Stablecoins are redefining how money moves

People talk about stablecoins all the time these days, and no wonder; their market cap just reached $200B, there is a new administration in the US discussing three(!) stablecoin bills, the Markets in Crypto-Assets (MiCA) regulation was rolled out in the EU last year, making it one of the first major jurisdictions to put into effect a clear, unified crypto framework; and payments companies, banks, and fintechs are publicly expressing their interest in integrating crypto into their offerings (or as we say, finally joining our camp).

However, the one thing that sticks out more than anything in my conversations with customers is where the true value of using stablecoins lies. One might think the true value is the cost (spoiler: it’s not really cheaper, not most of the time at least) or the transparency (there are other transparent methods out there). So, let me make the case for what I believe (and witness) is the true benefit: the velocity. 

Let’s break this down, starting with the basics.

More capital roundtrips = more profit

Most, if not all, businesses are limited by their balance sheets to conduct their day-to-day business routines. This is especially true for payment companies, obviously, as they are dependent on their balance sheet to fund and pre-fund their partners or accounts globally. When we add the banking rails into this equation, it adds a level of difficulty, as the operating hours are challenging, and FX can sometimes make costs less predictable. 

Take, for example, a B2B payments company; it can only serve its clients for international transfers up until it reaches the limitation of its capital (or margin/loans it received from various venues). So, in effect, given a certain amount of capital, that PSP can only process a certain number of “roundtrips” using its available funds. The equation is simple: the more roundtrips you get for your capital, the more profit you make for your business. 

If you think that’s a niche market, think again. Global B2B payments are on track to hit $124 trillion by 2028, up from $89 trillion in 2024. Right now, only 17% of these cross-border payments are instant. But that’s predicted to climb to 42% – about $16 trillion in rapid transactions. Businesses that fail to optimize for velocity will lose out.

The multiplier: Stablecoins

Enter Stablecoins. Unlike traditional banking rails, where payments can take days to clear, the speed of stablecoins is like nothing we’ve seen before in our industry. The average transaction takes about 10 seconds, and with the right banking partners, the entire end-to-end flow can be completed in less than 5 minutes. And while it’s true that PIX, SPEI, and other faster payment rails allow for equivalent domestic settlements, they are not as interoperable as stablecoins, which can “travel” across borders. 

A tangent: why your flow might not be flowing

Now, I do get one question a lot, so perhaps a quick detour—what does the “entire flow” or “right banking partner” mean? Current stablecoin flows are mostly used for cross-border transfers, and they usually either start or end with fiat, or both (or, as I called them in the past: “Stablecoin Sandwich” flows). Hence, they require reliable on/off-ramps; this will probably change in the future when banks will enable businesses to have a stablecoin balance next to their fiat balance (already happening in some countries), or all fiat converts to digital assets. But, only so much one president can do in one term. I think. 

When creating those flows, to truly benefit from stablecoins, one must make sure their banking partners are either connected to real-time payment rails (e.g., SPEI, PIX, Zelle, FedNow, etc.) or are also banking on-ramp providers (e.g., Bridge, ZeroHash, AlfredPay, YellowCard, Paxos, Bitso, or other exchanges) to allow 24/7 book transfers and on-ramping. 

The bottom line

Back from the detour – when PSPs check the boxes above and build their flow to leverage stablecoins, they can achieve more roundtrips, and generate more revenue. At the end of the day, this isn’t (just) about the fees, the speed of a single transfer, or the transparency. It’s about driving more velocity to your cash flow using stablecoins. The businesses that understand this and build for it will lead the next evolution of payments. And those who don’t… Well.. every industry must have its own Kodak. 

But don’t take it from me, hear from Kirill Gertman, Founder and CEO of Conduit, at our last SPARK conference!