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Stablecoins and the Future of Global Payments: A First-Principles Analysis

Unpacking the Global Payments Debate Around Stablecoins

Setting the Scene: Jack Zhang’s Provocation and the Industry’s Pulse

The ongoing discourse surrounding the utility and efficacy of stablecoins in global payments was recently invigorated by public commentary from Jack Zhang, CEO of Airwallex. In a thread on X, Zhang voiced deep skepticism about stablecoins' value for mainstream corridors, particularly for transactions between G10 currencies like USD and EUR where the ultimate recipient requires fiat in a bank account.

His core assertion, backed by over a decade of observing the crypto space, is that the costs associated with off-ramping stablecoins to local currency often exceed the highly optimized FX rates available in the interbank market. Airwallex, he noted, already facilitates money movement in G10 corridors at costs below 0.01% and in real-time, leading him to bluntly question how stablecoins could be “cheaper than free and faster than real time".

Zhang conceded a potential, albeit limited, role for stablecoins only in transactions involving very exotic currencies where liquidity is inherently poor, a view that underscores a potential G10 blinders effect, where focus on well-served markets may obscure benefits elsewhere. This position, coming from the leader of a significant cross-border payments firm, lends considerable weight to the skeptical viewpoint. It compels a direct and rigorous comparison between stablecoin-based solutions and existing, highly refined payment systems.

However, this perspective has been met with strong counterarguments. As Stone Atwine of Eversend responded, the point of stablecoins isn't merely to shave basis points off USD/EUR FX, but to serve as “24/7 programmable dollars, accessible in broken systems, and global wallets without banks," thereby replacing broken infrastructure rather than just marginally improving efficient corridors. This highlights a fundamental divergence: one side sees stablecoins as failing to improve already optimized systems, while the other sees them as transformative for "toxic" or restricted currencies and outdated financial plumbing.

The debate, therefore, is less about absolute correctness and more about contextual relevance; stablecoins might offer little in a New York-to-London payment but could be a lifeline in Lagos or Buenos Aires.

Furthermore, Zhang’s emphasis on the "last mile" bottleneck, the cost of off-ramping, identifies a key area of contention. Even if on-chain stablecoin transfers achieve nominal costs and high speeds, the conversion back to local fiat currency in a traditional bank account remains a significant friction point that can erode these efficiencies. This challenge is acknowledged even by stablecoin proponents, who are actively developing solutions to streamline this process, such as creating on-chain FX swap venues to facilitate one-click conversion from stablecoins to bank accounts, viewing it as a solvable engineering and liquidity problem.

Understanding the Wise, Airwallex Perspective

Kristo Käärmann, CEO of Wise, shared a similar sentiment to Zhang’s in 2024 when asked about stablecoins. He stated that Wise's stance remains unchanged: while the company would consider any technology that enables faster, cheaper, and more convenient fund movement, they have yet to see compelling evidence from the stablecoin space that surpasses their current capabilities.

This perspective from another leader who has fundamentally reshaped cross-border payments reinforces the high bar stablecoins must clear to be deemed superior by established, efficient fintech players.

The caution from these incumbents may stem from several factors. Having invested heavily in building complex, regulated global payment networks, they may be less inclined to perceive the disruptive potential of a fundamentally different architecture, particularly if it doesn't immediately address their primary optimization challenges or integrate seamlessly into their existing operational and regulatory frameworks.

Käärmann’s comment that Stripe’s acquisition of a stablecoin infrastructure company must be driven by "something different than ours" hints at this divergence in perceived problem sets or strategic opportunities. Established players have meticulously optimized solutions for specific corridors and customer segments within the prevailing financial paradigm. As Stephen Deng of DFS Labs observed, the past few decades of fintech progress involved assembling workarounds to tame fragmented, pre-internet infrastructure, a peak internet-era achievement in navigating a labyrinth of financial plumbing. Stablecoins, however, often propose a paradigm shift, which can be more challenging to embrace from within a successful, established model.

Why the Stablecoin Hype?

Despite the skepticism from some established figures, a strong counter-narrative fuels significant optimism and investment in the stablecoin ecosystem. A prominent example is Stripe's over $1 billion acquisition of Bridge, a stablecoin infrastructure startup, in early 2025 – Stripe's largest acquisition and the largest crypto-related purchase by a mainstream payments firm.^[2] This move is a strategic wager on stablecoins becoming integral to the future payment stack, not merely a niche product.^[2] Stripe's CEO, Patrick Collison, has lauded stablecoins as room-temperature superconductors for financial services that will bring significant speed, coverage, and cost improvements for businesses worldwide.

By May 2025, Stripe had rolled out stablecoin accounts via Bridge in over 100 countries, enabling businesses and consumers to hold and transfer digital dollars.^[3] Other incumbents like PayPal, which launched its USD stablecoin (PYUSD) in 2023, and Visa, which has been piloting USDC for merchant settlement, further signal this growing conviction.

This optimism is shared by many industry players and investors who see stablecoins addressing critical needs, particularly in emerging markets, enhancing B2B payment efficiency, offering unprecedented programmability, and fostering financial inclusion. Venture capitalist Chamath Palihapitiya argued in late 2024 that stablecoins should become the primary method for cross-border transactions, allowing us to chip away [at] the decrepit infrastructure that banks use to slow down and tax a process that should never have been taxed. He revealed that SpaceX's Starlink service utilizes stablecoins to collect customer payments in over 100 long-tail countries, that is markets where local banking is unreliable or FX risk is high, by converting local currency payments into stablecoins and later reconverting to USD, thus avoiding FX volatility and cumbersome wire transfers.^[4]

The raging debate is, in part, a reflection of different stakeholders focusing on disparate problem sets. For a corporate treasurer in a G10 country, the immediate utility of stablecoins might appear marginal. However, for a small business in Nigeria or an individual in Argentina grappling with hyperinflation and stringent capital controls, stablecoins can offer a crucial financial lifeline. This disparity in problem-solution fit across market contexts is fundamental to understanding the divergent views on stablecoin utility. The significant crypto trading volumes in regions like Latin America and Africa, a substantial portion of which is commercial or institutional, further underscore this real-world adoption driven by tangible needs.^[5]

The Friction in Today’s Cross-Border Payments

Traditional Rails (Banks, SWIFT) and Their Burdens

The bedrock of traditional international payments, the SWIFT network and correspondent banking system, dates back to an era before the internet. SWIFT itself is primarily a messaging system, facilitating communication between banks, rather than a direct settlement layer.^[6] As Stone of Eversend put it back in 2021, This architecture inherently introduces several frictions. Costs are a significant factor, with international wire transfers via SWIFT typically costing upto $40-$90 in fees, with an additional 2-5% in foreign exchange commission for cross-currency payments. Speed is another major pain point; transactions can take anywhere from two to seven business days to settle, and in some instances, funds can be delayed for weeks or even disappear if errors occur.

Opacity is also a common complaint. Senders and receivers often lack clear visibility into the fee structure, the exact path a payment will take through various correspondent banks, and precise settlement times.^[6] This reliance on a chain of correspondent banks, each adding its own processing time and potential fees, is a primary source of inefficiency.

Recognizing these shortcomings, the G20 has set ambitious goals to enhance cross-border payments, aiming for 75% of payments to be credited to the beneficiary within one hour by the end of 2027.7 The very existence of such targets highlights the deep-seated issues within traditional systems. While SWIFT has made strides with initiatives like SWIFT GPI, where around 90% of payments reach the recipient's bank within an hour, only 43% reach the end customer's account in that timeframe due to domestic processing factors and regulatory controls in receiving countries.^[6]

The persistence of SWIFT and correspondent banking, despite these inefficiencies, is a testament to the power of network effects, established regulatory integration, and the immense challenge of overhauling global financial infrastructure. This inertia creates a high barrier to entry for new systems, even those with potentially superior architectures. The G20's multi-year roadmap also signals that achieving its targets through incremental improvements to these legacy systems is a slow and complex endeavor, opening opportunities for alternative rails that are architecturally designed for greater efficiency.

Card Networks (Visa, Mastercard): Convenience at What Cost?

Card networks like Visa and Mastercard offer significant convenience for consumer cross-border payments and have become ubiquitous. However, this convenience comes at a considerable cost, particularly for merchants and for use cases beyond typical consumer retail purchases. Merchant fees can average around 3% of the transaction value, and this is often compounded by additional cross-border specific charges.^[8] These include foreign transaction fees (typically 1-3% of the transaction amount, comprising an issuer fee and often a currency conversion fee), explicit currency conversion fees, and less visible exchange rate margins built into the conversion rate by the financial institutions involved.^[9]

Furthermore, while consumers experience near-instant authorization, merchants typically wait two to five days for funds to settle into their accounts, and card payments also carry fraud and chargeback risks where a consumer's purchase can be reversed due to disputes, leaving the merchant liable. This delay can impact cash flow, especially for small businesses. The fee structure of card networks, often percentage-based, makes them prohibitively expensive for large-value B2B transactions. While ideal for point-of-sale consumer purchases, the cost model and settlement times are often unsuitable for international trade payments or for disbursing funds to freelancers, where margins may be tighter and direct cost pass-through is more scrutinized.

