Value in the stablecoin infrastructure space will accrue to companies that can successfully drive down FX costs and drive up settlement speeds—broadening the strength of the rail for wider use cases. The key market unlocks are bank networks and liquidity.
We’ve talked for some time about the potential for digital assets to reshape and transform global financial services. Unlike the fragmented and often inefficient jigsaw of regional fiat monetary systems, digital asset rails can be natively global, permissionless, programmable, composable, and transparent. These characteristics unlock a 24/7/365 financial market, unbounded by time zones or borders.
This openness and portability has the potential to catalyze currency network effects of a different magnitude to traditional fiat systems. Programmability and transparency can streamline complex and inefficient manual processes of settlement and reconciliation. Collapsing required chains of intermediaries and reducing settlement times can release capital that would otherwise be trapped as collateral in the system, reducing risk and allowing for greater capital productivity.
Stablecoins will be at the heart of this new paradigm. They have quickly moved from crypto-native utility to fintech headline – not least since Stripe’s $1bn acquisition of Bridge – and a wider portion of the market has woken up to their potential as an unlock for this platform shift: combining the power of blockchain with the familiarity and price stability of fiat currencies.
An emerging inflection point
The value of issued stablecoins has swelled 70% in the past year to more than $230bn. Combined, Tether and Circle are now easily among the top twenty holders of US treasuries – above Germany, South Korea and Saudi Arabia. Visa estimates the value of on-chain stablecoin settlements to be more than $700bn a month.
An inflection point for mainstream adoption of stablecoins is now clearly on the horizon.
Maturing regulatory landscape: In the EU, MiCA has harmonized the legal framework for digital assets across the bloc and formally recognised reserve-backed stablecoins as e-money tokens. In the U.S., the GENIUS Act is moving through Congress, with the aim of providing clear oversight, reserve standards, and consumer protections for stablecoins.
Growing institutional adoption: Regulatory clarity is building the confidence needed for institutions to invest in the technology. PayPal launched PYUSD way back in 2023. Stripe spent $1bn in 2024 acquiring infrastructure platform Bridge last year to build capabilities in a technology they labelled “room temperature superconductors”. Asset management giants, BlackRock and Franklin Templeton, have put significant resources into the launch of stablecoin-like tokenised money-market funds on public blockchain networks, with Fidelity soon to follow.
Central bank support: Most major central banks are now clearly engaged in some form of CBDC initiative. Monetary policy makers are increasingly attuned to the potential risks and rewards of a more decentralised currency system, with the Trump administration now openly pledging to use stablecoins as means of advancing the U.S. dollar’s position as the global reserve currency status.
Scalable infrastructure: Technology advancements, such as Layer 2 scaling solutions, have drastically improved the speed and cost-efficiency of on-chain settlement. At the same time, the landscape of infrastructure providers continues to grow and mature, improving UX and lowering the barriers to entry for consumers and businesses alike.
All of this suggests that stablecoins won’t be a “crypto thing” for much longer. They’re set to become a more universal payment rail.
Growing stablecoin utility
So far, stablecoin adoption has grown most quickly where fiat systems are clearly broken, functioning well neither as a store of value, nor a mode of transfer. Emerging markets with volatile local currencies, remittances, high-risk verticals, and global payroll for freelancers have all been natural entry points in this first wave. We are seeing accelerating demand from enterprises and PSPs to support just use cases alone.
But moving forward, there is a massive opportunity for stablecoins to assume an important role in the much larger $150tn cross-border B2B payments market, if their potential to reduce costs and complexity in international trade and treasury management is unlocked. This market is still so often beset by multiple intermediaries, compliance and operations bottlenecks, and limited payment windows that create 2–5 business day settlement times and 4–6% effective transaction costs.
Of course, from a customer standpoint, the right payment rail is simply the one that optimizes accessibility, cost, speed, reliability, and complexity. For the time being, fiat-based payments are still in many cases a better solution. Fiat-based aggregators like Wise, Airwallex, Rapyd and Thunes have already gone some distance in disrupting correspondent banking networks. As they have scaled their liquidity networks, they have massively reduced effective transfer costs and settlement speeds for many currencies and corridors. They represent stiff competition.
Even at this stage, stablecoin-enabled cross-border payments providers are regularly outperforming on settlement speeds in more challenging corridors across Latam, Southeast Asia, MENA and Africa, and supporting weekend transfers.
