The fintech firm Chime Financial went public about two weeks ago. Despite the stock rising nearly 40% above its IPO price of $27 to start at $43, it has since faced a steep decline, trading at approximately $29 as of Tuesday. Although post-IPO fluctuations are common, there are valid concerns regarding Chime stock. The risk seems to arise from stablecoins, which may pose a direct threat to Chime’s fundamental business model. Last week, the Senate approved the stablecoin bill, establishing a framework to regulate these digital currencies that are linked to the U.S. dollar. This action is anticipated to provide legitimacy to this cryptocurrency sector, thus increasing competition against traditional and digital-first financial service providers. Stablecoins effectively merge the dependability and stability of fiat currency with the rapidity, transparency, and programmability linked with cryptocurrencies and blockchains. They also have the potential to lower transaction costs compared to conventional financial systems. Chime might be at a greater risk compared to other financial entities. Chime operates as a neobank—essentially a digital-first banking institution that does not utilize physical branches. While several payment stocks, such as Visa and Mastercard, experienced declines following the bill’s approval, they have largely managed to recover those losses. Investors believe these well-established payment companies will adapt swiftly, given their extensive merchant networks and proactive investigation of blockchain systems. In contrast, Chime has a more limited business model. It concentrates on providing low-cost financial services through modern, mobile-first interfaces. This strategy has appealed to younger customers and under-served demographics, particularly those who are deterred by the fees and requirements imposed by traditional banks. However, these consumers are also more price-sensitive and tech-oriented, making them more inclined to adopt stablecoins if they present even greater convenience or savings. It’s important to note that Chime already has a no-fee structure, provides early access to direct deposits, and offers a streamlined app experience, differentiating it from many traditional banks. Nevertheless, these unique features may not suffice if stablecoin-based options emerge that provide near-instant settlements or integrated payment and savings functionalities. Furthermore, Chime has a relatively straightforward business model, primarily generating revenue through interchange fees—small charges that merchants incur when a customer uses a Chime card.