This creates a clear value proposition for alternative payment methods in B2B and C2B (e.g., freelancer payouts) contexts if they can offer significantly lower fees and faster settlement to the end recipient.

Challengers (Wise, Airwallex, Payoneer)

Fintech companies such as Wise, Airwallex, and Payoneer have made substantial strides in alleviating the frictions of traditional cross-border payments. They typically offer greater transparency in fee structures, significantly lower FX markups compared to banks (Wise, for instance, uses the mid-market rate plus a variable fee starting from 0.48% which is often around 0.5% or less while Airwallex uses the interbank rate plus a markup of 0.5% to 1% 10), and considerably faster settlement times. Wise reports that 60% of its payments are instant and 90% arrive within 24 hours, while Airwallex payments typically take 0-3 days.^[10]

These companies represent the current gold standard for efficient fiat-based cross-border payments. However, they largely operate by building sophisticated treasury management systems and local payout networks on top of the existing traditional banking ecosystem. They often rely on holding pre-funded accounts in various countries and leveraging local payment rails for the final mile of delivery.

This model, while innovative in its process optimization and user experience, can still face limitations, especially in less-developed financial markets where establishing robust local banking partnerships is challenging, where local payment infrastructure is underdeveloped, or in countries with capital controls or less developed financial APIs. Fintechs must also hold float in both source and destination currencies to enable instant exchanges, tying up capital.

This architectural approach of optimizing the existing system, rather than re-architecting it, means they might hit inherent ceilings in speed, cost, and accessibility in the most challenging corridors, precisely where stablecoins, proposing a parallel infrastructure, see an opportunity to provide truly open, instant, and global value transfer, especially for the world's unbanked population.

Emerging Markets and Underserved Segments

The frictions inherent in traditional and even modern fintech payment systems are significantly amplified in emerging markets across Africa, Latin America (LATAM), and Southeast Asia (SEA).

These regions often contend with limited access to traditional banking services for large segments of the population, leading to financial exclusion. Remittance costs are notably higher; for example, the average cost to send remittances to Sub-Saharan Africa was 7.9% in the fourth quarter of 2023, the highest globally, compared to a global average of 6.2%.11

Volatile local currencies present another major challenge, eroding the value of savings and payments. Capital controls in many of these countries restrict the free flow of funds, further complicating international transactions. Local payment infrastructure may also be less developed, leading to slower processing times and fewer digital payment options. It is in these environments that the need for viable alternatives becomes most acute. The pronounced difficulties explain the higher adoption rates of cryptocurrencies and stablecoins for practical use cases such as hedging against inflation, facilitating B2B trade, and enabling remittances.

For instance, individuals and businesses in countries like Argentina and Nigeria are increasingly turning to USD-pegged stablecoins to preserve capital amidst severe local currency depreciation and to navigate shortages of foreign currency for international trade In Colombia, people have turned to stablecoins for cheaper remittances, and in Pakistan, for paying for online services where local payment methods are rejected. This reality directly counters G10-centric skepticism, as the problem stablecoins solve is far more tangible and urgent in these markets, often serving as a financial lifeline.

The ability of stablecoins to offer a relatively stable store of value and a means to bypass restrictive financial controls is a powerful driver of adoption, a utility often not prioritized or addressed by solutions focused on developed markets.

Stablecoins in First Principles

What Problem Are Stablecoins Really Solving?

From a first principles standpoint, stablecoins aim to provide a digitally native representation of fiat that combines the perceived benefits of cryptocurrencies such as ease of transferability, global accessibility, and programmability without the inherent price volatility of assets like Bitcoin or Ether.

The fundamental problem stablecoins seek to address is the multifaceted friction present in existing financial infrastructures when moving fiat value. This friction manifests as high costs, slow speeds, limited accessibility (particularly for unbanked or underbanked populations), operational constraints (such as banking hours), and significant limitations in programmability. By early 2025, the total outstanding stablecoin supply had reached around $200+ billion in value, a significant increase from just $20 billion in 2020.12 Even more strikingly, annual stablecoin transaction volume hit $15.6 trillion in 2024, on par with Visa's total payment volume, with some analyses suggesting stablecoins even surpassed Visa depending on the measurement.

Stablecoins propose to solve this by offering a tokenized version of fiat that can move across blockchain networks. This architectural difference allows stablecoins to function akin to digital cash, a bearer instrument transferred directly between parties (peer-to-peer or business-to-business) across global, open (or permissioned) networks. This reduces, at least for the core transfer leg, the reliance on the multiple intermediaries inherent in traditional account-based systems, where value movement requires debiting one account and crediting another through a chain of institutions.^[13]

This digital bearer asset quality is foundational to their potential to bypass traditional correspondent banking channels and operate 24/7, independent of conventional banking hours.

Cost, Speed, 24/7 Availability, Accessibility

The most commonly cited benefits of stablecoins revolve around four key pillars:

• Cost: By potentially reducing the number of intermediaries involved in a transaction, stablecoins can offer lower transaction fees, with network fees typically ranging from $0.1 to $10 depending on the chosen blockchain.^[1] FX conversion via stablecoins can also be very low-cost, especially for exotic pairs when swapping directly or via P2P networks. This is particularly relevant for large B2B payments where percentage-based fees from card networks become exorbitant, or in underserved remittance corridors where traditional services charge high markups. However, the net cost must account for these network transaction fees (gas fees), which vary significantly depending on the underlying blockchain (e.g., Ethereum's ERC-20 tokens versus tokens on Tron or Layer 2 solutions like Lisk and Celo), as well as on-ramp and off-ramp fees.
• Speed: Blockchain transactions can achieve settlement, with a degree of finality, within seconds to minutes, a stark contrast to the days often required for traditional bank wires or card payment settlements to merchants.^[13] This near-instant settlement on the blockchain network itself is a core advantage.
• 24/7 Availability: Unlike traditional banking systems that operate on fixed business hours and are closed on weekends and holidays, blockchain networks operate continuously, 24 hours a day, 7 days a week, 365 days a year. This allows for payments to be initiated and settled at any time, which is particularly beneficial for international businesses operating across different time zones and for time-sensitive transactions.
• Accessibility: Stablecoins hold the potential to enhance financial accessibility. In principle, anyone with an internet connection and a smartphone or computer can send and receive stablecoins (as stablecoins) without a traditional bank account, which is transformative for financial inclusion in "unbanked" regions. However, for regulated on-ramps and off-ramps for cash, KYC/AML requirements remain crucial.

The true realization of these potential benefits often depends on the transaction remaining "on-chain" or within a stablecoin-native ecosystem for as much of its lifecycle as possible. When value needs to bridge to or from traditional fiat rails via on-ramps and off-ramps, new layers of cost, potential delays, and compliance requirements are introduced, which can dilute the native efficiencies of the on-chain transfer itself.^[13]

Programmable Value

Perhaps the most transformative, yet often less understood, advantage of stablecoins is their programmability. Because stablecoins are digital tokens on a blockchain, they can be seamlessly integrated into smart contracts, self-executing code that runs on the blockchain. This allows for the automation of complex payment logic, escrows, collateralization for loans, recurring payments, royalty distributions, and a host of novel financial applications that go far beyond simple peer-to-peer or account-to-account transfers.^[14] Examples include:

• Escrow and Trade Finance: Smart contracts can act as escrow, releasing stablecoin payments only when predefined conditions are met simplifying international trade by replacing complex letter-of-credit processes.
• Subscription and Streaming Payments: Businesses can set up recurring or even continuous stablecoin payments. For instance, a freelancer could be paid by the minute for work via streaming stablecoin payments
• Microtransactions: With potentially very low transaction costs, stablecoins enable cross-border micropayments, allowing content platforms or software services to charge small amounts efficiently.
• Multi-Party Splits: A single incoming stablecoin payment can be programmatically and instantly split among multiple recipients, such as a marketplace automatically distributing a customer's payment to the seller, the platform, and a referrer.
• Integration with DeFi: Companies receiving stablecoin revenue could automatically route portions into decentralized lending protocols to earn interest or use decentralized insurance or swaps to hedge their holdings.

This programmability is a key differentiator from traditional payment rails and even many modern fintech APIs, which may offer some automation but lack the native, on-chain composability of blockchain-based assets. It is this feature that strongly links stablecoins to the emerging "Everything is a Bank" trend, where platforms can embed sophisticated financial services directly into their offerings.^[15]

As Patrick from Ametyst notes, regulations for traditional banking are often based on an outdated tech stack, making it costly and cumbersome to build custom money workflows. Stablecoins, and the blockchain rails they run on, offer a new paradigm where regulations can be written based on the strengths of the technology itself, such as composability and trustless software execution, enabling truly programmable cash flows.

