‘Traditional rails won't disappear, but they'll become utilities underneath a Stablecoin layer.
Just as over-the-air TV, FM radio, and SMS still exist, but they’re not where the future of telco is. The winners will not be those who saw Stablecoins as cheaper rail but as the foundation of a new financial stack.’ Simon Taylor, Head of Strategy & Content @ Sardine / Writer Fintech Brainfood
Ever wondered what stablecoins are and why they’re making waves in the crypto world? In this article, I’ll break down BVNK’s latest report on stablecoins, share key insights, and reveal how I became captivated by this revolutionary technology.
In 2025, I embarked on a new journey: diving deep into the world of Web 3 payments. What started as a structured learning path quickly turned into an exciting rabbit hole of discovery, connecting dots and uncovering insights that sparked my curiosity in unexpected ways. This journey was ignited by a fascinating conversation with Tyler Spalding, President at Acronym, and Douwe Lycklama, Founder at Innopay. Together, they painted a vision of the future where the gap between traditional payment systems and Web 3 is bridged, empowering businesses and consumers to confidently embrace Web 3 payment options—stablecoins, tokens, CBDCs, and more—for seamless domestic and global money movement.
But how do we build this bridge? It requires a two-way approach: demystifying traditional payment processes for Web 3 innovators while clarifying the potential of Web 3 for traditional players. This means breaking down the essentials—authorisation, clearance, and settlement—and exploring the real-world impact of Web 3 payments. Are they truly transformative, or just hype? What problems do they solve in an era of instant payments, digital wallets, and real-time transfers? And most importantly, how can we address the scepticism surrounding their value and practicality?
Over the next year, I’ll be exploring these questions and more through reports, articles, interviews, and webinars on The Paypers website, LinkedIn, and my personal page. If you’re curious about the future of payments, stay tuned—we’re about to spark some exciting discussions and share knowledge that could reshape how we think about money in the digital age.
When I first decided to explore Web 3, I knew it had to be approached strategically. My plan was simple: start by understanding Web 2 payments—the underlying infrastructure, technologies, and key players like institutions enabling authorisation, clearing, and settlement. But then Donald Trump was elected, and his pro-crypto stance sent waves of excitement through the industry. Caught up in the hype, I abandoned my Web 2 deep dive and jumped straight into the world of crypto.
Yes, I admit it—I’m human, and like many of us in this fast-paced, AI-driven era, I’m prone to FOMO (fear of missing out). Staying ahead of the curve feels like an impossible task, but I’m determined to try. That’s why I shifted my focus to stablecoins, diving into their mechanics, potential, and impact. And here’s what I’ve learned so far:
When I want to learn fintech stuff, besides many others, I read what Simon says (yes, like the game ‘Simon Says’). He’s a strong advocate for stablecoins, not just as a way to make payments cheaper but as the foundation of a new financial stack that will become inevitable over the next 10–20 years. If we think of payments as a game, the winners will likely be tech-forward banks (like Société Générale), payment companies bridging old and new systems (think Stripe), and treasury teams at global corporations (think SpaceX). On the other hand, traditional correspondent banks, legacy payment processors resistant to change, and banks betting on closed systems risk falling behind.
But before we dive deeper, let’s start with the basics: what is a stablecoin?
Stablecoins were created to solve the volatility problem plaguing cryptocurrencies like Bitcoin. Unlike traditional crypto, stablecoins are designed to maintain a stable value by being pegged to a reference asset, such as fiat currency (e.g., USD or EUR), commodities (e.g., gold), or even other cryptocurrencies. In theory, this 1:1 backing ensures the stablecoin’s value mirrors its peg, avoiding the wild price swings seen in other digital assets.
However, in practice, maintaining this stability isn’t always straightforward. Some stablecoin issuers have struggled to prove they hold adequate reserves, leading to high-profile failures where investors lost the entire value of their holdings. This raises important questions about trust and transparency in the stablecoin ecosystem.
Stablecoins maintain their value through different mechanisms. Here’s a breakdown based on insights from Chainalysis, a leading blockchain analysis firm:
The most common type, these are tied 1:1 to traditional currencies like the USD or EUR. Their stability comes from reserves held in fiat or equivalent assets. Examples include Tether (USDT), USD Coin (USDC), and Stasis Euro (EURS).
These are backed by physical assets like gold or silver, allowing users to gain exposure to commodities without owning them directly. Examples include PAX Gold (PAXG) and Tether Gold (XAUT), each representing a specific amount of the underlying asset.
These are collateralised by other cryptocurrencies, often using overcollateralisation to offset volatility. For example, Dai (DAI) is backed by Ethereum (ETH) and managed through the MakerDAO protocol, where users deposit crypto to mint Dai.
