Stablecoins are simply the better version of the current financial system
Stablecoins have found product-market fit and are becoming an integral part of both the cryptocurrency ecosystem and the legacy global financial system. In less than a decade, they have evolved into a key financial instrument, with USD-pegged stablecoins collectively ranking among the top 20 holders of U.S. Treasury debt—surpassing several sovereign entities, including Germany, in their U.S. bond holdings.
Within the crypto ecosystem, stablecoins now account for approximately 32% of active on-chain usage, placing them among the most widely used digital assets. Their utility extends beyond the digital asset sphere; as of 2023, stablecoins facilitate an estimated 30% of global remittance transactions, highlighting their growing role in cross-border payments.
On-chain transaction data further underscores their adoption. In the second quarter of 2024, stablecoins processed $8.5 trillion across approximately 1.1 billion transactions—more than double Visa’s $3.9 trillion transaction volume during the same period.
What Are Stablecoins?
Stablecoins are digital currencies pegged to a stable asset, such as the U.S. dollar. They can be categorized based on what underpins their value peg. The dominant category—accounting for over 90% of the stablecoin market—is fiat-backed stablecoins.
Fiat-backed stablecoins are backed 1:1 by fiat currency reserves (e.g., U.S. dollars) held in bank accounts or liquid assets such as short-term government bonds. For every stablecoin issued, an equivalent amount of USD is kept in reserve by the issuer. These models rely on centralized custodians, such as banks, to hold the actual dollars or treasuries backing the stablecoins.
The largest stablecoin issuers today are Tether (USDT) and Circle (USDC), which together dominate the market and continue to drive mainstream adoption.
Why are stablecoins an attractive financial proposition? Speed and fees.
| Payment Type | Transaction Fee | Time to Settle | Notes |
| Credit Card Payment | 2-3% + $0.30 | Instant to Merchant | High fees for Merchant. Chargeback risk. |
| International Wire Transfer | $30 – $50 | 1-5 Business Days | High fees, exchange rate markups. |
| Remittance Service | 6.65% (for $200) | Minutes to Days | Varies by service and destination country. |
| Stablecoin Transfer | <$0.01 | Seconds to Minutes | Global availability, minimal fees. |
Let’s illustrate a few real world examples of why the current systems are archaic
Wire Transfer – The average international wire costs ~$44 and can take 3–5 days.
Traditional B2B international payments involve multiple intermediaries, leading to high costs and long settlement times. A payment from a garment manufacturer in Mexico to a textile manufacturer in Vietnam must pass through local banks and multiple correspondent banks, often requiring currency conversion (MXN → USD → VND). This process takes 3-7 days and incurs fees ranging from $14 to $150 per $1,000, significantly increasing transaction costs for businesses. Stablecoin settlements are direct, immediate and at a fraction of the cost.
It is simply the better version of the current financial system. This argument especially applies to small businesses and migrant workers. Recent advances have drastically reduced stablecoin transaction costs from about $5 to less than a tenth of a cent, presenting a compelling market opportunity for small, margin-sensitive businesses such as corner stores, restaurants, and coffee shops. For example, a coffee shop operating on a 2% margin could potentially double its profitability by switching from traditional payment methods—where a $1.50 coffee might incur a fee of roughly $0.30 plus an additional 2% charge—to a system build around stablecoins that charges negligible fees. Traditional payment providers charge without adding significant value, by adopting stablecoins, businesses can recover those lost margins directly, effectively enhancing their bottom line and transforming their overall profitability.
Stablecoins power 32% of on-chain transactions, making them a dominant digital asset
Remittances represent an $800 billion market, with approximately 200 million migrant workers sending money back home to support around 800 million family members worldwide. These financial flows are a critical lifeline, often used for essential expenses such as food, housing, healthcare, and education. However, the remittance process remains costly and inefficient. On average, every transaction incurs a fee of around 6% or more, meaning that for every $200 sent, roughly $12 is lost to intermediaries. In some corridors, particularly those serving low-income regions, fees can exceed 10%, significantly reducing the amount received by families in need. Stablecoins offer a direct, low-cost alternative by enabling instant, peer-to-peer transfers without intermediaries and can automatically be converted into local currency.
Financial exclusion remains a significant challenge, with 1.4 billion people globally lacking a bank account. However, the vast majority of these individuals own a smartphone. By utilizing digital wallets and stablecoins, the unbanked population can gain direct access to the global financial system, bypassing the limitations of traditional banking. With a universally accepted, stable digital currency stored on their phones.
The next frontier? Yield-Bearing Stablecoins
Fiat-backed yield bearing stablecoins represent a pioneering evolution in the digital currency landscape. Unlike traditional stablecoins that merely preserve value, these innovative instruments generate yield by leveraging the dollars held in custody. The underlying funds are strategically invested in low-risk, yield-generating assets such as treasury bills, money market funds, and bonds, effectively mirroring the returns typically associated with traditional bank deposits.
Stablecoins slash remittance costs, putting more money into the hands of families
Traditional intermediaries—namely, banks—might become obsolete in this equation. Users can access a globally accepted stable currency, traded with low to no fees, that earns yields comparable to those from a bank deposit—all while residing in their own digital wallets. Yet, for this paradigm shift to succeed, strict regulation is essential to safeguard liquidity and protect investors.
Real World Asset Tokenization
HSBC projects that tokenized assets—including sectors such as real estate, commodities, and public equities—could unlock approximately $16 trillion in capital by 2030, BCG estimates it will reach $24 trillion within the same time frame. Tokenized real-world assets within the blockchain ecosystem can only be transacted using a blockchain-based payment system making stablecoins the ideal solution for transacting within this new ecosystem, as the ecosystem grows does the demand and supply of stablecoins.
US – Dollar Dominance
Stablecoins, with over 90% of which are denominated in US dollars, are inherently reinforcing the dollar’s dominance within the rapidly evolving blockchain based financial ecosystem. As stablecoins become the preferred medium for transactions, tokenized asset trade, and decentralized finance applications, they effectively anchor the digital finance ecosystem to the world’s primary reserve currency. This alignment localizes much of the emerging blockchain based economy within the United States’ monetary system, ensuring that the dollar’s influence extends beyond traditional markets into the future of digital finance. Geopolitically, this phenomenon positions the United States at the helm of the blockchain-based financial system, solidifying its control over digital liquidity, regulatory frameworks, and financial infrastructure on a global scale.