Technologists like Chris Dixon of a16z have called stablecoins the WhatsApp moment for money, suggesting they offer the first real chance to make money transfers as open, instant, and borderless as email. This capability to create new financial primitives and business models, rather than just optimizing existing ones, represents a significant architectural advantage.^[18]

Reality Check on Stablecoin Efficacy and Adoption

Off-Ramp Costs, FX Spreads, and the "Last Mile" Problem

A critical assessment of stablecoins necessitates directly addressing the valid critiques concerning their practical efficacy. As highlighted by Jack Zhang, the cost associated with off-ramping stablecoins back into fiat currency in a user's bank account can be substantial, potentially negating any savings achieved during the on-chain transfer. These costs typically include fees charged by exchanges or payment providers for the conversion service, as well as potential charges from the recipient's local bank. A major pain point remains the availability of off-ramps; converting stablecoins to local fiat or goods can require using a local crypto exchange or finding a peer buyer, an extra step with potential fees or slippage.

Furthermore, the foreign exchange spread when converting a USD-denominated stablecoin (which most are) into a local, non-USD currency is a crucial factor. While on-chain FX swap venues are emerging, as mentioned by Tony Olendo, achieving FX rates consistently competitive with the deep liquidity of the interbank market, especially for G10 currencies, remains a challenge.

For many users, particularly those not crypto-native, the entire stablecoin sandwich, that is the process of converting fiat to stablecoin (on-ramp), transferring the stablecoin, and converting it back to usable fiat (off-ramp), must be seamless and cost-effective.^[13] The efficiency of this end-to-end journey, especially the last mile conversion to local currency, is paramount for mainstream adoption and is a key area of focus for infrastructure builders in the space.

Liquidity and Interoperability

Several technical and operational challenges can also hinder the practical usability of stablecoins. Deep liquidity is essential, not only for major stablecoin pairs (e.g., USDC/USDT) but, more importantly, for stablecoin-to-fiat pairs across a wide range of currencies, especially those in emerging markets. Insufficient liquidity can lead to high slippage and unfavorable exchange rates during on-ramping and off-ramping, diminishing the cost benefits. While USD stablecoins are very liquid globally, the liquidity for local currency stablecoins can be thin, meaning most stablecoin usage gravitates to USD or EUR tokens, often still relying on USD as an intermediary.

Interoperability between different stablecoins and various blockchain networks also presents a challenge. The proliferation of multiple stablecoins (USDT, USDC, and newer entrants like USDB) across numerous blockchains can create fragmentation.^[3] This can complicate the user experience and hinder the network effects that are crucial for widespread adoption, potentially requiring users and integrators to navigate multiple tokens and chains to complete transactions. While the market shows some consolidation, such as the dominance of USDT for payment volumes 18, ensuring smooth asset movement and interaction across this diverse landscape is an ongoing effort.

On-ramps, Off-ramps, and Daily Utility

For stablecoins to achieve mainstream adoption beyond crypto-native users and specific niche applications, the overall user experience (UX) must be significantly simplified. Acquiring stablecoins, storing them securely (which often involves managing private keys or relying on custodians, a learning curve for many), transacting with them, and converting them back to fiat currency needs to be as intuitive and straightforward as using existing digital payment methods or fintech applications.

Currently, the process can be cumbersome for those unfamiliar with cryptocurrency exchanges, wallets, and blockchain addresses. While companies like Stripe, through its acquisition of Bridge, are working to simplify on-ramps and off-ramps for developers and businesses3, the question of daily utility for the average consumer remains. Beyond specific B2B or remittance use cases, or as a store of value in volatile economies, the pathways for using stablecoins for everyday payments are still developing. Innovations like stablecoin-linked debit cards, such as Visa's partnership with Bridge, are addressing this by allowing users to spend stablecoin balances at any card-accepting merchant, with conversion handled behind the scenes.^[3] For mass adoption, especially among end-users like consumers and freelancers, stablecoins may need to evolve into an "invisible" infrastructure layer, with user-facing applications abstracting away the underlying complexities of blockchain interactions, much like most internet users are unaware of the TCP/IP protocols that power their online experiences.

AML, Anti-Fraud, KYC, and Compliance

A non-negotiable aspect for the mainstream acceptance and integration of stablecoins into the regulated financial system is the establishment of robust Anti-Money Laundering (AML), Counter-Financing of Terrorism (CFT), Know Your Customer (KYC), and Know Your Business (KYB) frameworks. These compliance measures are critical for on-ramps and off-ramps, as these are the points where stablecoins interact with the traditional fiat system.

Stablecoin issuers and service providers are increasingly implementing these measures, often leveraging blockchain analytics tools from firms like Chainalysis to monitor transactions and identify illicit activity.^[19] Major stablecoin issuers like Circle and Tether can freeze funds at specific addresses in extreme cases, and the industry is working on Travel Rule compliance.^[20] While some early adoption of stablecoins, particularly in certain jurisdictions, may have benefited from regulatory arbitrage, sustainable long-term growth depends on building compliant solutions.

The risk of enforcement action or de-risking by traditional banks (which might jeopardize their banking partnerships if they accept stablecoins, a concern noted by Jack Zhang) remains a challenge. The lessons from the Banking-as-a-Service (BaaS) sector, where lapses in AML and third-party risk management led to regulatory scrutiny and failures15, underscore the importance of robust compliance from the outset. Regulatory frameworks globally, such as MiCA in the EU which came into effect in 2024 21 and the proposed GENIUS Act in the US21, are placing strong emphasis on licensing issuers and ensuring they adhere to stringent operational and compliance standards.

Trust in stablecoins also hinges on the transparency and integrity of their reserves, an area shaken by events like the TerraUSD collapse and the temporary depeg of USDC during the Silicon Valley Bank crisis, pushing regulators to demand audits and specific reserve quality; PayPal's PYUSD, launched with regulatory approval and detailed monthly reports, indicates a move towards greater transparency. This move towards regulated frameworks brings an inherent tension with the permissionless nature of some public blockchains, likely leading to hybrid models where access to regulated stablecoin services occurs through compliant, KYC'd intermediaries, even if the underlying settlement rail offers efficiency. It is also important to acknowledge that stablecoins are not a universal solution; for simple domestic P2P transfers in countries with efficient instant payment systems (like India's UPI or Brazil's PIX), stablecoins offer little advantage, and for transactions where dispute resolution is valued, traditional card networks may still be preferred.

A Comparative Look at Payment Rails

To objectively assess the positioning of stablecoins relative to existing payment solutions, a comparative analysis of their key characteristics is essential. This involves looking at traditional bank transfers (like SWIFT), card networks, modern fintech services, and stablecoin-based transfers across several factors.^[1]

Traditional Bank Transfers (e.g., SWIFT)

These are characterized by high costs, with wire fees typically ranging from $20 to $90, plus an additional 2-5% FX markup. Settlement is slow, commonly taking 2-7 business days, and operations are restricted to business hours. Accessibility requires bank accounts on both ends, limiting reach in regions with weak banking infrastructure. The payment path is often opaque, making tracking difficult, and banks can hold or block funds. Compliance relies on established KYC/AML processes at banks, offering legal recourse but also stringent requirements.

Card Networks (e.g., Visa/Mastercard)

Merchants typically pay around a 3% fee, and currency conversions can come with unfavorable FX rates. Consumer authorization is instant, but merchant settlement takes 2-5 days. While ubiquitous for retail in developed markets, they are not designed for P2P transfers and acceptance can be limited in some developing markets. Consumers have dispute rights, but merchants face risk, and network rules are centrally controlled.

Fintech Platforms (e.g., Wise/Airwallex)

These platforms offer lower fees on major routes (e.g., ~0.5% or less) and near mid-market FX rates.^[1] They are faster than banks, often achieving same-day or next-day payouts, but are still constrained by local bank cut-off times and pre-funded account mechanisms. They provide user-friendly apps but require accounts with the platform or its banking partners, with local banking still needed for cash access. Tracking is improved, though users rely on platform transparency for FX rates and timing. Fintechs perform KYC/AML and rely on partner banks for storing funds.

Stablecoin Transfers

Network fees can range from less than $0.1 to $10, and FX conversion via stablecoins can be very low-cost, especially for exotic pairs. Settlement is near-instant (seconds to minutes) and available 24/7/365. Accessibility is internet-based, allowing anyone with a smartphone to receive funds without a traditional bank account, though on/off-ramps are needed for cash. Transactions on public blockchains are transparent, and funds are typically in user-controlled wallets, with payments being programmable via smart contracts. Compliance is handled at entry/exit points by exchanges and wallets, with evolving regulations like the Travel Rule; trust is placed in issuer reserves and emerging regulatory oversight.

In essence, stablecoin transfers present advantages in 24/7 availability, near-instant finality, and potentially much lower costs, particularly in corridors where traditional fees are high or currency exchange is difficult. They also enable direct wallet-to-wallet value transfer, which is transformative for financial inclusion. However, their use introduces new considerations around regulatory compliance and requires digital literacy and secure crypto wallet management.

Cost Structures

The comparison illustrates that for G10-G10 transactions or well-served remittance corridors, established fintechs like Wise often provide highly competitive rates, sometimes rivaling or even beating the potential end-to-end costs of stablecoin transactions when efficient fiat on/off-ramps are factored in. Jack Zhang's assertion that Airwallex moves G10 money at less than 0.01% highlights the efficiency achieved by specialized fintechs in these corridors.