A newer category, these stablecoins are backed by US Treasuries and repurchase agreements, offering yield to holders. Examples like Ondo’s USDY and Hashnote’s USYC function like tokenised money market funds, appealing to investors seeking secure, regulatory-aligned returns.
These rely on programmed mechanisms to adjust supply based on demand, without direct collateral. Examples include Ampleforth (AMPL) and Frax (FRAX), which combine collateralisation with algorithmic adjustments. However, this model carries risks, as seen with the collapse of TerraUSD (UST) in 2022, highlighting the challenges of maintaining stability without tangible backing.
Stablecoins offer a range of potential benefits, but they also come with significant risks and criticisms. Let’s break it down:
The Bank for International Settlements (BIS) highlights several potential merits of stablecoins:
Enhanced anti-money laundering (AML) efforts
Improved operational resilience
Stronger customer data protection
Greater financial inclusion
Better tax compliance
Enhanced cybersecurity measures
These advantages position stablecoins as a promising tool for modernising the financial system, bridging the gap between traditional finance and the digital economy.
Despite their potential, stablecoins face several challenges:
Regulatory uncertainty - stablecoins have long operated in a regulatory grey area, but this is changing. In Europe, the Markets in Crypto-Assets (MiCA) regulation—though it doesn’t explicitly use the term ‘stablecoin’—covers Asset-Referenced Tokens (ARTs)* and E-Money Tokens (EMTs)**, which are essentially stablecoins. Under MiCA, these tokens may be classified as ‘significant’ by the European Banking Authority, subjecting them to stricter oversight. Similarly, the US and UK are advancing their own regulatory frameworks to address the risks and opportunities posed by stablecoins.
Lack of transparency - transparency remains a major concern. For example, Tether (USDT), the world’s largest stablecoin by market capitalisation, has faced accusations of failing to provide adequate audits for the reserves backing its tokens. While Tether has since released assurance reports, scepticism persists about the true extent of its reserves and whether they fully back the issued USDT. This lack of transparency undermines trust and highlights the need for stricter auditing and disclosure standards.
Stablecoins have evolved from a crypto trading tool into a mainstream payment rail. In 2024, approximately USD 17 trillion in stablecoin transactions were processed, with payments accounting for an estimated USD 5 trillion—over a third of Visa’s total volume. In 2025, global payment volumes are expected to continue shifting on-chain, with stablecoin payments surpassing USD 8 trillion, solidifying their role as a core global payment infrastructure, according to Chris Harmse, Co-Founder and Chief Business Officer at BVNK.
This rapid adoption is driven by stablecoins’ speed, transparency, and accessibility, which traditional payment systems struggle to match. Stripe’s acquisition of Bridge has further reinforced stablecoins’ position as a viable solution for both domestic and international payments.
Could this spark a wave of adoption among PSPs? Simon Taylor raises an interesting question: With Stripe acquiring Bridge, how will Adyen and PayPal respond? PayPal has PYUSD and various assets in place but lacks full integration. Adyen, with its enterprise focus, hasn’t been pulled into the space yet—but keep an eye on Nuvei, DLocal, and Onafriq, which could lead the charge.
The premise: a surge in real-time payments, increasing demand for streamlined corporate operations and payment interoperability, and the rise of stablecoins as a B2B payment rail. Meanwhile, marketplace platforms are leveraging stablecoins to pay international creators, sellers, hosts, and contractors faster. Together, these factors set the stage for stablecoins to redefine cross-border payments in 2025—enhancing business efficiency by reducing volatility, speeding up transactions, and improving liquidity.
The EU’s MiCA regulation, US state frameworks, and Singapore’s progressive stance are legitimising stablecoins, setting the stage for greater global regulatory harmonisation in 2025, according to Chris Harmse, Co-Founder and Chief Business Officer at BVNK. The US and UK are expected to introduce new stablecoin regulations as they compete with Singapore, the UAE, and Europe to establish themselves as hubs for digital asset innovation.
These regulatory shifts will fuel competition and inject fresh energy into the stablecoin ecosystem. In Europe, we’ll see a rise in MiCA-compliant regulated stablecoins, with new market entry opportunities where issuers could partner with Europe’s EMIs to launch MiCA-regulated stablecoins. Globally, regulators will likely take a phased approach, treating stablecoins as electronic money before addressing more complex crypto use cases.
Intrigued by the potential of these developments, I revisited BVNK’s report, ‘The Decade of Digital Dollars’—a must-read that further solidifies the 2025 stablecoin outlook. Here’s a review of the report to explore these predictions in depth.