But speed alone won’t be enough to drive wider adoption. For stablecoins to become a preferred rail on a wider variety of use cases, they must more clearly and more consistently outperform fiat-based solutions on each vector of accessibility, cost, speed, reliability, and complexity. They must also interoperate seamlessly with existing fiat systems. This is the opportunity and the challenge for infrastructure providers emerging in the space.
The infrastructure opportunity
The landscape of providers is certainly evolving at an astonishing rate. Today, categories are fluid and we see companies also vertically integrating to varying degrees either building in-house or through acquisition – for example, on/off-ramp provider MoonPay recently acquired orchestration platform, Iron.
At a very high level, this evolving landscape has been quickly lowering the barriers to entry for businesses and PSPs to take advantage of stablecoins and blockchain. They are starting to make stablecoins feel just like any other currency and payment, so that customers aren’t aware or thinking about whether a transaction happened to be fiat or stablecoin-enabled.
B2B payment infrastructure platforms in particular are emerging as a connective tissue: under the hood they are providing fiat and digital wallets, sourcing liquidity for FX through exchanges and broker partners, optimising on-chain transfers and settlements, connecting with local banks and fiat systems, providing control with compliance automation, risk monitoring and regulatory licenses. This end-to-end offering allows for fiat-to-fiat cross-border transactions through a ‘stablecoin sandwich’, that has dramatically improved accessibility and UX.
Remaining friction points
But there are a number of key friction points that remain clearly outstanding that this landscape of infrastructure providers needs to address to unlock a wider market.
Perhaps the most pressing is shallow liquidity when on and off-ramping from stablecoins to multiple fiat currencies. Today, liquidity is typically sourced from regional CEX and OTC desks, but is severely lacking in depth in the long-tail of markets. This significantly drives up costs, settlement times and places an upper limit on volumes that can be moved – anything more than $1m a day in most corridors is still extremely challenging. The effect is that the costs to a customer of transferring via stablecoins are typically no less than they would be using either fiat aggregators or SWIFT – they may even be more expensive.
Secondly, offboarding to fiat remains slow today because the fiat leg of the stablecoin sandwich remains a bottleneck. The last mile of the payment still remains reliant on local fiat systems, and transfers between banks even in the same region can cause settlement delays, particularly outside business hours.
Solving liquidity and this last mile challenge will rely on wider bank participation in the stablecoin ecosystem, which in turn requires continued progress on regulatory frameworks that make participating in the market more appealing to traditional financial providers. The US in particular, home to the world’s deepest capital markets, remains a critical piece of the puzzle.
And finally, further progress is needed to develop scalable risk and compliance systems to support a market that is transacting on new rails, with a different data structure, and that trades 24/7/365 with vastly reduced settlement speeds.
What we’re looking for
We’re convinced that there will be a number of significant businesses emerging out of this landscape of infrastructure providers in the coming years.
Over the past few months, we’ve spoken to a range of enterprises, payment processors and financial software providers that are all ramping up engagement and activities with the emerging landscape of providers, and view it as a key growth initiative in the next 24 months. When picking the right partners, a few attributes were considered table stakes: alignment with their regulatory operating model (requiring both breadth as well as favouring licences in tier one jurisdictions), deep cross-border payments expertise, strong compliance operations and risk monitoring, and a respected and trusted brand.
But the biggest winners will start to unpick some of the remaining challenges around liquidity and offboarding to substantially drive down FX costs, supercharge settlement speeds, and multiply the number use cases stablecoins can effectively address.
This will require differentiation on a two major fronts:
Sourcing and managing liquidity: we expect to see best-in-class providers differentiate not only in their network of integrated and accessible exchanges and OTC brokers, but in the scalability and efficiency of their treasury operations. We’re interested to see whether companies can build differentiated and proprietary sources of liquidity, using network and scale to drive FX internalisation; and whether providers can differentiate on prefunding strategies such as liquidity pools, effectively harnessing and incentivising the increased supply of liquidity from traditional FX markets.
Banking networks and local payment connectivity: providers will clearly stand out in their ability to to effectively collect and disburse on local fiat rails. A deep network of bank partners within and across regions is vital to delivering this, and has been particularly challenging historically for crypto-associated players to build. Stablecoin utility is dependent on its interoperability with different fiat markets, and banking links are a critical condition for growth.
The prize
We see B2B cross-border payments as the most obvious initial prize – stablecoins can be a 10x better product that could drive down the cost of transfers by more than 80%.
But the companies building this infrastructure are not just enabling a new payment method. They’re laying the foundations for a new global financial operating system.
In time, these companies will have an opportunity to power the future of money movement, full stop.
If you’re building in this market, we’d love to hear from you.