However, for transactions involving emerging market currencies, or where banking infrastructure is less developed, stablecoins can present a more cost-effective alternative, especially if users can leverage efficient P2P off-ramps or if the transaction can remain within the crypto ecosystem for longer periods (e.g., B2B payments between crypto-native businesses). The "total cost of ownership" should also consider less obvious factors. While explicit fees are one component, hidden costs such as unfavorable FX markups embedded in rates by traditional banks9, the opportunity cost of funds being tied up during slow settlement periods, and the administrative overhead of reconciliation or managing payment failures can be significant. Stablecoins, with their potential for faster settlement and programmability, might offer advantages in these less tangible areas, even if headline fees appear comparable in certain scenarios.

From Days to Seconds?

In terms of speed, stablecoins offer near-instant settlement on the underlying blockchain (typically seconds to minutes).13 This contrasts sharply with traditional SWIFT transfers (2-7 days) and merchant settlement via card networks (2-5 days). Fintech challengers have significantly improved speeds, often achieving settlement within minutes to 24 hours.^[10] However, the end-to-end speed for stablecoins, from initial fiat to final usable fiat for the recipient, is still dependent on the efficiency of on-ramp and off-ramp processes. While an on-chain transaction confirms rapidly, the time until the recipient can actually use those funds as local currency in their bank account or for local spending is the metric that truly matters for most end-users. This highlights the critical importance of efficient off-ramps and the potential utility of local currency stablecoins or direct stablecoin spending mechanisms (e.g., stablecoin-linked cards3) to bridge this "psychological speed" versus "actual funds availability" gap. Settlement finality on public blockchains is typically achieved quickly and is irreversible, which can be an advantage in reducing counterparty risk compared to traditional systems where payments can sometimes be recalled or reversed under certain conditions.

Transparency and Counterparty Risk

Traditional payment systems, particularly SWIFT, have often been criticized for a lack of transparency regarding fees and the exact path of a transaction.^[6] Fintechs have generally improved on this, offering clearer upfront fee disclosures. Stablecoins transacted on public blockchains offer a high degree of transparency regarding the transaction itself (amounts, wallet addresses, timestamps are publicly viewable on block explorers), and funds are typically in user-controlled wallets, though issuers may retain blacklisting capabilities in rare cases. However, transparency concerning the stablecoin issuer – particularly the nature and auditing of their reserves – is a critical area that has seen much debate and is now a focus of regulators.^[12]

Counterparty risk profiles also differ. Traditional systems involve trust in regulated banks. Card networks involve acquiring and issuing banks and processors. Fintechs often rely on a network of banking partners. With stablecoins, trust is shifted towards the stablecoin issuer (their solvency and the integrity of their reserves) and the security of the underlying blockchain. Additional risks include the security of exchanges or wallets used to hold stablecoins and the potential for stablecoin de-pegging events. Robust regulation aims to mitigate these issuer-specific risks by mandating regular audits and specific reserve compositions.^[21]

Stablecoin Adoption and Impact Across Geographies

Developed Markets (North America, Europe)

In developed markets like North America and Europe, where existing financial infrastructure is highly efficient (e.g., EU's SEPA, US's RTP/Fedwire) and well-regulated, the arguments for widespread stablecoin adoption for general cross-border payments face considerable skepticism. For standard G10 currency transactions, established fintechs often provide services that are already very fast and cost-effective. Consequently, the immediate, compelling use cases for stablecoins in these regions may lie more in "wholesale" financial market activities rather than displacing existing "retail" or SME payment solutions. These niches include inter-institutional settlement, collateral for DeFi protocols, treasury management for crypto-native businesses, and facilitating settlement for the burgeoning tokenized asset market.^[16] Stripe's focus with its stablecoin accounts on businesses, particularly those in countries with volatile currencies or those wanting to pay globally using stablecoins, aligns with this B2B and infrastructure-centric approach.^[3] Some businesses in developed markets might also find stablecoins appealing for saving on credit card processing fees (e.g., ~3% to Visa) by accepting USDC for an invoice, and Stripe itself has hinted that stablecoins can offer their merchants a cheaper alternative to card payments. Additionally, immigrant populations in developed countries sending remittances contribute to stablecoin use when sending money to emerging markets.

Regulatory clarity, such as the implementation of MiCA in the European Union21 and potential federal legislation like the GENIUS Act in the United States21, is expected to spur further institutional adoption by providing a clearer operational framework. While the Artemis report indicates high transaction volumes originating from the US, Singapore, and Hong Kong, this may reflect the location of major stablecoin issuers and exchanges rather than broad end-user adoption for everyday payments in these specific developed markets.^[18] The primary drivers here appear to be leveraging stablecoins as a more efficient rail for specific financial operations or as a bridge to the broader digital asset ecosystem, rather than a direct replacement for efficient fiat payment systems for the general populace.

Emerging Markets (Africa, LATAM, SEA)

In stark contrast to developed markets, stablecoins are witnessing significant real-world traction and demonstrating a clear product-market fit in emerging economies across Africa, Latin America (LATAM), and Southeast Asia (SEA). These regions often grapple with challenges such as high inflation, volatile local currencies, stringent capital controls, limited access to traditional banking services, and expensive, slow remittance channels, creating a fertile ground for alternatives that local systems cannot fulfill. Grassroots usage often outpaces regulatory frameworks in these areas, with rules tending to catch up later as the need becomes pressing.

Latin America (LATAM): This region received nearly $415 billion in cryptocurrency value between July 2023 and June 2024, with a significant portion, around 70%, driven by commercial or institutional transfers.^[5] Argentina is a prime example of high stablecoin adoption, where users leverage them as a hedge against severe currency devaluation; stablecoins accounted for 61.8% of its on-chain transaction share.^[5] In Brazil, stablecoins reportedly constitute around 70% of indirect flows from local exchanges to global exchanges, primarily for B2B cross-border payments.^[5] El Salvador has even seen the issuance of its first regulated, gold-backed stablecoin, aUSDT by Tether, and Tether plans to relocate its headquarters there in January 2025.21 In Colombia, stablecoins are a preferred method for cheaper remittances. Local exchanges like Bitso and P2P networks are key players in this adoption.

Sub-Saharan Africa (SSA): The region received an estimated $125 billion in on-chain value between July 2023 and June 2024, with stablecoins making up approximately 43% of this volume.^[23] Similar to LATAM, about 70% of this is commercial. Nigeria is a major crypto hub, receiving around $59 billion in this period, with stablecoins dominating transactions under $1 million for uses like inflation hedging (against the depreciating naira), B2B payments (especially by importers facing FX shortages), and remittances.^[23] Ethiopia has become the fastest-growing market for retail-sized stablecoin transfers in Africa due to local currency devaluation.^[23] In South Africa, stablecoin trading volumes have reportedly surpassed Bitcoin as users seek to mitigate local currency risks.^[25] Venture funding is flowing into African fintechs like Mansa, Cedar, KAST, and Yellow Card, all leveraging and building on stablecoin infrastructure. Regulatory environments are developing, with Nigeria formally recognizing virtual assets 26 and Kenya introducing a VASP Bill.^[26] joining South Africa and other African countries with existing frameworks.

Southeast Asia (SEA): While less direct aggregate data is available from the provided materials for SEA, it is generally recognized as a region with high crypto adoption. In Pakistan, for instance, consumers use stablecoins to pay for online services where local payment methods are often rejected. Singapore has positioned itself as a leading global hub for stablecoin companies, having implemented a comprehensive regulatory framework under the Monetary Authority of Singapore (MAS).21 P2P platforms and crypto payment gateways are common in the region.

This significant adoption in emerging markets underscores that stablecoins are often not just a matter of marginal cost savings but can serve as a crucial financial tool for capital preservation, accessing global markets, and overcoming fundamental deficiencies in local financial systems, acting as a lifeline. This forms the strongest counter-argument to G10-centric skepticism and is a core element of the value proposition for companies like Payd Money.

In many of these regions, stablecoins (particularly USDT on low-cost blockchains) are effectively forming a parallel, shadow financial infrastructure that meets real needs often unmet by formal channels. While this drives utility and adoption, it also presents challenges related to consumer protection and illicit finance, highlighting the need for a transition towards regulated and compliant solutions that can maintain the benefits of accessibility and efficiency.

Where Stablecoins Are Making a Tangible Difference

B2B & International Trade

Business-to-business (B2B) payments and international trade represent a significant area where stablecoins are demonstrating tangible utility. According to industry analysis, an estimated 70% of on-chain volume in regions like LATAM & Africa was driven by commercial (business) transfers. By 2024, an estimated $6 billion in stablecoin payments were occurring each month, about half of which ($3B) were B2B transactions, consistent with earlier reports of a $36 billion annual run rate by February 2025.18 This adoption is driven by several factors. Businesses, particularly small and medium-sized enterprises (SMEs) involved in global trade, can leverage stablecoins for faster and potentially lower-cost settlement compared to traditional banking channels, especially when dealing with suppliers or customers in regions with less efficient financial systems.

