminal funds; setting up user complaints and protection funds, etc. Demonstrate a responsible attitude through "self-discipline" to reassure regulators and the public. As some analysts have suggested, if Amazon issues stablecoins, it can voluntarily accept SEC supervision in accordance with money market fund rules, making its reserves a "clean" portfolio of safe assets. This statement will greatly ease the risk concerns of regulators.

• Gradually expand the scope: During the legal gray period or when the license is limited, it can be tested in a small range first. For example, the stablecoin Beta version is only launched in some states or specific customer groups, in conjunction with the regulatory sandbox. If it goes smoothly, it can be expanded to the national or even international market. Internationally, attention should also be paid to the policies of different jurisdictions. For example, the EU's MiCA regulations have separate requirements for the issuance and operation of stablecoins. If Amazon wants its currency to circulate in Europe, it needs to obtain a separate license. In some Asian countries, the policies may be stricter, and it is necessary to evaluate whether to avoid or postpone entry. All of these require a compliance planning roadmap.

Overall, the stablecoin regulatory framework being constructed in the United States provides the prerequisites and basic rules for Walmart and Amazon to issue stablecoins. If it can be strictly followed and actively cooperate with supervision, this move is legally feasible. The challenge is how to achieve business goals within the cage of compliance. Fortunately, policymakers seem to recognize the potential benefits of stablecoins launched by compliant companies in consolidating the status of the US dollar and promoting payment innovation. As long as Walmart and Amazon show a gesture of maintaining financial stability and serving the real economy, rather than trying to "create coins to seize power", the attitude of regulators may gradually open up. This will be a win-win situation for both parties.

6. Potential impact: impact on the global stablecoin market, traditional bank payment system, and DeFi/Web3 ecology

If Walmart and Amazon successfully issue and promote their own stablecoins, it will undoubtedly trigger a chain reaction in the broader financial landscape. Its impact will not only be limited to the payment landscape of the US market, but may also affect the global stablecoin competition landscape, the traditional banking system, and the emerging crypto-financial ecology. The following are evaluated separately:

6.1 Impact on the global stablecoin market:

Currently, the world's largest stablecoins by market value are issued by crypto companies (such as Tether's USDT and Circle's USDC), and the dominant scenario is mainly digital asset trading. If the world's top retail and technology companies enter the market, their own stablecoins are expected to quickly gain a large-scale user base and transaction volume, occupying a place in the stablecoin landscape or even ranking among the top. Considering the annual transaction volume of Amazon and Walmart (Amazon's revenue in fiscal year 2024 is $638 billion, and Walmart's e-commerce sales in 2023 are over $100 billion), even if only a part of it is settled through stablecoins, the volume is still considerable. This may make their stablecoin circulation exceed the second-tier stablecoins with a market value of several billion dollars in a short period of time.

Market share restructuring is inevitable: traditional crypto-native stablecoins (such as USDT and USDC) will face new strong competitors. In particular, if Amazon Coin/Walmart Coin is open to off-chain circulation, used in various occasions, and even traded on exchanges, it will form a direct competitive relationship with compliant coins such as USDC. However, there is also a risk of market fragmentation - if major companies promote their own coins, users and merchants will have to face multiple "dollar tokens", which may bring inconvenience and redundancy in exchange. This may give rise to compatibility and bridging needs: such as cross-stablecoin exchange agreements, or unified standard alliances, so that stablecoins of different companies can interoperate in a certain proportion or even achieve final integration. There is also a possibility that, as reported, these merchants will eventually choose to share a third-party stablecoin (such as USDC) alliance to avoid multiple issuances. In any case, the participation of large commercial entities will enhance the credibility and mainstream recognition of the entire stablecoin market. Some stablecoins that are currently under regulatory scrutiny (such as USDT) may gradually be surpassed by compliant stablecoins issued by companies due to their opacity, and people are more willing to hold digital dollars endorsed by well-known companies and subject to regulation. This healthy competition may accelerate the self-regulation of the stablecoin industry. In addition, if the currencies of Amazon and Walmart mainly serve the retail consumption field, then the use scenarios of stablecoins will expand from exchanges and DeFi to daily consumption, achieving true popularization. This is a huge expansion of the overall demand for stablecoins, and may also increase the global circulation of stablecoins by an order of magnitude.

