The Future Trillion-Dollar Stablecoin Factories

Image Source: Modern Times (1936)

Author | Sleepy.txt

Bridge, the stablecoin issuance platform under Stripe, one of the world's largest online payment infrastructures, has collaborated with the wallet application MetaMask, which has over 30 million crypto users, to launch the native stablecoin MetaMask USD (mUSD).

Bridge is responsible for the full issuance process from reserve custody, compliance audits to smart contract deployment, while MetaMask focuses on refining the frontend product interface and user experience.

This collaborative model is currently one of the most representative trends in the stablecoin industry, with more and more branding parties choosing to outsource the complex stablecoin issuance process to professional "manufacturers," similar to how Apple entrusts iPhone production to Foxconn.

Since the birth of the iPhone, Foxconn has almost always undertaken the core production task. Today, approximately 80% of iPhones are assembled in China, with over 70% coming from Foxconn's factories. At its peak, the Foxconn Zhengzhou facility accommodated over 300,000 workers and was referred to as "iPhone City."

The collaboration between Apple and Foxconn is not a simple outsourcing relationship but a typical case of modern manufacturing division of labor.

Apple concentrates its resources on the user end, such as design, system experience, brand narrative, and sales channels. Manufacturing does not represent a differentiating advantage for it; instead, it signifies significant capital expenditure and risk. Therefore, Apple has never owned its factory but chose instead to entrust production to professional partners.

On the other hand, Foxconn has built core competencies in these "non-core" areas. They have established production lines from scratch, managing raw material procurement, process flows, inventory turnover, and shipping rhythms, continuously reducing manufacturing costs. In terms of supply chain stability, delivery reliability, and production capacity flexibility, they have established a complete set of industrial processes. For brand customers, this means fundamental support for frictionless expansion.

The logic of this model is collaborative division of labor. Apple does not have to bear the fixed costs of factories and workers or shoulder manufacturing risks during market fluctuations. Foxconn, leveraging economies of scale and multi-brand production capacity utilization, extracts overall profits from extremely low single-unit margins. Brands focus on creativity and consumer engagement, while contract manufacturers take on industrial efficiency and cost management, resulting in a win-win situation.

This model has not only transformed the smartphone industry. Since the 2010s, computers, TVs, home appliances, and even cars have gradually shifted to a contract manufacturing model. Manufacturers like Foxconn, Pegatron, Flex, and Jabil have become key nodes in the global manufacturing restructuring. Manufacturing has been modularized, packaged, and turned into a capacity that can be operated at scale and sold externally.

Several years later, this logic was transplanted into what seemed like an entirely unrelated field: stablecoins.

On the surface, issuing a stablecoin only requires minting it on-chain. However, to truly make it function, the work involved behind the scenes is far more complex than outsiders imagine. Compliance frameworks, bank custody, smart contract deployment, security audits, multi-chain compatibility, account system integration, KYC module incorporation—accomplishing these steps requires long-term investment in financial strength and engineering capabilities.

We have previously detailed this cost structure in "How Much Does It Cost to Issue a Stablecoin?" A issuing institution starting from scratch often faces initial investments in the million-dollar range, mostly comprising incompressible rigid expenses. Post-launch, annual operating costs could even reach tens of millions, covering legal, auditing, operations, account security, and reserve management modules.

Today, some companies are beginning to package these complex processes into standardized services, providing plug-and-play solutions to banks, payment institutions, and brands. They may not necessarily be in the limelight themselves, but behind the issuance of a stablecoin, one can often see their shadow.

Within the stablecoin world, we are also starting to see the emergence of "Foxconns."

"Foxconns" of the Stablecoin World

In the past, issuing a stablecoin almost meant simultaneously playing three roles: a financial institution, a tech company, and a compliance team. Project teams needed to negotiate with custodial banks, establish cross-chain contract systems, complete compliance audits, and even address licensing issues in different jurisdictions. For most enterprises, this threshold was too high.

The emergence of an "outsourcing" model is precisely aimed at solving this problem. The so-called "stablecoin factories" refer to institutions that specifically provide stablecoin issuance, management, and operational services to other companies. They are not responsible for building the final user-facing brand but provide a complete set of infrastructure needed behind the scenes.

These companies are responsible for building a complete set of infrastructure from front-end wallets, KYC modules to back-end smart contracts, custody, and auditing. Clients only need to specify which currency to issue, where to launch in the markets, and the rest can be handled by the factory. For example, Paxos played this role when collaborating with PayPal to issue PYUSD: custodial USD reserves, chain issuance responsibility, compliance integration, while PayPal only needed to display the "stablecoin" option in the product interface.

The core value of this model is reflected in three aspects.

The first is cost reduction. If a financial institution were to independently build a stablecoin system from scratch, upfront investment could easily reach millions of dollars. Compliance permits, technology development, security audits, bank partnerships—each step requires individual investment. By standardizing processes, the factory can compress the marginal cost for a single client far below the self-built model.

The second is to shorten the timeline. Traditional financial product launches are often measured in "years," and if a stablecoin project takes a fully self-developed path, it could take 12–18 months to go live. The white-label factory model allows customers to launch a product in just a few months. Stably's co-founder has publicly stated that their API integration model can enable an enterprise to launch a white-label stablecoin in a matter of weeks.

The third is risk transfer. The biggest challenge for stablecoins lies not in technology but in compliance and reserve management. The Office of the Comptroller of the Currency (OCC) and the New York Department of Financial Services (NYDFS) have extremely strict regulatory requirements for custody and reserves. For most companies looking to dip their toes in, taking on full compliance responsibility is not realistic. Paxos was able to secure major clients like PayPal and Nubank because it holds a New York trust charter, allowing it to lawfully custody USD reserves and fulfill regulatory disclosure obligations.