Anecdotal evidence and industry observations suggest that Chinese manufacturers are increasingly accepting USDT for payments, streamlining transactions for importers globally, such as African or Latin American businesses paying Chinese suppliers. For businesses, the 24/7 availability of blockchain networks means payments can be settled outside of traditional banking hours, which is crucial for time-sensitive supply chains. Furthermore, stablecoins can offer a payment rail for businesses that may be underserved by traditional banks or operate in industries classified as high-risk.

In Sub-Saharan Africa, for instance, businesses are using stablecoins to overcome local currency shortages and facilitate the import of goods.^[23] Chuk from Paxos noted that many businesses in emerging markets hold USDT as a way to hedge FX risk and manage treasury, essentially using stablecoins as an alternative to a U.S. bank account. Large multinationals like SpaceX (Starlink) use stablecoins to repatriate revenue from emerging markets, and Uber has reportedly explored similar uses for its global operations.^[4] The speed of stablecoin settlement (minutes versus days for traditional methods) can translate directly into improved working capital efficiency for these businesses. Faster receipt of payments or quicker payment to suppliers can unlock cash flow, reduce the need for expensive short-term financing, and allow for more agile inventory management. This benefit related to working capital can be compelling even if direct transaction fees are only marginally lower than alternatives.

Moreover, stablecoins are enabling new trade financing models, such as using smart contracts for escrow or decentralized FX venues like Tony Olendo's ViFi Labs project, which aims to create a "Uniswap for FX" allowing direct swaps between USD stablecoins and local currency stablecoins (e.g., Indonesian Rupiah stablecoin).

Remittance

Remittances are a critical financial flow, particularly for developing countries, and represent another key use case where stablecoins are posited to offer significant improvements. The World Bank data indicates that the global average cost of sending remittances was 6.2% in the fourth quarter of 2023 (some sources cite 6-7% 1), with costs to Sub-Saharan Africa being the highest at an average of 7.9%.11 These high costs, levied by traditional money transfer operators and banks, mean that a smaller portion of the sent funds reaches the intended recipients.

Stablecoins offer the potential for dramatically lower transaction fees, with some proponents suggesting near-zero costs for the on-chain transfer itself, apart from small network fees and on/off-ramp costs.^[1] Analysis by figures like Chris Harmse suggests that stablecoin-based remittances can indeed be cheaper than traditional methods in many instances, although the unpredictability of network gas fees (especially on blockchains like Ethereum) can introduce variability.^[13] The speed of stablecoin transfers (funds arriving in seconds, even on a Sunday night 1) also presents an advantage over traditional channels that can take several days. This directness has been likened to skipping the "Flintstones-era" backend of pre-funded accounts used by some fintechs, replacing it with real-time settlement.^[1] In regions like Sub-Saharan Africa and Latin America, stablecoins are already being used for remittances, offering a faster and more affordable alternative.^[23] For example, Bitso, a Mexican crypto platform, processed over $12 billion in transactions in 2024 and handled more than 10% of the U.S.-Mexico remittance corridor via crypto and stablecoins.^[1] Pan-African platforms like Yellow Card doubled their transaction volume to $3 billion in 2024 by enabling easy fiat-to-crypto conversions.^[1] Innovations like MoneyGram's partnership with Stellar for USDC cash-outs and stablecoin-linked debit cards are improving the last-mile experience.^[1] For migrants from countries with unstable currencies (e.g., Venezuela, Argentina), sending stablecoins allows recipients to hold value in USD, protecting against inflation.^[1] Stablecoins also provide a viable corridor where formal banking is limited due to sanctions or capital controls (e.g., Zimbabwe, Lebanon), acting as a financial lifeline, albeit sometimes in a legal gray area.^[1]

The Global Independent Workforce

The rapidly expanding global independent workforce, comprising freelancers, creatives, remote workers, and digital entrepreneurs, often faces significant challenges when it comes to receiving international payments. This segment, particularly individuals based in emerging markets, frequently encounters high fees from traditional payment platforms, slow settlement times, difficulties accessing earnings through local banking systems, and the erosion of value due to local currency volatility.

Stablecoins present a compelling solution tailored to these specific pain points. For global platforms and businesses hiring international talent, stablecoins can facilitate fast, low-cost global payouts directly to a worker's digital wallet. For the recipients, this means quicker access to their earnings. Holding funds in a USD-pegged stablecoin can also offer a valuable hedge against the devaluation of their local currency, allowing them to preserve the value of their income until they need to convert it for local expenses.^[1] For example, a writer in Argentina can receive $500 in USDC from a European client and hold it to avoid peso inflation.^[1] In Nigeria, where PayPal access is restricted, many young freelancers have turned to crypto payments, often stablecoins.^[1] This is more than just a payment efficiency; it's about enabling access to the global digital economy on more equitable terms.

Platforms like Deel enable companies to fund payroll in USDC, allowing contractors to withdraw in USDC to a crypto wallet, bypassing local banking issues.^[1] Other platforms like Remote and various crypto-focused freelance marketplaces also offer stablecoin payment options.^[1] The advantages include speed, low cost (network fees can be cents), and financial inclusion (e.g., a Kenyan freelancer can access the global market without a traditional bank account). Freelancers can also avoid unfavorable auto-conversion rates by banks by receiving USDC and choosing when and how to convert. Challenges remain, such as converting to cash for daily expenses, the learning curve for managing crypto, and tax and reporting compliance for paying companies. However, the vision of platforms like Stripe (after acquiring Bridge) is to enable businesses to send funds globally via stablecoin with a simple API, potentially making the underlying stablecoin use invisible to the freelancer.^[3]

Platforms like Payd are focused on building the infrastructure to make these benefits easily accessible to this demographic. This involves creating user-friendly interfaces that abstract away the complexities of blockchain, integrating efficient and compliant on-ramp and off-ramp solutions (such as partnerships with local P2P networks, fintechs, or offering stablecoin-linked cards for direct spending), and ensuring robust liquidity for conversion into local currencies. By addressing the unique financial needs of this underserved but rapidly growing global workforce, stablecoin-based solutions can foster greater economic empowerment and connect talent to opportunity, irrespective of geographical location. The use cases cited by BVNK, including wage payouts and marketplace seller payouts via stablecoins, further validate this application.^[13]

Navigating the Regulatory Maze

The Evolving Global Framework

The regulatory landscape for stablecoins is dynamic and varies significantly across jurisdictions, representing one of the most critical factors shaping their future. A global trend is emerging towards bringing stablecoin issuers and service providers within the regulatory perimeter, though the approaches and timelines differ.

In the European Union, the Markets in Crypto-Assets Regulation (MiCA) became largely applicable for stablecoins from June 2024.21 This comprehensive framework mandates licensing for issuers of Asset-Referenced Tokens (ARTs) and E-Money Tokens (EMTs), imposes strict 1:1 liquid reserve requirements for EMTs, and effectively bans uncollateralized algorithmic stablecoins. MiCA's enforcement has prompted exchanges like Kraken and Coinbase to delist some non-compliant stablecoins (e.g., USDT, PYUSD by some) for EU users due to a lack of proper authorization or sufficient reserves.^[21]

The United States currently lacks an overarching federal framework. Regulation is a patchwork of state-level money transmitter licenses (MTLs). However, proposed federal legislation, such as the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act and the STABLE Act (both introduced around February 2025), aims to create a federal licensing regime.^[30] These bills seek to define payment stablecoins as payment instruments, not securities, and allow issuers to choose between federal or similar state-level regulation, with federal banking agencies having enforcement authority.^[21]

The United Kingdom is actively developing its regulatory approach, generally expressing support for leveraging stablecoins for payments within a regulated framework. Specific legislation and detailed rules are under development, with a focus on financial stability and consumer protection.^[21]

Singapore has implemented a stablecoin framework through the Monetary Authority of Singapore (MAS) as of August 2023.21 This framework categorizes stablecoins, with SGD/G10-pegged stablecoins exceeding S$5 million in circulation requiring issuers to obtain Major Payment Institution licenses for Digital Payment Token (DPT) service and Stablecoin Issuance Service.^[21]

In the United Arab Emirates (UAE), jurisdictions like the Abu Dhabi Global Market (ADGM) permit stablecoin issuance. The Central Bank of the UAE (CBUAE) approved fiat-referenced tokens (FRTs) in June 2024, regulating dirham-backed stablecoins with 1:1 backing and banning algorithmic ones. AE Coin (dirham-pegged) launched in January 2025, and USDT was accepted by ADGM in December 2024.21

Across Africa, regulatory approaches are evolving:

• Nigeria: The Investment and Securities Act (ISA) 2024 formally recognized virtual assets as securities, a significant shift from a previous Central Bank of Nigeria (CBN) ban. The cNGN (Nigerian Naira stablecoin) has also launched.^[26] VASPs are to be regulated by the SEC.
• Kenya: Has introduced a Virtual Asset Service Providers (VASP) Bill aiming to license and supervise crypto businesses, including exchanges, wallet providers, and brokers, under the Capital Markets Authority and Central Bank of Kenya. It sets standards for AML/CFT, consumer protection, and cybersecurity.^[26]
• South Africa: Classifies crypto assets as financial products under the Financial Advisory and Intermediary Services (FAIS) Act. Crypto Asset Service Providers (CASPs) must be licensed as FSPs under the Financial Intelligence Centre Act (FICA). As of early 2025, stablecoins themselves are considered unregulated, though the South African Reserve Bank (SARB) monitors them. By April 2024, 75 CASPs had been approved.^[25]

In Latin America:

• El Salvador: Has adopted a pro-crypto stance, recognizing Bitcoin as legal tender. Its first regulated stablecoin, Alloy by Tether (aUSDT, pegged to USD and backed by gold), was issued in July 2024. Tether also announced plans to relocate its headquarters to El Salvador in January 2025.21
• Argentina: Despite high stablecoin adoption driven by economic conditions (inflation), stablecoins operate in a legal grey area, though the president is pro-crypto.^[21]

This diverse global landscape underscores the complexity for businesses operating in the stablecoin space. While there is a general movement towards regulation, the lack of harmonization creates significant compliance challenges. Stephen Deng's observation about the "'shadow' on-chain world" needing to "pierce the veil" into formal, regulated systems is particularly pertinent here; regulation is the primary mechanism for this transition.

