Are Stablecoins ushering in a new era for digital payments?

Once considered a niche part of the crypto ecosystem, stablecoins are rapidly emerging as a foundational element of the global financial system, with payments being hailed as their “killer app”. Stablecoins enable the digital transfer of value without the price volatility of other cryptocurrencies, offering the speed of the internet with the price stability of a fiat currency like the U.S. Dollar or Euro. This unique combination is driving significant growth and attracting attention from major financial players.

Momentum in the stablecoin market is undeniable. Total stablecoin transaction volume in 2024 was over US$5 trillion, which, for perspective, is about a third of Visa’s total payments volume for the same year (US$16 trillion). The last twelve months of transaction volume exceeded US$6.6 trillion, representing a greater than 60% year-on-year increase. This growth is fueled by a number of use cases, from peer-to-peer (P2P) remittances to business-to-business (B2B) payments and treasury management, according to a new report by Financial Technology (FT) Partners, a fintech-focused investment bank.

Unlike traditional banking systems and payment rails like SWIFT, stablecoin-based payment networks bypass slow routing and settlement processes. This enables real-time payments with significantly lower transaction costs, often more than 50% less than traditional rails. For consumers, especially in emerging markets, stablecoins can also help protect against high inflation and currency fluctuations^.

The stablecoin ecosystem is becoming more complex and layered, similar to the evolution of credit card and stock trading infrastructure. A diverse set of infrastructure providers are emerging to cater to different use cases for consumers, businesses, and investors.

Recent market developments highlight the growing acceptance and institutional interest in stablecoins:

• Acquisitions and Partnerships: In October 2024, Stripe acquired Bridge, a stablecoin orchestration platform, for US$1.1 billion. This was one of the largest M&A deals in the crypto industry and demonstrated Stripe’s belief that stablecoin payments will be a significant value driver for its business. Shortly before the acquisition, Stripe launched a “Pay with Crypto” feature, allowing merchants to accept stablecoins with a 1.5% transaction fee. Other major players are also getting involved; Visa announced a card-issuing product with Bridge, and Mastercard has announced capabilities to power stablecoin transactions.
• Company Initiatives: PayPal’s subsidiary Xoom began enabling clients to settle cross-border payments with its stablecoin, PYUSD. Circle announced plans for its own real-time cross-border payments network. Meta is also reportedly considering using stablecoins for payouts.

Regulatory Progress and Remaining Challenges

Favorable regulatory developments are further boosting the sector. The European Union has approved several companies to issue stablecoins under its Markets in Crypto Assets (MiCA) regulation, which provides a clearer framework for the industry. In the U.S., bipartisan stablecoin legislation was introduced to the Senate Banking Committee in February 2025, signaling increased optimism for a resolution to regulatory uncertainty^.

Despite the positive momentum, challenges remain. Regulatory inconsistencies across jurisdictions can be a hurdle for issuers. There are also risks, such as the potential for a stablecoin to “de-peg” from its underlying asset, as famously occurred with TerraUSD in May 2022. However, as the ecosystem matures and compliance measures improve, these risks are expected to decline.

The data and recent market activities make a compelling case that stablecoins are poised to transform the global payments landscape. With their ability to offer faster, cheaper, and more accessible transactions, stablecoins present a formidable alternative to traditional financial rails. As more companies and governments explore their own stablecoin projects and regulatory clarity improves, the potential for stablecoins to become a foundational element of the global financial system appears increasingly likely.