Regulation, Liquidity, and the Stablecoin Tipping Point of Cross-Border Payments: What Banks Must Do Next
26
Mar
Regulation, Liquidity, and the Stablecoin Tipping Point of Cross-Border Payments: What Banks Must Do Next
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Regulation, Liquidity, and the Stablecoin Tipping Point of Cross-Border Payments: What Banks Must Do Next
Regulatory clarity in 2025 will drive stablecoin adoption in cross-border payments.
Dr. Ignacio E. Carballo
Director, Alternative Finance
Stablecoins, blockchain-based digital assets pegged to a fiat currency, represent an increasingly viable alternative to traditional cross-border payments, as they grow in both volume and legitimacy. When comparing stablecoin performance to traditional systems in cross-border payments, certain benefits stand out:
Speed: Transactions settle in seconds or minutes, compared to days in traditional banking.
Cost Efficiency: Fees can be a fraction of traditional payment methods, making cross-border transfers more affordable (could cut costs by up to 80% compared to traditional methods1).
Transparency: Blockchain-based ledgers provide a clear, auditable record of transactions, reducing fraud and enhancing compliance.
Global Accessibility: With only an internet connection required, stablecoins enable financial inclusion in regions with limited banking infrastructure.
Based on these attributes, many industry observers argue that stablecoins are the most efficient option for cross-border payments, offering unparalleled speed, transparency, and cost reductions2. Yet, most financial institutions have been hesitant to invest heavily in stablecoin technology due to persistent regulatory uncertainty.
This article explores how regulatory clarity—expected to materialize in 2025—will impact bank liquidity, drive stablecoin adoption, and unleash competitive opportunities for blockchain infrastructure companies and digital partners in the near term.
Stablecoin gaining traction in the global money movement landscape
Data shows that stablecoin is not a niche, futuristic novelty but a legitimate financial instrument. Globally, around US$210 billion worth of stablecoins are in circulation, the largest issuers being Tether (USDT) and Circle (USDC). Stablecoin transaction volume is growing, with US$625 billion transacted last February, up 21% from same month 2024.3 When considering payment volume4, US$6.3 trillion in stablecoins payments were settled in the 12 months to February 2025, equivalent to 15% of global retail cross-border payments in 2024.
Worldwide, web3 companies like Ripple, Circle, Paxos, and Bitso Business, as well as traditional institutions Visa, Mastercard, PayPal and JP Morgan Chase are leveraging stablecoins to transform cross-border transactions and other financial services.
Of course, stablecoins present challenges as well. Converting stablecoins to local currencies requires reliable on/off ramps, which are limited in some regions and can add costs. Finding banks willing to support these transactions can also be difficult. In many cases, using stablecoins requires access to exchanges and technical knowledge, which may limit adoption. Nevertheless, it is becoming increasingly evident that banks need to take stablecoin seriously, especially as the regulatory environment in key markets evolves in favor of this technology.
Sizing the impact of stablecoins in your business can be a huge challenge. Let’s talk and unlock the opportunities, clarify the risks, and define your next steps.
A Regulatory Turnaround Expected after 2025: Why Will Regulatory Uncertainty Change this year?
In most countries, stablecoins are not explicitly banned but still lack full regulatory approval. Uncertainty remains over whether they should be classified as a currency, an asset, or something else, leaving gaps in legal frameworks, compliance requirements, and oversight5. Banks especially have hesitated to commit substantial resources while the legal framework remains undefined. As said by Brian Moynihan, CEO of Bank of America, earlier this year at Davos, referring to stablecoins6:
“If they make that legal, we will go into that business (…). It’s pretty clear there’s going to be a stablecoin, which is going to be fully dollar-backed (…) so you’ll have a Bank of America coin and a U.S. Dollar deposit and we’ll be able to move them back and forth because now it hasn’t been legal for us to do it but it’s just like another foreign currency.”
This is about to change. Converging factors indicate that the regulatory landscape for stablecoins will transform dramatically in 2025, giving banks, companies, and ordinary consumers more confidence to use stablecoins:
Europe’s MiCA: The Markets in Crypto-Assets (MiCA) framework establish clear rules for the issuance, custody, and trading of digital assets, including stablecoins. MiCA is expected to bring legal clarity across the European Union, creating a uniform standard that banks and fintechs can rely on7. Following the initial phase in June 2024, which introduced stablecoin-specific regulations, the full implementation las December expanded these requirements to encompass Crypto Asset Service Providers. MiCA is now live across the European Union8, marking a milestone for digital asset oversight9.
United Kingdom (UK): The FCA is shaping rules for stablecoin issuance and custody, focusing on fiat-backed stablecoins for payments10. The government plans to engage firms on draft legal provisions for stablecoin regulation “as early as possible” in 202511. The final rules and policy statements will be published, followed by a preparation period, with the regime expected to go live by end-2025 or early 2026.
US Legislative Initiatives: Under the Trump administration, there is significant momentum to bring legislative certainty to stablecoins. Bills like the STABLE (Stablecoin Transparency and Banking Licensing Enforcement) and the GENIUS (Guiding and Establishing National Innovation for US Stablecoins) Acts are under discussion in Congress. These proposals aim to define the responsibilities of stablecoin issuers and set robust compliance standards, reducing legal ambiguity for market participants. Introduced in February 2025, full implementation is expected in 2025-202612. Another sign of confidence is Trump’s March 6 executive order creating the “Strategic Bitcoin Reserve and the United States Digital Asset Deposit.”13
Asia: Key markets are already showing the way. Singapore finalized its stablecoin regulatory framework in August 2023. In Japan, Stablecoins are regulated under Japan’s Payment Services Act, which is already in effect, providing clear guidelines for issuance and operation14. In Hong Kong,a draft Stablecoin Bill was introduced in December 2024,the bill is expected to pass and come into effect by early 2025.
