Summary

Winners:

• Card Networks (Mostly Insulated): Their core business as ubiquitous real-time messaging networks for authorization and value-added services is largely unaffected. They are the top on=ramp (Visa Direct) and the top off-ramp (linked card). Networks will expand services to support issuer demand for stablecoin settlement and services. Within OECD 20 markets, there is no merchant demand for stablecoin in eCommerce.  
• Emerging Markets: Stablecoins provide crucial financial access, inflation hedging, and efficient remittances where traditional banking is broken or local currencies are unstable, especially in Africa.  
• Edge and Non-Card UCs. Low value payments, remittances, … 
• Corporate Treasury and Treasury Platforms: Fortune 100 enterprises gain significant efficiencies in cash management through real-time liquidity, reduced costs, and enhanced transparency.  
• Dollarization – US Treasury: The growth of USD-pegged stablecoins, driven by regulations like the Genius Act, creates substantial demand for US Treasuries, reinforcing dollar dominance. Tether is already a top buyer.  
• Existing Banks: Despite some fee pressure, banks are adapting by integrating stablecoins into their services, leveraging their customer relationships and regulatory expertise to remain central players.  
• Fintech Enablers (Stripe, Shopify): These platforms expand their global reach by making stablecoin acceptance and payouts easier for merchants, particularly in cross-border commerce.  
• KYC/AML Service Providers: Increased regulatory clarity and stablecoin adoption drive demand for robust identity verification and anti-money laundering services.
• Wallets/Consumer Champion? PayPal? Enabling wallets in non-carded markets and a new model in eCom and POS (this is Stripe Privy).
  

Likely Losers:

• A2A and PayByBank Platforms. Creating a perfect tsunami w/ death of 1033.  
• Bank Fee Revenue: Stablecoins’ transparency and speed will likely reduce some traditional bank fee income, especially in cross-border payments.  
• Real-Time Payment (RTP) Networks: After years of development, RTPs may find their technology bypassed by more agile, blockchain-native stablecoin solutions for instant settlement.  

Stablecoin Winners and Losers 

I’m a bit of a contrarian when it comes to stablecoins. While the crypto world buzzes with talk of revolution, I see a more nuanced picture – one where the real impact is less about wholesale displacement and more about targeted evolution. My core belief is that stablecoins are a powerful settlement innovation, not a direct competitor to the established functions of card networks or traditional banks. They simply don’t offer the same suite of services, possess ubiquitous reach, or share the economic incentives that drive investment in existing payment rails. The narrative needs to shift from “stablecoins will replace everything” to “stablecoins will optimize specific inefficiencies.”

My view is that Stablecoins are primarily a settlement innovation. Think of it like everyone having an account at the same bank. Transfers within that bank might be lightning-fast, but the moment you step outside, the friction reappears. This isn’t a more efficient network than cards because it doesn’t provide the same function. Card networks are real-time messaging systems that facilitate credit, disputes, and rewards (functions stablecoins don’t offer). They don’t move money; they allow banks to message each other to authorize it. It is up to Member banks to determine HOW they want to settle.

The European Central Bank’s “Stablecoins’ role in crypto and beyond” report highlights that stablecoins, despite their rapid growth, “fall short of what is required of practical means of payment in the real economy”. It points to critical limitations such as transaction speeds on Ethereum (not “near-instant or real-time” for point-of-sale or e-commerce use). The report also notes that transaction costs for stablecoins do not consistently offer an advantage over traditional payment schemes, stablecoin issuers can constrain redemption possibilities (ie once per week), may have transfer fees (ie TOken 2022)  and do not always guarantee redemption at par value.

These shortcomings seem to undermine any claim of stablecoins being a “more efficient network” than cards for general payments. While stablecoins offer fast, low-cost settlement for specific use cases, they lack the full-service functionality (like credit, rewards, and robust dispute resolution) and guaranteed real-time, at-par redemption needed for ubiquitous retail payments. 

 

Friction Relocated, Not Eliminated

The idea that stablecoins magically remove all payment friction is naive. It simply shifts. The “on/off ramps” (convert fiat to stablecoin and back) remain significant points of friction, cost, and regulatory complexity. If the whole world was on a single stablecoin, things might be great, and banking could be remade. But that’s not going to happen. Transferring value must consider the needs and preferences of both originator and beneficiary, as we all know change to current behavior (and systems) has a cost.