6.2 Impact on traditional banks and payment systems:

The issuance of stablecoins by large non-bank enterprises is seen as a positive impact on the traditional bank payment system. The first to bear the brunt are the fee income of credit card networks and issuing banks. If consumers switch to stablecoin payments, Visa and Mastercard's transaction volume and commissions will decline, forcing them to adjust their business models. For example, they may actively reduce merchant fee rates to retain customers, or seek to connect to stablecoin payment channels themselves (Visa has expressed interest in blockchain payments). The issuing bank will lose part of the card swipe profit, and the savings account deposits may also flow to these company stablecoin wallets (users transfer funds out of the bank for payment convenience and interest). The traditional banking industry has already felt the sense of crisis brought about by this potential threat.

Wall Street News reported that several major banks in the United States are discussing the launch of a joint stablecoin in response, with the banking industry cooperating to establish its own digital dollar to retain customers and payment flows. For example, the bank alliance EWS that operates Zelle payment is considering issuing a stablecoin supported by multiple banks for daily use by the public. This shows that banks are unwilling to sit back and watch technology giants take away the dominant position in payment, and may compete through alliance confrontation. If the bank version of the stablecoin and the retailer version of the stablecoin appear at the same time, two new forces will be formed in the US financial system. Of course, since the banking group has regulatory resources, they may put pressure on corporate issuers to impose more constraints to slow down their progress.

On the other hand, the extensive use of stablecoins will reduce the public's dependence on commercial bank deposits, and some funds will be held by stablecoin issuers instead. In extreme cases, if hundreds of millions of consumers really exchange part of their cash for the balance of Amazon/Walmart coin wallets, the capital pool of the traditional banking system may shrink, affecting its lending capacity and funding costs (reduced deposits will increase the bank's deposit interest rate). However, it should also be noted that the reserves themselves will flow back to the banking system (deposited in custodian banks or purchased securities issued by banks), so the impact is complex and delayed.

The central bank is concerned about the transmission of monetary policy: if stablecoins replace bank deposits and cash for transactions on a large scale, the effect of the central bank on regulating the benchmark interest rate may be weakened because funds circulate outside the banking system. This may prompt the central bank to accelerate the launch of its own central bank digital currency (CBDC) to provide a public alternative. In terms of payment infrastructure, instant payment systems (such as the Federal Reserve's FedNow) and stablecoins compete. FedNow aims to provide 7×24 real-time small payment clearing services. It was originally positioned to replace some card transactions and payment apps, but if private stablecoins occupy the market faster, FedNow's role may be marginalized. Conversely, if the central bank feels threatened, it may integrate its functions to provide better services to suppress the stablecoin network. In general, the rise of retail stablecoins will force traditional finance to innovate: banks and payment companies need to improve efficiency, reduce fees and embrace new technologies to remain competitive, otherwise they may gradually lose the favor of the younger generation of customers.

6.3 Impact on Decentralized Finance (DeFi) and Web3 Ecosystem:

The emergence of Walmart Coin and Amazon Coin may also cause ripples in the cryptocurrency and blockchain ecosystem. If these stablecoins are allowed to circulate on the chain and are compatible with mainstream blockchains, they will quickly become high-quality assets that DeFi protocols are vying to support. Imagine that Amazon Coin/USDC trading pairs appear on Uniswap, and lending platforms such as Aave accept Walmart Coin as collateral. Users can use the Walmart Coins obtained from supermarket change to participate in Internet finance. This will be an important bridge between traditional business and the DeFi world. These corporate stablecoins may be widely regarded as credible value stores due to their high brand reputation, compliance and transparency, and their status in the crypto market is close to USDC. It is mentioned that the access of PayPal and Stripe to stablecoins is itself a catalyst, and the larger Amazon and Walmart coins will have a greater impetus on the entire Web3 payment landscape. Their participation may significantly expand the proportion of stablecoins in on-chain transactions and applications, and provide an entry path for ordinary users who have not yet been exposed to digital assets. For example, an Amazon customer may start holding digital currency for the first time because the return refund is returned in the form of stablecoins, thereby lowering the threshold for the public to enter the crypto field. These new users may then try other crypto services, driving the growth of the crypto user group.