BVNK partnered with the Centre for Economics and Business Research (Cebr) to analyse the benefits of stablecoins. Their 78-page report charts the growth of stablecoin payments from 2020 to 2024, demonstrating a quantifiable link between rising stablecoin adoption and economic impact. The report highlights three key areas where stablecoins provide significant value: mitigating currency volatility, bridging the dollar gap, and unlocking capital trapped in slow payment systems.
Beyond Cebr’s research, BVNK also collaborated with stablecoin issuers Circle and First Digital, blockchain analytics firm Chainalysis, and payments giant Visa, bringing together a broad spectrum of industry expertise. The report also presents 17 country summaries, showcasing how individuals in these economies use digital dollars to stabilise income in the face of high local currency volatility. Additionally, it examines cross-border stablecoin payment outflows in 2024, shedding light on adoption trends.
Another crucial insight is the route summary, which analyses how stablecoins are improving payment efficiency across global corridors. The report finds that stablecoin transactions have significantly reduced settlement times:
US to LATAM: Faster by up to 4 days
Europe to Africa: Faster by up to 6 days
Europe to Southeast Asia: Faster by up to 3 days
Europe to LATAM: Faster by up to 3 days
Currency volatility has a significant negative impact on economic performance in emerging markets. In a study of 17 countries, Cebr found that total GDP losses due to long-term currency volatility amount to USD 1.2 trillion, or an average of 9.4% of GDP. The losses are especially notable in Indonesia (USD 184 billion) and Brazil (USD 172 billion).
Stablecoins offer a potential solution to mitigate some of these losses. By providing a stable form of value pegged to a fiat currency (typically the US dollar), stablecoins help protect savings from the effects of devaluing currencies and enhance purchasing power. According to Kimberly Grauer, Director of Research at Chainalysis, emerging markets such as Turkey, Thailand, and Brazil are leading in stablecoin adoption as a percentage of their GDP. ‘Residents in these countries often turn to stablecoins to preserve their savings when local currencies lose value’, she explains. The global rise in stablecoin usage highlights their crucial role in enabling financial inclusion and giving the unbanked or underbanked access to the global economy.
Currency volatility presents several challenges for businesses, too:
Uncertainty in the cost of imported raw materials due to fluctuating exchange rates;
Risk of detrimental long-term contracts if the domestic currency significantly depreciates;
Increased borrowing costs and reduced investment opportunities, as currency instability may lead banks to view businesses as high-risk.
In the B2B transacting area, stablecoins offer protection against currency risk by stabilising their balance sheets, reducing the chance of unfavourable pricing in long-term contracts, and supporting better financial planning.
Stablecoins bridge the dollar gap in global payments
Stablecoins serve as a digital substitute for the US dollar, fulfilling the global demand for a stable currency, especially in regions with limited access to traditional banking. Like fiat dollars, stablecoins are designed to maintain their value, but unlike fiat dollars, they can be sent globally near-instantly, operate 24/7/365, and are easily accessible with just an internet connection. Additionally, they are simple to buy, sell, and trade.
BVNK research identified strong demand for stablecoins in emerging economies, particularly through what’s known as the ‘stablecoin premium.’ This refers to the willingness of individuals and businesses in certain countries to pay more to hold and trade US dollar-pegged stablecoins than physical fiat US dollars. In the 17 countries studied, consumers and businesses are paying an average 4.7% premium, with countries like Argentina seeing a 30% premium. It is estimated that in 2024, these countries will spend USD 4.7 billion in premiums alone, with this number expected to rise to USD 25.4 billion by 2027.
The three main sources of stablecoin demand are:
Access to financial services: Stablecoins offer anyone with an internet connection access to a stable currency, without needing a traditional bank account.
Access to dollars: Since most stablecoins are dollar-pegged, they provide global access to the world’s reserve currency, even in regions where access to traditional fiat dollars is challenging.
Access to dollars at a fair price: Stablecoins can be easily bought and sold online, allowing for deeper, less fragmented markets compared to physical dollars.
To explore the theory behind this demand, BVNK invited Andrew Gallucci, Director of Regulatory Strategy at Circle, to discuss how fintechs can rethink cross-border payments, making them more accessible and affordable.
Cross-border payments are a significant driver of USDC adoption. ‘There’s an enormous remittance market and demand for affordable cross-border payments in the US’, says Gallucci. ‘That’s where stablecoins come into play—people can send money easier, faster, and cheaper, with broader accessibility to anyone with an internet connection’.