As a16z crypto’s article on “How stablecoins become money” explains, the history of U.S. banking is, in part, the history of creating and improving systems to ensure dollar fungibility. Stablecoins currently “do not function with this ‘singleness’ because they are poorly integrated into existing infrastructure”. This means large transactions on automated market makers (AMMs) can result in “slippage,” where users receive less than a 1:1 conversion. While some issuers offer direct redemption services, these are often limited to institutional clients or require minimum transaction sizes, making them “not universally accessible”. The Bank for International Settlements (BIS) further elaborates that stablecoins fail the “singleness” test because they are liabilities of specific issuers, akin to private banknotes from the 19th-century Free Banking era, and can therefore trade at varying exchange rates depending on the issuer’s creditworthiness.

Without seamless, guaranteed 1:1 conversion between stablecoins and fiat, potential transfer fees (Token 2022) and even between different stablecoins, the friction of on/off ramps persists. This is not merely a technical hurdle; it is a fundamental challenge for stablecoins to achieve true monetary status. The historical analogy provided by the BIS underscores that a fragmented “money” system is inherently less efficient and stable, making the vision of a single, global stablecoin a highly improbable pipe dream. The friction doesn’t disappear; it simply moves to these conversion points, adding complexity and cost that undermine the promise of a truly frictionless system.

Merchant Survey – No Interest in Stables

I just completed a merchant survey, and let me tell you, the CMOs in OECD 20 markets aren’t jumping for joy concerning agentic, or loosing sleep about accepting stablecoins. The prevailing sentiment is clear: “Optionality does not improve conversion rates and none of my customers in the US or Europe are asking for stablecoin.” This is a stark reality check for payment geeks who love pay-by-bank or stablecoin. US/EU Merchants care about conversion, not cutting-edge tech their customers aren’t demanding.

While it is true that more countries are adopting stablecoin laws, and this regulatory clarity might theoretically “propel stablecoins as a regular medium of exchange”, and there is a potential for merchant costs to be lower than credit cards, this does not directly translate to widespread adoption in mature economies. Experts peg the merchant’s cost for accepting stablecoins at parity to debit card costs. In US eCommerce, credit cards make up 70% of transaction volume. Merchant laugh at the idea that they can convince consumers to move toward debit.. No less stablecoin.

Not that there is a significant disconnect between regulatory progress and theoretical cost benefits versus actual market pull in mature economies. Regulatory clarity and lower transaction costs alone are insufficient to drive widespread merchant adoption where existing payment methods are deeply entrenched and consumer demand for alternatives is absent. For example ApplePay and ShopPay are the most loved consumer payment methods. Neither enable stablecoin today. In my view if the card networks and banks are smart they will EXPAND the Apple 15 bps fee to create economics for other wallets.. As shared economics enforce the value of the shared investment in the network. 

Merchants prioritize conversion rates, and if customers are not actively asking for stablecoins, adding another payment option simply introduces complexity without a clear benefit to their bottom line. This highlights that the “winners” in the stablecoin space aren’t necessarily those who offer the “cheapest” or “fastest” tech, but those who address existing, felt needs or can overcome ingrained consumer behaviors, which stablecoins largely fail to do in OECD retail environments.

Stablecoins Opportunity – Filling the Voids

1. Emerging Markets
2. B2B / Treasury
3. Dollarization
4. Broken Banking – Cross Border and Remittance
5. Wallets/Consumer Champion?

Emerging Markets

Where do stablecoins win? where banks don’t play, where they perform poorly, where local financial services are broken, or where local fiat and monetary systems are unstable. Africa is a prime example. Remittance is the fastest area of growth for stablecoins, with Africa as the primary market.

“Africa’s Stablecoins Explosion: Regulators Race to Keep Up” confirms Africa as a global leader in stablecoin adoption, driven by practical, day-to-day transaction needs: hedging against inflation, reducing friction in international cash transfers, avoiding cash AND avoiding local banks. Businesses and institutions are also incorporating digital assets into their operations, allowing more customers to make payments with digital assets instead of local currency, leading to accelerated financial access and reduced remittance fees. The Yellow Card report cited in the snippet reveals that Africa leads worldwide stablecoin adoption at 9.3%, with an estimated 54 million digital asset customers, and Nigeria ranking first globally for stablecoin adoption with 25.9 million customers.

Stablecoins are a disruptive force of financial inclusion in these emerging markets, providing a vital alternative where traditional banking systems are inefficient or local currencies are unstable. The regulatory adaptation seen in Africa, with authorities reversing previous bans, establishing sandboxes, and issuing draft legislation, further underscores a proactive environment fostering this growth, unlike the slower consumer adoption in more developed economies. The adoption in these regions is driven by a fundamental need for financial stability and access, positioning stablecoins as tools for economic empowerment and resilience for populations facing severe financial challenges.

