For years, stablecoins served as the backbone of cryptocurrency trading, providing liquidity and stability in crypto’s famously volatile markets.
Though some have been circulating for over a decade, stablecoins like Tether (USDT) and USD Coin (USDC) weren’t embraced by the traditional financial sector, in part due to regulatory uncertainty. That left them as a favorite go-to tool for traders on crypto exchanges looking to park profits or hedge against market swings.
Tether, for example, is the third largest cryptocurrency by market cap, and has a circulating supply of around $144 billion. USDT stablecoins represent 70% of the stablecoin market, with much of Tether’s daily volume tied to its use across crypto exchanges.
But recently, stablecoins have started to decouple themselves from crypto exchanges and position themselves as a component of real-world financial infrastructure.
The crypto market in general is down by around 18% over the past 30 days and remains buffeted by uncertainty; yet Stripe’s latest shareholder letter includes an entire section on stablecoins, and recent developments indicate a broader adoption of stablecoins in mainstream financial activities including B2B payments, capital markets, lending, cross-border payments and treasury management.
However, separating the hype from the reality is essential. Just how much real-world utility do stablecoins offer today?
Read more: The Payment Professional’s Guide to Stablecoins
During previous crypto market cycles, stablecoins’ primary function was to facilitate trading on exchanges by allowing investors to quickly move in and out of positions without converting back to fiat.
Today, stablecoin adoption has its sights set well beyond crypto market liquidity and into potentially practical, real-world applications.
Cross-border payments stand as one of the most promising use cases for stablecoins. Traditional international transactions remain slow and expensive, burdened by correspondent banking networks and legacy financial systems. Stablecoins, pegged to fiat currencies, promise a faster and cheaper alternative. By leveraging blockchain rails, stablecoins can bypass intermediaries, facilitating near-instantaneous settlements at potentially lower costs.
For the Outlook 2030 B2B event at the end of 2024, PYMNTS sat down with Ran Goldi, SVP, payments and network at Fireblocks, and Nikola Plecas, head of commercialization, Visa Crypto, to dissect the benefits and myths surrounding blockchain-based payments, including the concept of the “stablecoin sandwich,” a method of using stablecoins to transfer value between currencies, which serves as a practical illustration of blockchain’s efficiency in cross-border payments.
“Blockchain solutions and stablecoins — I don’t like to use the term crypto because this is more about FinTech — they’ve found product-market fit in cross-border payments,” Sheraz Shere, general manager of payments and commerce at Solana Foundation, told PYMNTS earlier this year. “You get the disintermediation, you get the speed, you get the transparency, you get extremely low cost.”
FinTech companies, including Visa, PayPal, Revolut and Stripe, are exploring stablecoin integrations to enhance their cross-border payment services.
Read more: OCC Says Banks Can Hold Crypto, but Should They?
Beyond payments, stablecoins are transforming corporate treasury operations. Managing liquidity across multiple jurisdictions involves navigating various currencies, banking systems and regulatory environments, and this can often lead to back-office inefficiencies and increased operational costs. Stablecoins can help offer a unified solution by enabling companies to hold and transfer value seamlessly on a global scale.
Several marketplace moves spotlight the varied ambitions of stablecoin issuers and platforms. For example, crypto payments company MoonPay said March 13 that it expanded its enterprise offerings by acquiring Iron. Iron’s stablecoin infrastructure platform provides solutions for enterprises; FinTechs and payment processors; and marketplaces and merchants.
Elsewhere, PayNation said March 14 that its new Crypto-Payment Portal is available now to facilitate B2B payments; while BNY is reportedly handling additional services for Circle, with the bank confirming it will allow some clients to send money to and from the stablecoin company to buy or sell Circle’s stablecoins.
Last month, Bank of America’s CEO Brian Moynihan said in an interview that the bank would “go into” stablecoins if regulation were passed in the U.S., and regulatory compliance remains a key concern for financial stakeholders.
The regulatory environment in the U.S. does, however, appear to be warming toward stablecoins in particular. House Financial Services Committee Chairman French Hill of Arkansas said March 11 that he supports the development of a federal framework for payment stablecoins.