Therefore, the emergence of stablecoin white-label factories has somewhat changed the industry's barrier to entry. The significant upfront investment that only a few giants could bear can now be divided, packaged, and sold to more financial or payment institutions in need.

Paxos: Turning Processes into Products, Compliance into Business

Paxos set its business direction early on. It does not emphasize the brand, nor does it pursue market share. Instead, it has built capabilities around one thing: turning stablecoin issuance into a standardized process that others can purchase.

The story begins in New York in 2015 when the New York Department of Financial Services (NYDFS) opened up the digital asset license, and Paxos became one of the first chartered limited-purpose trust companies. That license was not merely symbolic; it meant Paxos could custody client funds, operate blockchain networks, and settle assets. Few companies in the U.S. hold such qualifications.

In 2018, Paxos launched the USDP stablecoin, with the entire process under regulatory oversight: reserves held in banks, monthly audits disclosed, and minting and redemption mechanisms on-chain. Not many followed this practice because of the high compliance costs and it being a slow process. However, it did create a clear and controllable structure, breaking down the birth process of a stablecoin into standardized modules.

Later, Paxos did not heavily promote its coin but packaged these modules into a service and offered them to others.

Two of the most representative clients are Binance and PayPal.

BUSD is the stablecoin service Paxos provides for Binance. Binance controls the brand and traffic, while Paxos handles the issuance, custody, and compliance responsibilities. This model operated for several years until 2023 when the NYDFS required Paxos to halt new minting due to insufficient anti-money laundering checks. It was only after this event that the public started to realize that BUSD was issued by Paxos behind the scenes.

A few months later, PayPal launched PYUSD, still issued by Paxos Trust Company. PayPal has users, has a network, but does not have regulatory qualifications, and does not intend to build one itself. Through Paxos, PYUSD can be legally and compliantly launched, entering the U.S. market. This is the most representative demonstration of Paxos' "OEM" capability.

This model is also being replicated overseas.

In Singapore, Paxos obtained a major payment institution license issued by the Monetary Authority of Singapore (MAS) and used this as a basis to issue the stablecoin USDG. This was the first time Paxos completed the entire process outside the United States. It also established Paxos International in Abu Dhabi, dedicated to overseas operations, and launched the interest-bearing U.S. dollar stablecoin USDL, using local permits to avoid U.S. regulation.

The purpose of this multi-jurisdictional structure is straightforward: different clients, different markets require different compliant and executable issuance paths.

Paxos has not stopped issuing. In 2024, it launched a stablecoin payment platform, began accepting corporate receipts and settlement business, and also participated in the establishment of the Global Dollar Network, hoping to connect stablecoins from different brands and systems to facilitate clearing. It aims to provide a more complete backend infrastructure.

However, the closer to regulation, the more susceptible to regulatory scrutiny. NYDFS once called out its insufficient anti-money laundering due diligence in the BUSD project. Paxos was fined as a result and required to submit corrective actions. Although not a fatal blow, this indicates that Paxos' path is destined to be non-lightweight and without blurred lines. It must continuously strengthen compliance, delineate boundaries clearly. It incorporates every regulatory requirement, every security step, as part of the product process. When others use it, they only need to apply their brand to issue stablecoins. Paxos takes care of the rest. This is its positioning, a business model deeply intertwined with technology and regulation.

Bridge: Stripe's Entry into the Heavyweight OEM Factory

Bridge's participation has brought a true heavyweight to the stablecoin OEM factory track for the first time.

In February 2025, Bridge was acquired by Stripe, one of the world's largest online payment infrastructures, processing billions of transactions daily, serving millions of merchants. Compliance, risk control, global operationalization—these paths already established by Stripe are now transplanted to the blockchain through Bridge.

The positioning of Bridge is very direct, providing a complete stablecoin issuance capability for enterprises and financial institutions. It is not simply technical outsourcing, but more like modularizing mature segments of the traditional payment industry, packaging them into standardized services. Reserve custody, compliance audits, contract deployment—all of these are taken care of by Bridge, allowing customers to simply call APIs to integrate stablecoin functionality into their front-end products.

The most illustrative case of MetaMask's partnership can explain this clearly. As one of the world's largest Web3 wallets with over 30 million users, it lacked financial licenses and reserve management qualifications. Through Bridge, MetaMask was able to launch mUSD within a few months, without spending years building compliance and financial systems.

The business model chosen by Bridge is platform-based. It is not tailored to a single customer, but aims to build a standardized issuance platform. The logic is consistent with Stripe's approach to payment. By lowering the barrier through APIs, customers can focus on their core business. Just as countless e-commerce platforms and apps integrated credit card payments in the past, now enterprises can issue stablecoins in a similar way.

Bridge's advantage comes from its parent company. Stripe has already established a compliance partnership network globally, which facilitates Bridge's entry into new markets. Additionally, Stripe's existing merchant network naturally forms a potential customer base. For those enterprises that want to explore stablecoin business but lack on-chain technology or financial qualifications, Bridge provides a ready-made solution.

However, there are limitations. As a subsidiary of a traditional payment company, Bridge may be more conservative than crypto-native enterprises, and its iteration speed may not be fast enough. Within the crypto community, Stripe's brand influence is also not as strong as it is in the mainstream business world.

Bridge's market positioning leans more towards traditional finance and enterprise customers. MetaMask's choice illustrates this; what it needs is a trusted financial partner, not just a technical supplier.

The entry of Bridge signifies that the stablecoin OEM (Original Equipment Manufacturer) business is drawing attention from traditional finance. As more players with similar backgrounds join, competition in this field will intensify, but at the same time, it will drive the industry towards maturity and standardization.

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