Why Stablecoins Can Disrupt Cross-Border Payments?
The internet has made information free and globalized. So, why is transferring funds still so difficult and costly?
The early internet promised a future where anyone could publish, build, or trade without permission. Protocols like email and the World Wide Web were open and neutral, leading to an explosion of creativity, innovation, and entrepreneurship. However, along the way, it went off track.
Today, the global financial system resembles a patchwork quilt of corporate networks: centralized, closed, and predatory. Behind every transaction lies a complex series of intermediaries akin to a Rube Goldberg machine (Note: a type of overly complex contraption), such as point-of-sale systems, payment processors, acquiring banks, issuing banks, local banks, correspondent banks, foreign exchange dealers, and credit card networks. Each of these entities takes a cut, adding delays and imposing rules. These networks impose unnecessary taxes on commercial activities and stifle innovation. They turn what should be neutral channels into high-friction bottlenecks.
Stablecoins, cryptocurrencies tied to stable assets like the US dollar, offer a way out—a reset—a means of bringing the original vision of the internet into the realm of currency.
Disruptive Opportunities of Stablecoins
The current payment systems were not built for the internet—but rather for a world filled with fee-charging intermediaries (who previously played roles in managing local cooperation, fraud prevention, and operations). Even today, the fees for international remittances can reach as high as 10% (as of September 2024, the average fee for a $200 remittance was 6.62%).
These are not just frictions—they are, in fact, regressive taxes imposed on some of the world’s poorest workers (Note: a regressive tax is generally understood to tax at the same rate regardless of taxpayer income or wealth, resulting in a higher burden for lower-income individuals compared to higher-income individuals). The inherited system is slow, opaque, and exclusive, leaving billions underserved or completely cut off from the global financial system.
For many businesses, traditional payment methods are highly inefficient. Stablecoins can significantly improve this situation. B2B payments from Mexico to Vietnam typically require 3 to 7 days for settlement, with costs ranging from $14 to $150 for every $1,000 transaction, passing through as many as five intermediaries, each taking a cut. Stablecoins can bypass traditional systems like the international SWIFT network and related clearing and settlement processes, making such transactions nearly free and instantaneous.
This is not just theoretical—it is already happening. Companies like SpaceX are using stablecoins to manage their corporate funds (including repatriating funds from countries like Argentina and Nigeria, where local currencies are highly volatile). Companies such as ScaleAI are using stablecoins to pay their global employees faster and cheaper.
Meanwhile, in the B2C (business-to-consumer) space, Stripe has become the first service provider to widely offer cryptocurrency payments, charging a 1.5% fee—half of what traditional payment methods charge. This could significantly improve profit margins for certain businesses: as a16z partner Sam Broner noted, for low-margin businesses like grocery stores, a 1.5% margin increase could double net income. (Moreover, in competitive, blockchain-based markets, transaction costs are expected to drop even lower).
Unlike the old financial system that developed in “silos,” stablecoins are inherently global. They operate on blockchains: anyone can build open, programmable networks. There is no need to negotiate with dozens of cross-border banks; just plug into the network. People are beginning to realize these advantages.
In 2024, the transaction volume of stablecoins reached $15.6 trillion, comparable to Visa’s transaction volume. Although this figure primarily represents flows of funds (not retail payments), its scale indicates that we are on the brink of a transformation in financial infrastructure that does not rely on the patchwork of 20th-century systems.
Instead, entirely new, truly internet-native entities can be built—what Stripe calls “the room-temperature superconductor of financial services,” where the goal is not lossless energy transfer, but lossless value transfer.
The “WhatsApp” Moment for Currency
Stablecoins provide us with the first real opportunity to make currency open, instant, and borderless, just as email revolutionized communication.
Consider the evolution of texting. Before apps like WhatsApp emerged, sending a text across borders meant paying 30 cents per message, and if the message actually got delivered, that was considered lucky. Then, internet-native messaging apps emerged: instant, global, and free.
Today’s payment methods resemble the messaging landscape of 2008: fragmented by borders, burdened by intermediaries, and controlled by “gatekeepers.”
Stablecoins offer a completely new alternative. They are not patching together a clunky, costly, and outdated system, but instead flow seamlessly on a global blockchain.
These systems are programmable, composable, and designed for cross-border scaling. Stablecoins have significantly reduced remittance costs: sending $200 from the US to Colombia through traditional means costs $12.13; using stablecoins, the fee is only $0.01. (The costs of converting stablecoins to local currencies range from 0% to 5%, and prices continue to decline due to increasing competition).
Just as WhatsApp disrupted expensive international calls, blockchain payments and stablecoins are transforming global remittances.
Regulation: From Bottleneck to Breakthrough
It is easy to see regulation as a barrier, but wise legislation is the key to solving the problem.
Establishing clear rules for stablecoins and the crypto market could eventually allow these technologies to emerge from sandbox environments and achieve broader adoption. For years, DeFi has been trapped in a closed, circular, “coin-to-coin” economy. Not because these tools are ineffective, but because regulators have made it difficult for them to enter the traditional financial system.
This situation is changing. Policymakers are actively crafting rules to recognize and regulate stablecoins to maintain US competitiveness, protect consumer rights, and promote flourishing innovation. Thoughtful regulation—such as a framework differentiating between network tokens and security tokens—can prevent bad actors while providing clear guidance for compliant entities. In fact, an upcoming bill clarifying these regulatory rules may pave the way for wider adoption and integration into the global financial system.
Building Public Goods for Everyone
Traditional finance is built on private closed networks. But the internet has shown the power of open protocols (like TCP/IP and email) to drive global collaboration and innovation.
Blockchain serves as the native financial layer of the internet. It combines the composability of public protocols with the economic strength of private enterprises. They have trustworthy neutrality, auditability, and programmability. Adding stablecoins on top will provide something that has never truly existed: an open monetary infrastructure.
Think of it as a public highway system. Private companies can still build vehicles, conduct business, and create roadside attractions. But the roads themselves are neutral and open to all.
The role of blockchain networks and stablecoins goes far beyond cost reduction. They are giving rise to new categories of software:
- Programmatic payments between machines: AI-driven markets automatically match transactions for computational resources and other services.
- Micropayments for media, music, and AI contributions: simple rules are established for budgeting, allowing “smart” wallets to make payments.
- Transparent payments with complete audit trails: using these systems to track government spending.
- Global trade without cumbersome intermediaries: instant settlement of international transactions at extremely low costs—this is already happening.
The era of blockchain networks and stablecoins has arrived: technology, market demand, and political will are converging to make these applications a reality. A stablecoin bill may pass this year, and regulators are weighing frameworks to match risk with appropriate oversight.
Just as early internet startups thrived once it was clear they wouldn’t be shut down by telecom companies or copyright lawyers, cryptocurrencies are poised to leap from financial experiments to critical infrastructure, with stablecoins leading the charge.
Instead of patching old systems, we can reconstruct better ones.
This article is collaboratively reprinted from: PANews