Stablecoins to streamline Cross Border Payments

A stablecoin for currency is a token that can be used alongside the parent currency reflecting the market price at that instant. The historic volatility is known, and the price can be verified publicly. 

Earlier attempts to use crypto currencies fell afoul of Herstatt Risk . The fait currency had not left the sender’s bank before the amount transferred at the receiver’s bank had been moved. In addition, the crypto currency’s own volatility could add 10% to exchange cost. Stablecoins are valued one to one to their parent. For example, Tether (USDT) and USD Coin (USDC), both pegged to the US dollar on a 1 to 1 basis.

Up to now US stablecoins are regulated by individual states, for example New York applies its existing virtual currency regulations to stablecoins rather than treating them as a separate asset class. On June 17, 2025, the U.S. Senate passed the “Guiding and Establishing National Innovation for U.S. Stablecoins Act” or “GENIUS Act.” The legislation would limit the issuance of payment stablecoins in the United States to “permitted payment stablecoin issuers” (“PPSIs”) and qualifying foreign issuers. A foreign issuer would be permitted to offer and sell stablecoins becoming subject to OCC supervision, among other things.

UK’s regulator FCA working with the Bank of England has published proposals for issuing stablecoins, crypto custody and financial resilience of crypto-asset firms, to provide a safe, competitive sector. Final regulations expected in 2026.

Market Size

Value of cross-border payments is estimated to reach a minimum $ 250 trillion by 2027.

• Global non-cash commercial payments will grow at a CAGR of 11.3% between 2022 and 2027 Asia Pacific region leading the growth at 14.6%
• 60% of corporate banks agree that cross-border real-time payments infrastructure brings a revenue opportunity.
• 42% Global cross-border e-commerce is to reach USD 3.4 trillion in 2028 with Asia Pacific merging as the largest market at 40%.

• 56% of commercial clients are taking international/cross-border B2B payment services from fintechs.

Reduce the cost of cross border payments by:

The arrival of regulated stablecoins would simplify:

• Reducing the 4 correspondent banks payment networks, serviced largely by SWIFT, to 2 either of which may not be a bank
• Reduce regulatory friction as the stablecoin has a main regulator

Use of ISO 20022 additional information would reduce failures or delays:

• Existing information practises:

• • Inaccurate bank beneficiary name and address details:      21%   
    • Non IBAN account numbers:                                          15%
    • Inaccurate bank name/Swift BIC:                                   15%

• Improving the quality of payment information and reduce and failures in: 
  • Asia Pacific to North America:                                      49%
  • Middle East to Asia Pacific:                                          47%
  • Africa to Asia Pacific:                                                  39%

The average cost of cross border payments transaction is $15 to $25 plus an FX fee of 1 to 3%. With stablecoin and the underlying competing technology the total cost can become significant less. The key, though, is the cost of using blockchain networks, for example gas fees, can vary based on volume and network capacity, like electricity charges.

The appeal of stablecoins is it is tied to something that is universally accepted, for example the USD and the British Pound. The underlying technology has matured so payments can flow at any time, anywhere. The Central Banks are working on regulations that protect the users of stablecoins for their currencies. 

Stablecoins, with regulations, are a major step forward from the unregulated crypto coin fraud fiascos of the last few years. This is evidenced by major banks and Card Companies beginning to offer stablecoins. Stablecoins will also help institutions better manage their currency exposures worldwide while providing instant and final settlement.