Corporate Treasury: Unlocking Efficiency for the Fortune 100

I covered this last week in B2B Payments, Cards, RTP and Coin. While retail adoption in OECD countries lags, large enterprises are quietly reaping benefits. Fortune 100 companies with strong supply chain control will benefit significantly from treasury and cash management efficiency gains. Stablecoins offer real-time liquidity management, enabling 24/7/365 fund transfers, minimizing the need for pre-funding accounts, and providing greater flexibility in reacting to liquidity needs or market conditions. They also reduce costs by removing intermediaries and traditional international wire transfers, sending funds directly to the receiver’s digital wallet. Treasury platforms can leverage Stablecoins programmabilty to automate treasury functions, supply chain finance, and international trade settlements.

The benefits for corporate treasury are largely back-office efficiencies and cost savings, which are less dependent on consumer-facing behavior and more on internal financial operations. Companies can establish reserve accounts denominated in stablecoins to mitigate issues like bank decay and the need to shift capital locally. Adoption here is driven by a clear ROI driven by OPEX as stablecoins improve internal financial plumbing.

Dollarization

An under-reported aspect of the Genius Act and the US Treasury’s strategy: driving demand for Treasuries. US Treasury Secretary Scott Bessent estimates that we will see over $2 trillion of USD stablecoin by 2026.8 This isn’t just a number; it’s a strategic play.

Tether, the issuer of USDT, is already a behemoth in this space. Paolo (Tether CEO) outlined that they are the seventh largest buyer of US Treasuries in 2024, with $33.1 billion in holdings, surpassing several nations, including Canada, Mexico, and Germany. Tether reported an annual profit of around $13 billion in 2024, largely driven by returns from these Treasury investments, all managed by roughly 100 employees, serving over 400 million consumers worldwide. This performance is far above my expectations, demonstrating an impressive EBIT of $13 billion on approximately $145 billion in reserves.

The Genius Act, which passed the Senate with bipartisan support, mandates that stablecoin issuers back their coins 1:1 with eligible assets, including U.S. dollars and short-term Treasury bills (with maturities not exceeding 3 months). Citigroup forecasts that stablecoin issuers will drive $1 trillion of net new purchases of U.S. Treasury bills by 2030, accumulating $1.2 trillion of US federal debt.  This surging demand could pressure yields, reducing the government’s borrowing costs. However, experts warn that this stablecoin concentration could potentially weaken the Federal Reserve’s influence over interest rates.

The growth of USD-pegged stablecoins, particularly under the regulatory framework of the GENIUS Act, creates a powerful, self-reinforcing demand mechanism for US Treasuries. This is a strategic advantage for the US in managing its national debt and maintaining dollar dominance, effectively turning a “crypto innovation” into a significant fiscal and geopolitical tool. The “dollarization globally” aspect is not just about facilitating payments, but about channeling capital flows into US debt, thereby reinforcing the dollar’s global reserve status. 

This is a sophisticated fiscal and geopolitical play. Italy’s Minister of Economy and Finance, Giancarlo Giorgetti, has already expressed significant concern regarding the appeal of US stablecoins to Europeans, viewing it as a greater threat than traditional trade tariffs, as they enable users to invest in a widely accepted method for cross-border payments without opening a US bank account. This highlights the international recognition of the dollarization effect.

Winners and Losers

Banks: Fee Pressure, But Ultimate Winners

Stablecoins will undoubtedly force more transparency in transaction costs and drive speed, which will impair some traditional bank fee revenue, particularly in cross-border payments. I disagree completely with Deloitte’s suggestion that stablecoins could “disintermediate” the financial system by bypassing traditional rails, giving an advantage to fintechs and allowing users to “avoid the bank rail entirely” for certain transactions. In my view banks are likely to be successful with their own stablecoin and treat it as “just another rail” within their payment hub. 

Bank power and influence should not be under estimated. Not only do they hold the current customer relationships, regulatory expertise, and bank charter, they are powerful force for education (ie what are stablecoins to be used for and why).  We’re already seeing this. Beyond the US, banks like Societe Generale, Deutsche Bank, and Banco Santander in Europe, and MUFG, SMBC, and Mizuho in Japan, are also actively engaging with stablecoins, launching their own, or exploring consortiums.  