Stablecoins also offer institutions an efficient way to manage global payroll by mitigating exchange rate fluctuations, reducing cross-currency transaction fees, and enabling faster payments. In 2024, BVNK launched a new product in collaboration with a major global HR platform to facilitate near-instant payments to a globally dispersed workforce via stablecoins.
As digital dollars, stablecoins help businesses stabilise payroll values and avoid delays common with traditional cross-border payment systems. This offers employers and employees more certainty, easier budgeting, and better financial planning.
Cross-border payment systems often involve long delays, which can trap capital in transit and force financial services providers to maintain pre-funded accounts to mitigate risk. Access to funds sooner can significantly improve liquidity, boost efficiency, and reduce borrowing costs for businesses.
BVNK's analysis found that, when used productively, funds from cross-border transactions could generate a USD 2.9 billion return for businesses by 2027 across four key routes: US → Latin America, Europe → Africa, Europe → Southeast Asia, and Europe → Latin America. These routes account for around 10% of total cross-border payment volume.
Stablecoins can enable near-instantaneous settlements, eliminating the need to pre-fund accounts typically required in correspondent banking corridors. This can dramatically reduce the capital buffers businesses must hold in pre-funded accounts, streamlining payment processes.
To illustrate the benefits of stablecoins in instant settlement, BVNK presented two case studies – Visa and Worldpay.
In March 2020, Visa launched a pilot program allowing clients to settle cross-border transactions using USD Coin (USDC). One of the first participants, Crypto.com, used the program to settle a portion of its global settlement obligations for its Visa card programs.
By 2023, Visa expanded this pilot to merchant acquirers, allowing Web 3 businesses like on-ramp providers, gaming platforms, and NFT marketplaces to receive settlement payouts in USDC and send payments to their merchants via the Solana and Ethereum blockchain networks.
In 2022, Worldpay began offering merchants the option to receive a portion of their settlements in USDC stablecoins. By 2024, the acquirer completed its stablecoin pilot with Visa, enabling faster payouts by eliminating extra steps in the settlement process. According to Caitlin Kulowoski, Director of Crypto at Worldpay, ‘Visa sends USDC to Worldpay’s wallet, and we pass it on to the merchant without needing a minting process’.
Worldpay is also exploring stablecoin payouts to consumers, which could open new opportunities for non-crypto-native merchants like Etsy and Airbnb. Many of these merchants have sellers and hosts globally, in regions where there is currency volatility or limited access to traditional banking.
As Web 3 continues to grow, stablecoins will grow with it, says Vincent Chok, founder of First Digital. While stablecoins were initially used primarily for crypto trading, their use cases have evolved. However, these use cases still vary by region. ‘In the US, many people use stablecoins to purchase crypto on exchanges. But in Asia, where many remain unbanked, the picture is different’, says Chok.
According to the World Bank’s 2021 Index, in countries like the Philippines and Indonesia, 1 in 2 adults don’t have a bank account. In these regions, the B2C market opportunity for stablecoins is significant, Chok adds. However, to succeed, providers need to overcome the challenge of KYC (Know Your Customer). ‘You need the infrastructure to collect and manage KYC and AML (Anti-Money Laundering) information for retail clients’, Chok explains. ‘Onboarding thousands of customers weekly is no easy task, which is why we emphasise working with the right partners.’
It’s been a long journey unpacking the role of stablecoins, their economic benefits, and the trends shaping 2025.
But this is just the beginning.
Over the coming months, The Paypers will dive deeper into the complex world of Web 3 payments, exploring topics such as DeFi, NFTs, regulation, tokenisation, smart contracts, identity verification, scams, cybersecurity, and consumer behaviour.
Stay tuned for more!
* ‘Asset-referenced tokens’ (ARTs): these are crypto-assets that are not electronic money tokens (see below) and that purport to maintain a stable value by referencing another value or right or a combination thereof, including one or more official currencies (fiat). Stablecoins in particular should be considered here.
**‘Electronic money token’ or ‘e-money token’ (EMTs): these are crypto-assets that purport to maintain a stable value by referencing the value of one official currency.
About Mirela Ciobanu
Mirela Ciobanu is Lead Editor at The Paypers, specialising in the Banking and Fintech domain. With a keen eye for industry trends, she is constantly on the lookout for the latest developments in digital assets, regtech, payment innovation, and fraud prevention. Mirela is particularly passionate about crypto, blockchain, DeFi, and fincrime investigations, and is a strong advocate for online data privacy and protection. As a skilled writer, Mirela strives to deliver accurate and informative insights to her readers, always in pursuit of the most compelling version of the truth. Connect with Mirela on LinkedIn or reach out via email at mirelac@thepaypers.com.
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