Visa Advances USDC Settlement in U.S., Reinforcing Onchain Innovation Amid Regulatory Risks

What happened

Visa has introduced USDC stablecoin settlement for U.S. partners, enabling 24/7 blockchain-based transactions and integrating stablecoins into its core VisaNet workflows. This aligns with the company's strategic shift toward a 'network of networks' and investments in stablecoin technologies, as noted in recent SEC filings. However, Visa remains exposed to significant regulatory and antitrust challenges, including DOJ litigation and interchange fee pressures that threaten long-term economics. Its fundamental strengths, such as ~10% revenue growth and ~50% net margins, persist, but the stock trades at a ~33% premium to its DCF intrinsic value of ~$245. Consequently, while Visa enhances its technological capabilities, the investment backdrop is clouded by valuation concerns and unresolved legal overhangs.

Implication

Visa's USDC integration bolsters its position in emerging payment flows and could aid growth in value-added services over time. Yet, it fails to address immediate threats from fee compression due to antitrust actions and interchange regulations. The innovation may help Visa compete with alternative rails like FedNow and domestic schemes, but near-term earnings impact is likely minimal. Given the stock's premium valuation at ~31x P/E, this development alone does not justify a higher multiple or alter the margin of safety. Investors should maintain a 'wait' stance, monitoring for regulatory clarity or a price pullback to reassess entry points.

Thesis delta

The news reinforces Visa's adaptability in integrating blockchain to maintain relevance, as anticipated in its long-term strategy. However, it does not shift the core investment thesis, which remains focused on high quality at a full price with persistent regulatory downside risks. Thus, the 'WAIT' recommendation stands unchanged, pending more material developments on valuation or legal outcomes.