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Stablecoins have become one of crypto’s few clean products, with US$250B of supply that’s projected to continue growing, tens of billions in daily settlements, and an increasingly clear role as the “dollar API” for the internet.
But when you’re looking for the best trade to capitalise on the stablecoin narrative, the obvious ticker — Circle ($CRCL) — isn’t necessarily offering the best risk/reward. Western Union (WU), sitting on a hated legacy remittance franchise with a double-digit dividend yield, is quietly wiring itself into the same stablecoin megatrend from the opposite direction.
In today’s article, we dive into how to better capitalise on the growth of stablecoins: Is the value in the minting of the stablecoin, or in the ownership of the last-mile distribution?
Modern Applications of Stablecoins
Today, the highest volume of stablecoin activity is still intra-crypto:
According to TD Economics:
Roughly ~90% of stablecoin volume is tied to trading, collateral, and institutional settlement between exchanges, desks, and DeFi protocols.
Less than 10% is “real-world” payments.
Within that, P2P and remittances are ~3% of flows.
So the narrative of “stablecoins will kill tradfi” is premature. Today, real world related payments still run through banks, money transfer operators, and card networks.
Stablecoins must grow into and replace existing real-world use cases to live up to their hype. By 2030, mainstream projections put stablecoins at ~20% of cross-border payment volumes due to the fact that blockchain-based transfers can cut underlying settlement costs by up to 70% vs traditional correspondent banking.
Cross-border payments will be one of the most potential use cases for stablecoins as they expand. We believe that the gap in stablecoin adoption can be attributed to distribution, which is where Western Union has led the way for 170+ years — and where Circle also wants USDC to go.
Circle’s Dilemma: The Cost of Buying Distribution
Circle’s business model is typical: issue USDC, invest reserves in short-duration treasuries, and capture the net interest margin. However, as an infrastructure provider without a native user base, Circle faces a prohibitive "distribution tax".
Since Circle doesn't own the end customer, it must rent access to liquidity. To propagate USDC, Circle is forced to incentivise exchanges and wallets to prioritise its token over competitors like Tether. This dynamic is most visible in its relationship with Coinbase. Public disclosures indicate that Coinbase captures a substantial portion of the economics generated by USDC reserves—often 50%+ of total interest income—simply for acting as the distribution funnel.
This reveals a fragile quality of earnings – Circle’s "distribution, trading, and other" costs have expanded aggressively as USDC supply has scaled, outpacing traditional operating leverage.
In essence, Circle is a utility provider whose marginal cost of acquisition remains stubbornly high because every new user effectively demands a revenue-share agreement. The company is priced as a high-growth fintech, yet its earnings are heavily levered to partners who control the customer relationship.
Circle’s strengths are real:
One of the most trusted fiat-backed stablecoins;
Strong regulatory positioning;
Deeply integrated into crypto trading and on-chain infra as the second biggest stablecoin in circulation today.
But its weaknesses are just as real:
No native retail distribution;
Heavily dependent on partners like Coinbase;
Earnings are levered not just to USDC adoption, but to how much of the economics it can keep after paying those partners?
Western Union: The "Retro-fit"
Western Union approaches stablecoin from a position that is largely ignored by the market: it already owns the distribution that Circle is paying to acquire.
It already owns distribution:
Hundreds of thousands of physical locations in more than 200 countries.
Deep penetration into migrant corridors where cash transaction volumes are high.
A compliance stack and set of licenses that are extremely hard to replicate, especially in higher-risk jurisdictions.
Most importantly, Western Union does not need to pay Coinbase-type rev-share to get in front of customers. It’s already the customer’s default choice in many corridors, and has been for decades.
Today, Western Union monetises that distribution with old-school tech and economics: fees plus FX spread on cash remittances. These economics are very good, which is why, despite challenges posed by stablecoin growth, Western Union remains a profitable, cash-generative business.
Now it’s layering stablecoins underneath.
By launching its own USD stablecoin (USDPT) and building a “Digital Asset Network,” Western Union is effectively saying:
the front end (brand, agents, trusted payout locations) stays the same;
the back end (settlement rails and float) moves to a stablecoin model.
That gives WU two levers Circle does not have in the same combination:
It can still charge fees and spreads where it has captive distribution.
It can start monetising the float and on-chain settlement like a stablecoin issuer.
Circle has to pay heavily for distribution and then tries to maximise its share of the float, whereas WU already has distribution, makes money from it, and now is adding stablecoin float as an additional revenue stream.
Western Union’s Execution Risk
In 1975, a Kodak engineer named Steven Sasson invented the first digital camera. When he presented it to corporate leadership, their response became the textbook definition of corporate suicide: "That’s cute—but don’t tell anyone about it."
Kodak buried the technology to protect its high-margin film annuity. They chose the cash cow over the inevitable shift in distribution, and by the time they pivoted, they were a relic.
Today, Western Union ($WU) stands at this exact precipice. Can it cannibalise its own legacy cash cow to survive the digital transition?
The "Spread" Addiction vs. Blockchain Efficiency: Western Union’s profitability is heavily reliant on FX spreads—the markup charged on currency conversion. The stablecoin narrative promises near-zero settlement costs, but for WU, efficiency creates a conflict of interest. If they move to transparent, on-chain rails, they risk compressing the very spreads that drive their bottom line.
Valuation: The Value Trap vs. The Growth Trap
The divergence in valuation between these two entities presents a classic market inefficiency.
Western Union is priced as a struggling business. Trading at a low 4 P/E multiple with a 10% dividend yield, the market is pricing in a slow, inevitable erosion of its franchise by digital disruptors. This view focuses heavily on the "innovator’s dilemma"—the fear that digital wallets will cannibalise WU’s high-margin cash business. While valid (digital is ~15% of revenue and growing, while retail cash is softening), this ignores the optionality of the turnaround.
Circle, conversely, is priced for perfection, embedding optimistic assumptions regarding long-term market share and the durability of unregulated seigniorage in a high-rate environment. Investors are paying a premium for a future that requires Circle to outmaneuver not just Tether, but inevitable bank-issued stablecoins and central bank digital currencies (CBDCs).
Bottom line: Consider Longing $WU
For the trader constructing a portfolio around the thesis "stablecoins will revolutionise cross-border finance," the choice lies between a capital-intensive issuer and a distribution-rich incumbent.
Circle represents the high-beta, pure-play exposure to the asset class, carrying significant regulatory tail risk and margin compression concerns.
Western Union represents a deep-value, asymmetric bet on the application of the technology. It offers a free call option on the success of its digital pivot, cushioned by massive cash flows and a valuation that assumes failure. If Western Union successfully integrates stablecoin rails to defend its margins and streamline settlement, the subsequent multiple expansion would likely outperform the linear growth trajectory of a pure issuer.
In the race to dominate the digitisation of the dollar, possession of the user is nine-tenths of the law. Western Union owns the user; Circle is still renting them.
English (US) · 