However, the degree of centralization and risk transmission issues also need to be considered. The stablecoins issued by enterprises are highly centralized, and accounts can be frozen and transactions can be reviewed, which conflicts with the permissionless and anonymous characteristics of DeFi. DeFi applications also face the possibility of regulatory intervention when incorporating such assets. For example, Circle's USDC has frozen certain addresses in DeFi due to compliance with US sanctions, causing uneasiness in the decentralized community. Similarly, if Walmart/Amazon coins are connected to DeFi, once regulators require them to freeze certain addresses suspected of being illegal, the funds in the smart contract may be affected. Therefore, the decentralized ecosystem needs to establish risk plans when using these "large compliant stablecoins", such as avoiding using them as the only collateral assets. In addition, the rise of large stablecoins may squeeze the living space of decentralized stablecoins (such as Dai), because users prefer to use compliant stablecoins with better liquidity and lower volatility, thereby affecting the diversity of the DeFi ecosystem.

From the perspective of the global financial structure, the driving effect of Walmart and Amazon's stablecoins may be to strengthen the digital hegemony of the US dollar. These stablecoins are essentially digital substitutes for the US dollar, and are issued by US companies and regulated by the United States. If they are widely popular, it is equivalent to further implanting the US dollar into daily economic activities around the world through technology companies.

On the one hand, this consolidates the US dollar's position as the world's main medium of value (just as some senators support stablecoin legislation to consolidate the US dollar's reserve currency status). But on the other hand, this kind of dollar substitute issued by private companies circulates internationally, which may arouse the vigilance of other central banks, because the right to issue currency and the control of cross-border capital flows are partially transferred. Especially in emerging markets, if a large amount of funds flow into these stablecoin circles, it may impact the demand for local currency and bring about a currency substitution effect. Therefore, some countries may restrict the use of foreign stablecoins in their countries, or accelerate the implementation of their own central bank digital currency to hedge. This will lead to diversified competition in the global digital currency field: there will be a situation where the official digital currency of the central bank, the stablecoin of major US companies, and the crypto-native stablecoin coexist, competing and cooperating with each other to meet the needs of different markets.

In short, the impact of Walmart and Amazon's issuance of stablecoins is two-sided: internally, it is expected to bring more efficient and low-cost payment experience to American consumers and merchants, but externally, it will stir up the existing financial power map, force traditional institutions to change, and accelerate the global digital currency competition. For the crypto industry, this is a strong signal that traditional giants endorse digital currencies, which will greatly promote the popularization of digital currencies, but it also reminds the decentralized community to face up to the entry of compliance forces. In the next few years, we are likely to see a new pattern of stablecoins with many players and ecological integration.

7. Conclusion

Walmart and Amazon explore issuing their own stablecoins, which reflects the trend of the times of the integration of physical business and digital finance. There is a clear business logic behind this strategy: reduce costs and improve efficiency by mastering payment carriers, and achieve closed-loop operation and value-added of funds with the help of their own ecosystems.

From the perspective of potential applications, their stablecoins have the opportunity to run through online e-commerce, offline retail, supply chain settlement and consumer rewards, and innovate existing trading methods. However, successful implementation is not easy, and we must learn from the lessons of pioneers: steadily advance within the framework of regulatory approval and win the trust of users and partners. The United States is currently accelerating the formulation of stablecoin laws to create conditions for compliant issuance. This is both an opportunity and a threshold - giants need to hold themselves to the standards of financial institutions to ensure security and compliance. The report emphasizes the key role of regulatory bills in this, indicating that policy trends will directly affect the success or failure of this payment revolution.

Looking to the future, if the stablecoin plans of Walmart and Amazon are implemented smoothly, it will not only reshape the payment and financial services landscape in the United States, but may also promote the widespread adoption of digital currencies worldwide. More companies or regions may follow up with similar innovations, traditional banks and payment networks will be forced to adapt to the new competitive environment, and the DeFi and Web3 ecosystems will also usher in a large number of mainstream users. It can be foreseen that the digital dollar stablecoin will move from the backstage of the crypto world to the front stage and become part of the daily financial life of the general public. Walmart and Amazon may serve as leaders in this historical process, witnessing and writing the chapter of the new era of digital finance.