Banks are also well placed to make stablecoin “invisible” to consumers and businesses as they provide a stablecoin sweep function that instantly provisions stablecoins when needed and sweep them back into interest-bearing, insured accounts when not. This leverages their core strengths, allowing them to integrate stablecoin functionality into existing online banking and treasury services

While stablecoins exert downward pressure on traditional bank fee revenue, a move to stablecoin positions them to as winners in the evolving digital asset landscape by absorbing the innovation rather than being displaced by it. The “loss” in fee revenue may be a tactical hit for banks, but by co-opting the stablecoin innovation and integrating it into their regulated, trusted infrastructure, banks are ensuring their continued relevance and dominance in the digital financial ecosystem. 

Real-Time Payment Networks: A Tech Bypass?

After 15 years of effort, Real-Time Payment (RTP) networks might find their tech has passed them by as the intersection of RTP and stablecoins is increasingly unclear. The GENIUS Act clarifies the legal classification of stablecoins as payment instruments rather than securities, and explicitly states they should not be treated as liabilities, especially when held in custody. But banks can “sweep them” into liability accounts (upon direction from holder). 

Stablecoins’ blockchain-native architecture and rapidly clarifying regulatory environment may prove to be a more agile and efficient solution for many use cases. Banks also may want to “white label” stablecoin issuance for their large corporates (ie Walmart and Amazon). I see RTP networks a potential “loser” in the long run, or at least facing an existential challenge to redefine their value proposition against a more natively digital competitor.

Card Networks: Business as Usual (Mostly)

Despite the hype, US card networks like Visa and Mastercard will NOT be significantly impacted by stablecoins in their core business. They are real-time messaging networks that don’t move money. They facilitate authorizations, manage credit lines, and provide dispute resolution and loyalty rewards. Member banks determine how they will settle with each other. Furthermore, they are a profitable off-ramp to every stablecoin issuer (use linked card to purchase). 

Credit cards are deeply embedded in consumer behavior, offering convenience, credit access, and loyalty rewards that stablecoins currently lack. The lack of merchant acceptance interest, combined with entrenched consumer behaviors (ie use and rewards), shared economics and card functionality (ie, dispute, op regs, authentication) mean that stablecoins are not a direct substitute for the primary services that drive card usage in mature markets.

There may be an impact on new growth areas where card networks have not yet gained significant traction, such as in B2B payments beyond virtual cards. However, Visa and Mastercard are actively innovating in the stablecoin space, with Visa having already piloted settling transactions in USDC, and both networks exploring ways to modernize cross-border payments using blockchain-based infrastructure.20 These efforts demonstrate their adaptability and commitment to staying relevant, even as the industry moves towards cryptocurrency. Their core business, focused on authorization and value-added services, remains largely insulated from direct stablecoin competition.

Fintech Enablers: Stripe and Shopify’s Global Expansion

Stripe and Shopify are clear winners as they expand their global market of merchants and consumers that they can serve. Stripe, for instance, has made accepting stablecoin easy with the addition of Bridge, a stablecoin orchestration platform it acquired for $1.1 billion. Bridge offers orchestration, issuance, and cross-border payment capabilities, allowing businesses to seamlessly move, store, and accept stablecoins through a single API.21 Stripe’s new Stablecoin Financial Accounts allow businesses in 101 countries to hold balances in dollar-backed stablecoins, receive funds on both crypto and fiat rails, and send stablecoins globally. 

While Stripe has made significant strides in stablecoin acceptance, my personal experience highlights some nuances. I applied for Stripe’s stablecoin account and was denied because my merchant account must be outside of the US. Stripe’s documentation indicates that while customers can use crypto as a payment method globally, “Pay with Crypto” is currently only available to a “limited set of US businesses”.  

While direct stablecoin is of low interest and might be restricted to a private preview, Stripe’s broader strategy is not consumer use, but rather to enable global stablecoin payouts and financial accounts, particularly benefiting merchants in emerging markets and those engaged in cross-border commerce. This strategic focus positions Stripe and Shopify to expand their global reach by enabling businesses to accept payments and manage funds in stablecoins, especially where traditional financial rails are less efficient.

Wallets and Consumer Champions?

While the broader retail market in OECD countries remains hesitant, the rise of digital wallets and payment apps presents a unique opportunity for stablecoin adoption, particularly if a “consumer champion” can emerge (see Sling Money). PayPal, for instance, has thrown its hat into the ring with its own stablecoin, PayPal USD (PYUSD running on Solana under Token 2022), aiming to streamline transfers within its ecosystem (including Venmo) and ultimately challenge traditional banking service pricing. This is a bold move, as PayPal is the first major consumer wallet to move into stablecoin. But adoption has been terrible. Why hold a stablecoin? Its not a speculative investment like Bitcoin.. I can’t use it at any merchant..  It works.. But why do I have it? The “new economics” for PYUSD are not new at all for PayPal.