The Compliance Burden

Complying with this diverse and evolving web of global regulations presents significant operational challenges and costs for stablecoin issuers and service providers. Key compliance obligations include robust AML/KYC procedures for customer onboarding, implementation of the Travel Rule (which requires VASPs to share originator and beneficiary information for transactions above certain thresholds), sanctions screening, ongoing transaction monitoring for suspicious activity, meeting potential capital requirements, and fulfilling various reporting obligations to regulatory authorities.^[20]

The cost and complexity of these compliance measures can be a barrier to entry for startups and can impact the overall cost-effectiveness of stablecoin solutions. There is also the risk of "de-risking" by traditional financial institutions, where banks may be hesitant to provide services to stablecoin-related businesses if they perceive them as posing a high compliance risk or if the regulatory landscape is too uncertain. Technology, particularly blockchain analytics tools and specialized RegTech solutions, plays a crucial role in helping businesses meet these obligations more efficiently.^[19] The lessons from the BaaS sector, where inadequate AML controls and third-party risk management led to significant regulatory actions 15, serve as a cautionary tale for the stablecoin industry.

Regulatory Clarity and Mainstream Acceptance

Achieving greater regulatory clarity is paramount for the mainstream acceptance and growth of stablecoins. This will likely require a multi-pronged approach. International coordination among regulatory bodies, facilitated by organizations like the Financial Stability Board (FSB) and the Bank for International Settlements (BIS), is essential to promote harmonization and prevent regulatory arbitrage.^[7] The development and adoption of industry best practices and potentially self-regulatory organization (SRO) frameworks can also contribute to building trust and demonstrating a commitment to responsible operation.

Ultimately, building trust with both regulators and the public is key. This involves transparency from issuers regarding their reserves and operations (e.g., PayPal's PYUSD monthly reports), robust security measures, and a proactive approach to compliance. As Stephen Deng aptly put it, the "'shadow' on-chain world" of early crypto adoption needs to "pierce the veil" and integrate with formal, regulated financial systems.

Constructive public-private dialogue, including the use of regulatory sandboxes, can accelerate this process by allowing innovators to test new solutions in a controlled environment while providing regulators with valuable insights to inform evidence-based policymaking.^[27] This collaborative approach can help bridge the gap between rapidly evolving technology and the necessarily more deliberate pace of regulatory development.

The Tech Stack (Under the Hood)

Choosing the Right Rails

The choice of the underlying blockchain network is a critical strategic decision for stablecoin issuance and payment solutions, as it directly impacts cost, speed, scalability, security, and the developer ecosystem.

The decision involves navigating the persistent blockchain "trilemma" that is the challenge of simultaneously optimizing for decentralization, security, and scalability. Networks like Tron and BSC have often prioritized scalability and low cost, which are crucial for payment use cases, sometimes with perceived trade-offs in decentralization compared to Ethereum.

Layer 2 solutions such as Lisk represent an attempt to achieve scalability without sacrificing the security and decentralization of the base layer. The optimal choice depends heavily on the specific priorities of the stablecoin application, whether it's high-volume retail payments, large-value B2B settlements, or integration with a specific DeFi ecosystem.

Building Robust On/Off-Ramp Infrastructure

The bridges between the traditional fiat financial system and the world of stablecoins – on-ramps (fiat-to-stablecoin) and off-ramps (stablecoin-to-fiat) – are arguably the most critical components for widespread stablecoin utility. Without efficient, compliant, and user-friendly on/off-ramps, the practical use of stablecoins is severely limited for the majority of individuals and businesses who operate primarily in fiat currencies.

Building this infrastructure involves establishing partnerships with banks, payment processors, cryptocurrency exchanges, and local P2P networks. It requires navigating complex regulatory requirements for KYC/AML and payment processing in each jurisdiction. The strategic importance of this infrastructure is underscored by moves like Stripe's $1.1 billion acquisition of Bridge, a firm specializing in stablecoin orchestration and on/off-ramp solutions.^[3] The "stablecoin sandwich" – the end-to-end process of moving from fiat to stablecoin, transacting, and returning to fiat – must be as seamless and cost-effective as possible.^[13] Companies that can master the provision of these compliant and efficient access points will likely become key enablers, or "kingmakers," in the stablecoin ecosystem, as they control the primary gateways for user and business adoption.

Liquidity for Seamless FX and Payouts

Deep and readily available liquidity is crucial for the smooth functioning of stablecoin payment systems, particularly for conversions between stablecoins and various fiat currencies, and between different stablecoins. This is especially challenging for emerging market currencies or less common currency pairs, where FX markets may be thinner. Insufficient liquidity leads to wider spreads, higher slippage, and consequently, more expensive conversions, which can negate the cost advantages of using stablecoins for cross-border payments.

Sourcing and maintaining this liquidity requires relationships with market makers, specialized FX providers, and potentially the development of on-chain liquidity pools. Initiatives which aims to create decentralized, Uniswap-like venues for on-chain FX swaps are designed to address this challenge by fostering dedicated liquidity for various currency pairs directly on the blockchain. Such infrastructure could enable programmable currency conversion embedded in payment flows.

Decentralized liquidity pools holding baskets of stablecoins (USD, EUR, GBP, NGN, etc.) could allow users to swap between any pair 24/7, reducing dependence on correspondent banking for less common routes like a KES to EUR stablecoin swap. There is a symbiotic relationship here: as stablecoin payment volumes increase, particularly those involving non-USD stablecoins or conversions to non-USD fiat, the demand for FX liquidity on stablecoin rails will grow. Conversely, deeper and more efficient on-chain FX markets will make stablecoins a more attractive option for payments, creating a positive feedback loop where payment utility and FX liquidity co-evolve.

Orchestration Layers (e.g., Stripe/Bridge)

Given the complexity of navigating multiple blockchains, various stablecoins, different wallet technologies, and diverse on/off-ramp providers, orchestration layers are emerging as a vital component of the stablecoin technology stack, especially for business adoption. These platforms aim to abstract away the underlying complexities, providing businesses with a unified API or interface to integrate stablecoin payments and treasury functions into their existing financial workflows without needing to become experts in blockchain technology.^[3]

Bridge, for example, offers APIs for developers to move, store, and exchange stablecoins without dealing with blockchain complexity or regulatory nuance directly, and has partnered with Visa to issue stablecoin-linked payment cards.^[3]

An orchestration layer can manage tasks such as selecting the most efficient blockchain for a given transaction, handling wallet interactions, connecting to various liquidity providers for FX conversion, and ensuring compliance with on/off-ramp requirements. By simplifying integration and reducing the technical burden, these platforms significantly lower the barrier to entry for businesses wishing to leverage the benefits of stablecoins. Much like payment gateways simplified card acceptance for e-commerce merchants in the early days of the internet, stablecoin orchestration layers are poised to become the key "application layer" that enables broader B2B adoption, transforming stablecoins from a niche crypto-company tool into a more mainstream financial instrument for businesses globally.

Stablecoins, Programmable Money, and the Next Financial Epoch

The "Everything is a Bank" Trend

The rise of stablecoins intersects powerfully with the broader fintech trend often described as "Everything is a Bank" or "Embedded Finance." This refers to the increasing tendency for non-financial platforms i.e. marketplaces, SaaS companies, social networks, to embed financial services directly into their user experiences.^[16] As argued by Patrick from Ametyst and echoed by Fintech Brainfood, stablecoins and the underlying blockchain rails offer a potentially more agile and cost-effective foundation for this trend compared to traditional Banking-as-a-Service (BaaS) models that rely on legacy banking infrastructure.^[15]

Traditional BaaS often involves complex and costly integrations with sponsor banks, whose technology stacks and regulatory frameworks were not designed for the level of customization and real-time responsiveness that modern digital platforms require. Stablecoins, as programmable money on inherently digital and API-friendly rails, can offer a more flexible and developer-centric approach. This could democratize the creation of financial products, enabling platforms to build tailored solutions such as integrated invoicing, instant global payouts, yield-bearing accounts, or automated escrow services with greater ease and potentially lower overhead.^[15]

If stablecoins can make core banking functionalities more "plug-and-play," they could significantly lower the barriers for a wide array of companies to offer innovative financial solutions, leading to a proliferation of niche products embedded contextually within various user journeys.

