Can stablecoins avoid the same disjointed fate as traditional payments? Yes–here’s how.

Stablecoins are exploding in both popularity and practicality–launching a new era of fast cross-border payments and seamless transactions. 

Advancements such as the American GENIUS Act have placed a helpful regulatory framework around the digital currency, improving not only the safety of launching stablecoins, but the safety for end users. 

And yet, as more companies roll out stablecoins, they’re sending themselves straight into closed-loop, fragmented networks. These fragmented networks are very similar to the traditional payments networks today. Just like someone using Zelle cannot send money to their peer who uses Venmo, the stablecoins companies leverage for closed-loop internal treasury functions cannot interact with external stablecoins–like the PayPal USD. 

Most companies are not thinking with a long-term interoperability mindset from the start of their stablecoin initiatives. In this sense, interoperability means the ability for different stablecoins to transact with one another–regardless of their issuer, blockchain or other identifying factor.

As a result, companies, financial institutions and any other planned issuers of the currency are forced to broker one-off partnerships that allow them to incrementally build out a network that allows the money to flow seamlessly between both issuers and receivers.

This means stablecoins are at risk of falling victim to the same fate as traditional payments: disjointed and siloed webs of financial connections that complicate transactions. But it doesn’t need to be this way. 

Now is the perfect time for companies to get ahead of stablecoin silos and tap into interoperability. This means thinking about how the coin can, and will, interact with every other stablecoin and fiat currency across the world.

To fully achieve the fast and low-cost cross-border payment vision that many have for stablecoins, organizations will need to ensure they can be transacted seamlessly anywhere in the world–bringing the payment method mainstream in a way that actually rivals leading payment methods like debit and credit cards today. 

Interoperability is essential to global stablecoin adoption.

New currencies and forms of payment can only achieve significant usage if two statements ring true: the payment method is widely accepted by businesses and it can be easily transacted with other forms of payment. 

To achieve these two components, though, interoperability is essential. 

The most significant value proposition for stablecoins is their promise to bring seamless, cheap cross-border payments, which unlocks new possibilities for the global economy. Further, if stablecoins are fully interoperable, then everyone, everywhere can use them as a form of payment. 

This has benefits across the board: for businesses, consumers and countries as a whole.

For businesses, interoperable stablecoins could extend their total addressable market anywhere in the world–without needing to build integrations that support payments in every single payment method. With these advancements, they could also source and pay talent anywhere, anytime seamlessly. Additionally, these payments would happen in near real time, allowing the business to see their true account balance at all times rather than waiting days for settlement. 

Consumers could also use interoperable stablecoins to support businesses of any size, wherever they’d like. For example, if someone in the US wanted to purchase handmade goods from another country, they could do so cheaply and in a matter of seconds. Or, individuals would be able to send and receive money between their friends and family easily, regardless of what bank or digital payments apps they use. 

The unimpeded flow of money will also benefit nations as a whole. In countries like India, where payment system interoperability is already regulated and required–leading to widespread financial connectivity–their economy has seen significant increases in GDP as a result. It’s possible that by replicating this level of interoperability, other nations' GDPs will face similar gains as well.

How to make stablecoins interoperable. 

Many companies are launching their stablecoin initiatives in closed-loop systems where no external parties can access or transact with them. Even when launched on the blockchain, these networks are inherently not interoperable, and greatly limit the potential of each currency.

To achieve widespread interoperability–and avoid unnecessary complications–stablecoin issuers will need to adopt and follow globally accepted open payments standards. These standards must be widely agreed-upon, easy to use, and able to be integrated right from the start.

For example, a similar framework to the internet today can be used as a baseline, providing a straightforward roadmap for connections that will ensure that different stablecoins can interact with each other, as well as all fiat currencies. 

Furthermore, once there’s a cohesive set of standards for interoperability, it must be adopted at the inception of each stablecoin. It’s far more costly and time-consuming to recalibrate the currency around an interoperable network once it’s already finalized and released, so by doing this from the start, issuers can save significant resources.

Once every stablecoin becomes interoperable, it will be much easier to work on expanding access to digital currency, ensuring both widespread usage and mainstream adoption.

Fostering a future where stablecoins are interoperable and power a thriving global economy is an enormous task. And yet, with the innovation visible behind the thousands of stablecoin projects, it’s clear that the willpower and creativity to achieve this already exists.