PayPal has much work to do here. Can a consumer champion like PayPal truly drive widespread stablecoin adoption by enabling something “new”. My contrarian bias suggests it’s an uphill battle against deeply ingrained habits, all from an exec team weak in global and in payments. My idea would be to trash all the bank agreements and go back to the model where PayPal had a 180bps+ take rate and cleared through linked ACH (only in Stablecoin). Partner with every stablecoin Issuer to allow all coins in wallet (with provision for Paypal to earn transfer fees on all). Then move on the Braintree side to enable stablecoin adoption by every merchant at a discount to their 349bps + $0.49/tran.  

In my view they could NOT do this as they would have an immediate hit to their volume discounts and incentives from the networks. Investors would not want to see cannibalization.. But that is what is necessary for growth. Merchants were clear in my survey “PayPal is no longer top in auth rates, fraud or conversions.. ApplePay and ShopPay win across the board here and I don’t pay a premium for their services”. 

KYC/AML Providers: The Silent Beneficiaries

The growth of stablecoins and the increasing regulatory clarity surrounding them create a significant demand for robust Know Your Customer (KYC) and Anti-Money Laundering (AML) services. This positions KYC service providers like Socure and Trulioo as silent, but substantial, beneficiaries.

The Genius Act, for example, explicitly mandates that permitted payment stablecoin issuers are treated as financial institutions under the Bank Secrecy Act and must comply with all federal laws related to economic sanctions, money laundering prevention, customer identification, and due diligence.26 Issuers must implement AML and economic sanctions compliance programs, including customer identification and enhanced due diligence, monitor and report suspicious transactions, and comply with recordkeeping and risk assessment requirements.26 This regulatory imperative drives a strong demand for sophisticated identity verification solutions.

Trulioo, for instance, offers a global online identity verification service that combines KYC, KYB (Know Your Business), and AML capabilities to meet complex regulatory requirements worldwide.28 Their platform provides access to over 450 data sources globally, covering more than 5 billion potential customers in 195 countries and over 700 million verifiable business entities. They offer services like Person Match for individual verification, Identity Document Verification for authenticating various ID types, and Business Verification for comprehensive corporate due diligence.

As stablecoin adoption grows and regulatory frameworks like the Genius Act and MiCA solidify, the need for these verification services will only intensify, making KYC/AML providers indispensable partners in the digital finance ecosystem.

Conclusions: A Pragmatic View of the Digital Dollar’s Ascent

My contrarian view: Stablecoins are not poised to displace credit cards or traditional banks in mature, OECD markets where existing payment networks offer comprehensive functionality, ubiquitous reach, and deeply ingrained consumer behaviors. The friction of on/off ramps and the lack of consumer demand for stablecoin payments in these regions remain significant hurdles.

Where traditional financial services are weak, unstable, or expensive, stablecoins find their true purpose. They are undeniable winners in emerging markets, particularly in Africa, where they provide essential financial inclusion, inflation hedging, and efficient remittance solutions. Similarly, large enterprises are leveraging stablecoins for significant back-office efficiencies in treasury and cash management, driven by cost reduction, real-time liquidity, and enhanced transparency.

Perhaps the most under-reported winner is the US Treasury itself. The strategic growth of USD-pegged stablecoins, bolstered by legislation like the Genius Act, creates a powerful, self-reinforcing demand for US Treasuries, effectively turning a crypto innovation into a tool for managing national debt and reinforcing dollar dominance globally.

For incumbents, the landscape is shifting. While banks may face some pressure on traditional fee revenue, they are strategically adapting by integrating stablecoins into their existing offerings, leveraging their customer relationships and regulatory expertise to remain dominant. Real-time payment networks, despite their efforts, face a competitive challenge from stablecoins, which offer a natively digital solution for instant settlement that may prove more agile in key growth areas. Card networks, focused on messaging and value-added services, will largely remain insulated in their core business, though they are also exploring stablecoin integration to stay relevant. Lastly, KYC/AML service providers are silent but significant beneficiaries, as regulatory clarity and stablecoin growth necessitate robust identity and transaction verification.

The future of stablecoins is not one of outright conquest, but of pragmatic utility. They are filling critical voids, enabling new efficiencies, and subtly reshaping global capital flows, all while operating within a rapidly evolving, and increasingly clear, regulatory framework. The digital dollar is ascending, not as a replacement for all, but as a powerful, specialized instrument in the global financial toolkit.