Vision for a More Open, Efficient, and Inclusive Global Financial System

The long-term potential of stablecoins, if developed and deployed responsibly within clear regulatory frameworks, extends to fostering a more open, efficient, and inclusive global financial system. The prospect of near-frictionless global value transfer, available 24/7 at potentially lower costs, could significantly reduce the economic drag caused by current payment inefficiencies.^[12] For unbanked and underbanked populations, particularly in emerging markets, stablecoins accessed via mobile devices could offer a gateway to essential financial services, bypassing the need for traditional banking relationships that may be inaccessible or unsuitable.^[32] Stablecoins effectively turn anyone with an internet connection into someone with a "global bank account".

Furthermore, the programmability of stablecoins opens the door to new economic models and decentralized financial applications that can automate complex processes and create novel forms of value exchange. This vision aligns with the aspiration to reduce global economic disparities by providing more direct and efficient channels for cross-border commerce, remittances, and access to stable currencies.^[23] If implemented equitably and accessibly, stablecoins could play a role in allowing talent and capital to flow more freely across borders, empowering individuals and businesses in previously underserved regions.

Building the Future of Money Movement

For entrepreneurs, developers, and investors looking to contribute to this evolving ecosystem, several strategic imperatives emerge:

1. Solve the On/Off-Ramp Challenge: Continuously improving the cost, user experience, and compliance of fiat-to-stablecoin and stablecoin-to-fiat conversions remains paramount. This is the critical bridge to mainstream adoption.
2. Build User-Centric Applications: Focus on developing applications that abstract away the underlying blockchain complexity, making the benefits of stablecoins accessible to non-technical users.
3. Develop Robust Compliance Tools: Create and implement advanced solutions for AML/CFT, KYC/KYB, sanctions screening, and transaction monitoring that are tailored to the unique characteristics of on-chain transactions and global regulatory requirements.
4. Foster Liquidity: Contribute to building deep and efficient liquidity pools for a wide range of stablecoin-to-fiat pairs and on-chain FX, especially for emerging market currencies.
5. Educate and Collaborate: Proactively engage in educating users, businesses, and regulators about the technology, its benefits, and its risks. Foster collaboration across the industry to develop interoperable systems and shared best practices.

Beyond direct payment applications, there is a substantial "picks and shovels" opportunity in providing the enabling infrastructure and tools for the stablecoin economy. This includes compliance-as-a-service solutions, institutional-grade custody, advanced developer tools, security auditing services, and user-friendly wallet interfaces. These foundational elements are crucial for supporting the broader ecosystem's maturation and growth.^[2]

Connecting Global Talent to Global Opportunity

Payd (https://payd.money) is founded on the conviction that stablecoins can be a transformative force for global independent workers, creatives, and entrepreneurs. Our mission is to leverage this technology to provide fast, affordable, and accessible payment and financial infrastructure, enabling talent from anywhere in the world to connect seamlessly with global opportunities. By focusing on the specific pain points of this underserved demographic, including high transaction fees, slow payment settlements, and currency volatility in their local markets, Payd aims to deliver a solution that not only streamlines payments but also empowers individuals with greater control over their earnings and financial well-being.

Our approach exemplifies how the broader potential of stablecoins can be realized by addressing acute needs within well-defined user segments. By building a compliant, user-friendly platform that harnesses the core benefits of stablecoins that is speed, low cost, global reach, and stability (via USD-pegging), Payd is working to turn the theoretical possibilities of this technology into tangible results for the global independent workforce, contributing to a more equitable and interconnected digital economy.

Conclusion

The debate surrounding stablecoins and their role in the future of global payments is multifaceted and dynamic. Skepticism from established fintech leaders, particularly concerning G10 currency corridors where existing systems are highly optimized, highlights the significant hurdles stablecoins must overcome in terms of cost-efficiency, especially regarding fiat on-ramps and off-ramps. These critiques are valid and underscore the necessity for continued innovation in streamlining the entire "stablecoin sandwich" to make the end-to-end user experience truly competitive with best-in-class fiat solutions.

However, the narrative shifts considerably when viewed through the lens of emerging markets and specific underserved use cases. In regions grappling with currency volatility, high remittance costs, capital controls, and inefficient local banking infrastructure, stablecoins are already demonstrating tangible value as a tool for B2B payments, international trade, remittances, and capital preservation.^[5] The significant adoption rates and transaction volumes in LATAM and Africa are not driven by speculation alone but by real-world problem-solving. For freelancers and global independent workers, stablecoins offer a pathway to faster, cheaper receipt of international earnings and a means to protect the value of those earnings from local economic instability.

The core proposition of stablecoins, offering a digitally native, programmable representation of fiat value that is globally transferable, 24/7, and potentially at a lower cost, remains compelling. Their architectural advantages, particularly programmability, open avenues for financial innovation that traditional rails and even current fintech APIs struggle to match, feeding into the "Everything is a Bank" trend where financial services become more embedded and customizable.^[15]

Yet, the path to widespread adoption is contingent on several factors. Regulatory clarity is paramount; the evolving frameworks in the EU (MiCA), the US, and key Asian and African hubs will profoundly shape the operational landscape.^[21] Building robust, compliant infrastructure for AML/KYC, transaction monitoring, and secure custody is non-negotiable. Furthermore, enhancing user experience, ensuring deep liquidity for FX conversions, and fostering interoperability between different stablecoins and blockchains are critical technical and operational challenges that the industry must collectively address.

Major industry moves, such as Stripe's acquisition of Bridge, signal a growing recognition among established payment players that stablecoins are poised to become an integral part of the future financial stack.^[3] While stablecoins may not immediately or universally supplant existing systems, particularly in highly efficient G10 corridors, they are carving out significant niches and offering transformative solutions where current systems fall short.

For innovators like Payd, the opportunity lies in harnessing the strengths of stablecoins to solve specific, acute pain points for clearly defined user segments. By focusing on the needs of the global independent workforce, abstracting away the underlying technical complexities, and building compliant, user-centric solutions, it is possible to unlock the immense potential of this technology to foster a more inclusive, efficient, and interconnected global economy. The journey is ongoing, but the trajectory suggests that stablecoins are not merely a fleeting crypto-phenomenon but a foundational element in the continuing evolution of how value is moved and managed across the globe.

Thoughts drawn from;

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Referenced tweets related to Jack Zhang’s original thread;

Jack Zhang - CEO of Airwallex

https://x.com/awxjack/status/1931239220204486879

Investors keep asking me about stablecoin, and how that can reduce FX fees; if you send money from USD to EUR, and the receiving end still requires to receive EUR in their bank, I can’t see any ways stablecoin can reduce fees - off ramping from stablecoin to recipient currency are far more expensive than the FX interbank market.

Crypto is an area I have never been able to understand. I still don’t see a single use case yet on how crypto has helped anything in the last 15 years.

Even if stablecoin is less volatile, I don’t see how it will help B2B transactions unless it’s related to the very exotic currencies, and the liquidity is so small anyway.

Unlikely AI, the use case is real, and everyone uses some sort of AI tools every day. Stablecoin, how many people are using it?

I still remember that I was like an idiot in 2021, as everyone was talking about crypto, and the market went crazy on it. A16z even posted a white paper about the web3 future. I still don’t see that future. (a16z on stablecoins - https://a16zcrypto.com/posts/article/stablecoin-guide-what-why-how )

This year, I felt like I was that total idiot again, as I couldn’t see the future of using stablecoin to do cross-border transactions in G10 currencies. We are moving money at the cost of less than 0.01% and in real time. You can’t be cheaper than free and faster than real time.

Simon Taylor, author of Fintech Brainfood

Previous article done on stablecoins - https://www.fintechbrainfood.com/p/stablecoins-are-better

Tony Olendo, Founder of ViFi Labs

https://x.com/tonyolendo/status/1931358776692547668

If you look at Chainalsys reports, LATAM and Africa traded about $540bn in crypto in the last year. Close to 70% of that volume is commercial/institutional. Cross-border payments are the real use case. Chinese manufacturers are increasingly accepting USDT for payments, meaning that more businesses are driving domestic USDT demand.

You're right in saying that in local currency, stablecoins only have utility in off-ramping, but have been lacking so far in DeFi in an on-chain FX swap venue that drives price discovery. Full disclosure, that's what we're building over at @vifi_labs, essentially Uniswap for FX. The goal is to make it one-click from USDT to your bank account and vice versa. The base is onboarding 30 local currency stablecoins across the world.

In terms of trade volume, the main unlock isn't going to be USD as a global reserve currency. China produces 34% of the world's manufacturing, and if you can unlock a means to get to Chinese RMB, fully on-chain, you'd unlock astronomical levels of volume given the demand both ways.

