The Stablecoin Versus Real-Time Payments Debate

Cryptocurrency supporters have long argued that one of the lowest-hanging fruits in the payments industry is cross-border payments, and that’s doubly true for stablecoins, which marry the speed and low cost of bitcoin transfers to a digital asset that does not share bitcoin’s price volatility.

But before you can get to the question of whether stablecoins offer a better mousetrap than the current payments rails, you have to start by looking at the round-the-clock nature of stablecoin payments, argues Amias Gerety, a partner at FinTech investment firm QED Investors.

That dovetails nicely with the “more interesting and longer-term trend, which is globally available 24/7 payment rails,” Gerety told PYMNTS’ Karen Webster.

Looking at the currently available traditional rails, he notes that some are global, but few are 24/7, or if they are, have restricted access.

That creates “a real gap in the market in terms of what the U.S. payment system, in particular, is able to deliver because it’s based on banks and ACH and wires,” Gerety said.

See also: US Real-Time Payments Transactions Seen Quadrupling to 8.9B in 2026

While the ability to make payments 24/7 is available to people with good credit, he added, without it you quickly get exposed to the reality “that these ‘24/7’ payment systems don’t really work to deliver the money instantly.”

That’s particularly obvious in remittances, but “you can imagine it in a variety of other different commercial or personal scenarios as well,” Gerety said.

Two Frictions

Getting back to stablecoins, he suggested that the drive to use them — which has become a big political fight and regulatory struggle in Washington, D.C. — is “actually reflective of a true weakness in the dollar-denominated payment system.”

While acknowledging that the vast majority of stablecoin use today is to facilitate the trading of price-volatile cryptocurrencies, Gerety said taking that weakness seriously “allows us to be pretty excited about technologies that would make it easier to do 24/7 global payments.”

That weakness is also behind a number of real-time payments initiatives from the traditional banking system, like The Clearinghouse’s RTP Network and the Treasury’s FedNow in the U.S., and systems like India’s UPI or Brazil’s PIX abroad, he said. All of which, he added, are “driven by the same underlying impulse, which is that real-time payments are valuable to people, valuable to businesses, and global payments are increasingly important.”

But with proof-of-concept pilots only now beginning, those new 24/7 rails are “moving at a pace which is frustrating,” he said. “It feels to me like there are huge opportunities, but those opportunities, when they exist inside the system, they tend to move slowly.”

Startups like those in the crypto — and especially stablecoin — space can move faster because they have “asymmetric risk profiles,” while “established businesses have more to protect than they have to gain, [and] really want to make sure that any innovation that they do does not imperil the franchise,” Gerety added.

Despite initiatives like the RTP Network and FedNow, Gerety sees a place for crypto, including stablecoins, for two reasons. The first is access, which he said really comes down to permissioned access — like the cost of sending a wire transfer or time-zone difficulties — while the second is about anti-money laundering (AML) and countering the financing of terror (CFT) requirements.

Order or Freedom

“Where there is a friction, you have either people who think that we can do it better with technology and meet the exact same standards that we use today, or people who reject the societal demand [for AML to fight crime] and want a truly permissionless system,” he said.

The latter, Gerety said, is an impulse shared by many early adopters and developers of crypto with a “libertarian globalist ethos” that does not meet up with “the societal demands that we make around not facilitating money laundering” — which he calls a necessary friction.

“What’s on offer in the crypto landscape belies the fact that there is a significant portion of the crypto landscape that is ignoring existing laws,” he added. “But consumers can’t see that. People don’t go around saying, ‘The reason this is faster is I don’t have fraud protections.’”

That said, he adds that there are certainly stablecoin companies that are coming at the cross-border problem with new technology and systems as well as “attention to consumer safety, attention to compliance and regulation.”

Regulatory Changes

A tension that exists around crypto payments is the political fight over creating a regulatory framework for cryptocurrencies in general and stablecoins in particular.

That’s a very difficult task, Gerety said, noting that financial regulation is complex because the financial services industry is complex.

“We have so many different payment rails,” he said. “Normally people think about debit, credit and wire, but even within that there’s all sorts of different varieties of debit. There’s a huge volume of closed-loop payment rails that people don’t think about that much. Most of them are small. Some of those operate on similar regimes, some of them not.”

There’s a real risk that “anytime you create a new regulatory regime, you create an unknown set of incentives,” he said. “Many people talk about cost-benefit analysis. It’s not about cost-benefit analysis because we’re talking about dynamic systems. We’re talking about the fact that we don’t know what’s going to happen.”

That said, the goal of the members of Congress and regulators like the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) who are working on the rules is “to not create an imbalanced regulatory architecture that then shifts the framework of competition,” Gerety added. “They want to create stable frameworks. Then competition is all about customer service, speed, price, those kinds of things.”

One Silo or Two

One particular question that has yet to be answered, Gerety said, is whether crypto and stablecoins will get their own set of rules, or whether they will be folded into the existing banking and money transmission regulations, perhaps updated for the peculiarities of digital assets.

“If you create a regulatory silo over here and then another regulatory silo over there, of course there’s every intention to say, same financial instrument, same risk, same rules,” said Gerety. “But whenever you write the rules separately, you can’t guarantee that that’s what you’re going to get.”

His view, Gerety said, is basically a Gordian knot approach. Pointing to the Electronic Funds Transfer Act, he said, as “the rise of electronic payments came about, there was a move, basically successful, to pass laws that say no matter how you move the money, we need these consumer protections.”

Stablecoins and traditional payment rails are “less different than people think, so we should use regulatory regimes that already exist. You want to be a stablecoin, go register as a money market fund. Or you want to be a stablecoin, go register as a bank.”

Power Play

It’s important to remember that there is real consumer demand for the advances that stablecoin supporters say they can bring to cross-border payments.

“We don’t really know where the consumer demand is coming from,” he said. It could be functional — wanting a 24/7 global payment system. Or it could be ideological — the idea of freeing money.

But it remains an issue in large part because people from the crypto ecosystem have “entered the field, not with an acceptance of what’s there, but an attempt to say, you know, what’s there just doesn’t count at all.”

They’ve got momentum, Gerety said, because the “lawmakers and regulators and policy makers are trying to harness that momentum. … They do recognize that it’s a true, authentic, consumer-driven momentum.”

However, he’s worried that legislators are trying to harness that demand for political power.

“I don’t know where that will play out,” he said. “But I think we have to understand those are the two forces at play.”

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