Amazon & Walmart Coin: Genius Act or Another Diem Disaster?

The whispers are getting louder. In particular, titans of retail Amazon and Walmart are reported to be interested in joining the stablecoin race. Will they disrupt the entire state of payments as we know it? Or are they soon to run into a regulatory brick wall, just like Facebook’s doomed Diem project? Fortunately, unlike a rapidly dropping crypto price, the answer is complicated in all the right ways.

Can They Dodge Regulatory Fire?

The elephant in the room is regulation. Remember Diem? Facebook’s ambitious, if misguided, first foray into crypto was put on ice after suffering a death by a thousand cuts of regulatory oversight. Regulators around the world were understandably afraid about the possibility of systemic risk, illicit finance, and data privacy violations. Diem thus became a kind of cautionary tale, a bright, bold symbol of crypto ambition colliding with regulatory reality.

Now, enter Amazon and Walmart. EV proponents, by in large, aren’t exactly known as fans of regulatory burdens. And the “Genius Act,” although it seems like it would provide a framework, could turn into a compliance nightmare labyrinth. Will it be the magic incantation that opens the stablecoin door, or more like a trapdoor to regulatory Hades?

Think about it. Facebook, despite its size, faced trust issues. While Amazon and Walmart do start with brand recognition, they have something else – massive amounts of consumer data. This could be a double-edged sword. Regulators should be looking at this as an opportunity, allowing them to provide greater flexibility. Fourth, they are understandably confident in their ability to manage the sensitive data. Or perhaps they will view it as a greater danger, worried about the prospect of abuse and market manipulation.

The unexpected connection here? Now imagine that parallel to the earliest days of the internet. Firms such as Amazon and Google grew and thrived in that largely unregulated space, creating tech monopolies. Today the internet is one of the most regulated industries on the planet and these companies are under an endless microscope. The same could happen with crypto. An initial “wild west” period then replaced with heavy-handed government regulation. Are Amazon and Walmart coming in at the right time? Or have they just shown up to the party too late?

Credit Card Fees: The Real Motivation?

Let's be honest. The "democratizing finance" narrative is probably secondary. We think the real driving force is the credit card transaction fees that every merchant—and their customers—loathe. These fees, which frequently amount to a quarter or more of each sale, gouge retailers’ profit margins. For transactional companies like Amazon and Walmart, with billions of transactions per year, those percentages start to amount to some serious money.

Consider a scenario where consumers start adopting an Amazon or Walmart stablecoin. All of a sudden, those fees are gone, supplanted by maybe lower transaction costs in their own walled garden. It’s an alluring prospect, a means to save money and get more direct oversight on the payment process.

Enter the utility factor — one of the greatest hidden dangers to your commute. If Amazon and Walmart can offer incentives for using their stablecoin – discounts, loyalty rewards, exclusive deals – they could incentivize widespread adoption. Think of it as a fancy new kind of store credit. The flip side of that rule is that it provides amazing opportunity to claim it for a much wider set of products and services.

Will consumers trust a stablecoin issued by a retailer? Are they going to be comfortable just letting their money sit in a digital wallet that’s owned and operated by Amazon or Walmart? This is where the emotional trigger of anxiety fits in. Americans are increasingly worried about the privacy and security of their data. Will their constituents be comfortable with them giving these companies even greater latitude?

Existing Stablecoins vs. Building Their Own

Amazon and Walmart have a key decision to make: partner with an existing stablecoin issuer, or build their own from scratch? Each option has its pros and cons.

The stakes for deciding to do it all themselves are high, particularly if the "Genius Act" evolves into a regulatory debacle. The potential rewards are great. You would receive total dominion over the payment environment, reduced future expenditures, and the capacity to configure the stablecoin according to your public code requirements.

Ultimately, the success or failure of Amazon and Walmart's stablecoin ventures will depend on a complex interplay of factors: regulatory approval, consumer trust, technological execution, and the overall health of the crypto market. It’s a pretty high stakes game and the outcome is anything but assured. Or will they be the vanguard of a new, more equitable financial future? Or will they end up as just another footnote in the history of failed crypto ambitions? Only time will tell. One thing is clear, the world is watching. The anticipation, the surprise/curiosity factor is off the charts and everyone is itching to see what unfolds next.