Additionally, funds repatriation by MNCs and Chinese SOEs is a major unlock as well. Starlink already uses stablecoins for this use-case, Uber is exploring, but the direction this will take is that you'll pay for an Uber ride in Turkish Lira stablecoins, Uber automatically swaps that (hopefully using us) into USDC and off-ramps. No bank accounts, no SWIFT, just immediate settlements.

For foreign remittances, stablecoins will drive the fees to nearly zero. Currently, all FX apps like Wise operate these pre-funded accounts where a cross-border payment is like the Flintstones, it looks automated, but the backend settlement means that they have to hold both source and destination currencies. Multi-currency stablecoins fix this. Loads more innovation is coming; we're only getting started.

Chuk from Paxos

https://x.com/chuk_xyz/status/1931277350533992938

Stablecoin payments have grown rapidly to at least $6B monthly, $3B of which is B2B (see this @artemis report https://reports.artemisanalytics.com/stablecoins/artemis-stablecoin-payments-from-the-ground-up-2025.pdf)

These aren't massive numbers, but they show growing adoption of stablecoins for payments. It's mostly not G10 to G10.

But why are they being used?

Much of it is rooted in regulatory arbitrage, as you say.

But there are some other reasons too:

1. Stablecoin routes are sometimes (50/50) cheaper (see https://linkedin.com/pulse/remittance-giants-beating-stablecoins-cost-today-forever-chris-harmse-a7rwf/)
2. Stablecoin-funded transactions can sometimes be faster (E2E in minutes)
3. Some businesses already have USDT but can't use it to fund APMs
4. Some businesses are underserved by APMs (e.g., high risk) or cannot use APMs (they compete)

Wrt to reg arb, some big businesses (e.g. Uber) got their start via regulatory arbitrage, so while risky, the adoption is worth paying attention to.

I think if Airwallex accepted USDT on Tron, a lot of customers would do it, but that presents its challenges (e.g., banking relationships) and leaves an opportunity open for the stablecoin orchestrators

Outside of payments, stablecoins are (amongst other things) being used as offshore dollar accounts for businesses. This is often still reg arb / grey areas, but these businesses are happy to hold USDT as they can hedge FX risk, better manage treasury, etc., and they know they can use it to fund their onward obligations.

Nik from This Week in Fintech

https://x.com/NikMilanovic/status/1931414843040383080

When someone like @awxjack, who built @airwallex, says this, it's worth thinking about and listening to.

There are some material advantages, some edge-case benefits, and then some 'benefits' that aren't really benefits.

This isn't a comprehensive list, but a few that come to mind:

Material advantages

1. Instant FX pair settlement; available 24/7, instead of being constrained by exchange hours.
2. Less expensive in some difficult or thin corridors and exotic currency pairs. Especially exotic <> exotic.
3. Normally faster than correspondent banks and wires, specifically for cross-border.
4. Fewer programmability constraints when building reliable versions of txn types like (^[1]) recurring billing, (^[2]) pull transactions, (^[3]) escrow, (^[4]) margin provision, etc.

Edge-case benefits

1. Unlike some rails, settlement doesn't have to be to a bank account - it can be a bank/wallet or wallet-wallet pair.
2. Evading capital controls: This will probably erode over time, but for a certain user segment, being able to move money across borders beyond cap control limits is a very real value proposition!
3. Easier to use within the crypto ecosystem (eg, exchanges). Trading is still the #1 use of stables.

Not really a benefit

1. The cost is roughly the same as many conventional rails when you factor in features like chargebacks, fraud checks, etc. "Less expensive" is not really a general feature.
2. For simple push p2p transactions in-country where the destination is a bank account, stablecoins don't really have much advantage over UPI, RTP, PIX, SPEI, etc.

Stone from Eversend

https://x.com/StoneAtwine/status/1931333209305829468

Jack’s right. Stablecoins won’t beat 0.01% FX on USD to EUR. But that’s not the point. Stablecoins do more than FX. They’re 24/7 programmable dollars, accessible in broken systems, and global wallets without banks. We are replacing broken infrastructure, not improving margin on USDGBP but on “toxic currencies” :)

Previous twitter thread on stablecoins in 2021;
https://x.com/StoneAtwine/status/1473585804010266630

In recent days, we have heard calls from U.S. authorities to regulate stablecoins. This kind of attention only comes up if something is systemically important to the financial system. More than $115 billion in stablecoin value has been issued to date.

Today, business payments are made through the SWIFT messaging system, debit and credit cards, or direct bank transfers, such as ACH. These traditional payment systems have significant disadvantages, including high transaction costs, slow delivery and settlement, fraud, and inconvenience. Processing cards costs about 3% on average; SWIFT transfers cost between $40 and $90. If the payment is across borders or cross-currency, there is an additional 2%-5% in foreign exchange commissions.

Card processors take as long as 2-5 days to settle funds to any merchant. When you pay a business using a card, they will see the funds in their accounts after 2 to 5 days. SWIFT transfers take 2 to 7 days, and sometimes the money disappears for months (true story). Card payments are notorious for fraud and chargebacks. The consumer may be protected most time if a credit card is used. However, the merchant is usually liable for chargebacks (pray for African fintech companies that accept cards).

Enter stablecoins. The beauty of stablecoins is that they solve all these problems. Most transactions will cost about $0.1 to $10 (damn ETH/ERC20) in gas fees and take about 5 seconds to settle at the recipient side.

A fintech company moving money for float across continents can use Stablecoins. Are you importing goods from China? Send stablecoins, and the money is delivered in 5 seconds. A government could run stimulus cash transfers to citizens instantly (printer go brrrr). In the future, with improved regulation, I see stablecoins offered as a payment option by leading payments service providers.

Stephen Deng from DFS Labs

https://x.com/mrstephendeng/status/1931439279638716435

Understandably, those in the FX trenches are pretty 'meh' about stablecoins as the last few decades were about building a labyrinth of workarounds to tame a pre-Internet infrastructure to get to 1 basis point and real-time settlement.

It's a peak internet era achievement.

It's just that the world's largest and fastest-growing population of young people is now knocking at the door of that financial labyrinth and getting no answer.

Yes, regulatory arbitrage is at the core today. But you have to understand the momentum it creates when someone opens the door.

This feels like a part of the labor story in the AI era, not just the payments story of the internet era.

Previous tweet on stablecoins this year;
https://x.com/mrstephendeng/status/1927509892522479750

On my way to @thestablecon. In honor of the million convos I'll have about USD stablecoins in Africa, here's some of our thinking:

Right now, we operate in first-party settlement worlds, where African stablecoin companies must deal with offramp + FX legs outside of formal systems. This 'shadow' on-chain world is growing massively, and there's no way regulators don't react. They must because the sender side is institutionalizing USD stable settlements. That pipe is opening, and pressure is mounting.

The big question is whether stablecoin startups will be able to do third-party settlement in the near future (where they can send USD or local stablecoins to banks/reg fintech who can do last-mile settlement). In Africa and elsewhere, the stablecoin hype relies on this 'piercing the veil.' If this does not happen, the largely USD fiat FX bottleneck remains in place, and on-chain features become much harder to distribute.

Many are investing based on how the market and the players interact today (to skirt regulations), but we believe this status quo won't hold. We see that rare moment where there's pressure to change (massive opening or closing), and we've placed bets on both sides.

Patrick from Ametyst

https://x.com/kkpeckk/status/1931422079615910092

Stablecoins are better for payments and FX outside of the G10 - TRUE

The value prop of stablecoins in the G10 isn’t tightening margins on payments and FX - TRUE

G10 markets make up most of the economy, so what is the real usage of stablecoins? - That’s a very good question.

I keep asking myself this question. I think, as a builder, you don’t build based on FOMO or hype, but on real-world value.

Digging into the rabbit hole of the traditional money stack, it becomes clearer what the real value prop of stablecoins in developed economies is. And that is PROGRAMMABILITY.

Programmability must be contextualized because the word alone means nothing.
The trend, without even talking about stablecoins, is this: EVERYTHING IS A BANK, like
@m0foundation (who, in my opinion, is years ahead of everyone else) keeps saying.

Everything is a bank because:

1. Every platform with a distribution network has realized it can become the “bank” for its customers
2. The trust gap of customers between non-banks and banks has tightened

If you are a platform and not legally a bank, you have to build on sponsor banks or use banking-as-a-service. Building custom money workflows and integrations is costly and sucks, because you have to deal with banks whose regulation is based on an outdated tech stack - and it’s awful. That’s why these services now lean more toward consultancy than real infrastructure.

Stablecoins - and before them, blockchain (which is the most important part btw) - solve this. Because the new regulations around building “core banking” on blockchain rails are written based on the strengths of blockchain: composability and trustless software execution. You can truly build programmable cash flows on them.

Stablecoins are the best positioned to meet the “everything is a bank” trend and make it explode. Turning core banking from a consultancy-heavy process into a plug-and-play one.

That’s the play.

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This analysis represents Payd's current understanding of the market based on available data and expert assessment. It should not be considered financial or investment advice. Regulatory conditions and market dynamics are subject to change.