Impact of Regulatory Clarity on Traditional Institutions
As global regulatory clarity strengthens, the adoption of stablecoins by traditional financial institutions is expected to accelerate. As Gabriele Zuliani, Chief Revenue Officer at Bitso Business, said to PCMI:
“Blockchain technology and stablecoins are emerging as a faster, cheaper, and more transparent way to move money. While global regulations remain inconsistent, progress in providing clarity is being made in key countries. Once regulatory clarity is achieved, we expect financial institutions to adopt stablecoins more widely, eliminating intermediaries and revolutionizing cross-border payments to meet the demands of the modern global economy.”
As banks adopt stablecoin to move money across borders, the impact could be substantial in terms of:
Freeing up of Capital: Blockchain eliminates the need for pre-funded accounts in multiple jurisdictions, improving capital efficiency. Traditional banks currently lock up around US$10 trillion in Nostro/Vostro accounts to facilitate cross-border payments through corresponding banking15. Transitioning even a fraction of these operations to stablecoins can free up capital, allowing banks to reinvest in innovation and expand their services.
Cost Reductions: With near-instant settlement provided by stablecoins, banks can manage liquidity more dynamically. According to recent studies, improved liquidity management could boost efficiency by up to 40%, while stablecoin transactions can reduce remittance fees by up to 80% compared to traditional methods. This substantial cost reduction is expected to translate into billions of dollars in savings for the global payments ecosystem16–17.
New Revenue Streams: As banks integrate stablecoins into their offerings, they can generate new fee income from stablecoin-related services, such as transfer fees, minting and redemption fees, and custody services, tapping into the growing stablecoin market.
Current industry forecasts project that the global cross-border payments market could reach approximately US$320 trillion annually by 203218. The retail cross-border payments market, valued at US$40 trillion, is projected to expand by 62% to US$65 trillion by 2032.
Traditional cross-border transactions incur fees ranging from 1.5% to 6. Using a mid-range fee of 3% for traditional systems and assuming that the fee rate could drop 40% to approximately 1.8% with stablecoins, adoption to stablecoin would save 1.2 percentage points per transaction, or an estimated US$23 billion annually. In an optimistic scenario, a 5% shift (around US$10 trillion annually) could save up to US$116 billion per year.
Additionally, in the context of US$10 trillion locked in nostro/vostro accounts, a 1% shift would free up US$100 billion in liquidity, and a 5% shift would free up US$500 billion. This freed capital can then be redeployed for innovation, lending, or other value-added services, significantly boosting the overall efficiency of the financial ecosystem.
From Regulatory Uncertainty to Competitive Advantage: What Will be the Impact and What Should Banks and Fintechs Do?
As regulatory clarity is achieved, a substantial market shift is anticipated. This transformation will occur in several stages:
1. Operational Transition
Traditional banks will start shifting a portion of their cross-border payment operations to stablecoins by partnering with stablecoin issuers and blockchain infrastructure providers like Circle, Paxos, BVNK, and Bitso Business.
This shift will unlock liquidity, lower transaction costs, and speed up operations. The types of transactions most likely to be disrupted first include:
B2B Cross-Border Payments and Retail: Stablecoins will transform non-wholesale B2B payments by reducing transaction times from 3-5 days to under one hour, with 24/7 transfers and lower fees. This will benefit both large enterprises and SMBs making high and low-value transactions, such as paying invoices, supplier payments, and intra-company settlements. Additionally, stablecoins will also transform consumer and retail transactions, including C2B, B2C, and C2C payments, while wholesale19 transactions are expected to remain unaffected in the short term.
E-commerce Settlements: Stablecoins will enable instant payouts to global merchants and improving cash flow through immediate transparency and real-time transaction tracking. This means that payment service providers (PSPs) and acquirers can settle transactions with merchants in real-time20.
2. Market Disruption
The integration of stablecoins will force traditional financial institutions to re-engineer their operations and strategies to remain competitive. This will involve significant changes in several areas, including:
Cost Structure Overhaul: To remain competitive, banks will need to revamp their fee structures for cross-border payments, since stablecoins reduce intermediary costs.
Technology Integration: Legacy systems will require upgrades to handle blockchain-based transactions.
Talent Acquisition: Institutions will compete for blockchain and crypto expertise.
Product Innovation: New services leveraging stablecoins for instant settlements and programmable money will emerge.
3. Competitive Edge for Early Adopter
Institutions that embrace stablecoins early will gain significant advantages:
Expanded Customer Base: Attracting Gen-Z and tech-savvy clients who value speed, efficiency, and cost savings.
Enhanced Cross-Selling Opportunities: Offering new products like crypto-backed loans or stablecoin savings accounts to existing customers.
Operational Efficiency: Reducing transaction costs and shortening settlement times from days to minutes, improving liquidity management.
Capital Utilization: Freeing up capital previously tied up in traditional banking relationships.
New Market Penetration: Entering previously unprofitable markets like micro-remittances where low fees and faster transactions can drive adoption.
Given the imminent shift toward a stablecoins, both traditional financial institutions and fintech companies must act decisively to seize the emerging opportunities.
Recommendations:
1.Invest in Blockchain Infrastructure and Strategic Partnerships
Financial institutions should partner with established blockchain companies with proven experience in developing secure, scalable solutions, including stablecoin payment systems, liquidity management solutions, and blockchain-based settlement systems. Key solutions to implement include blockchain-based remittance platforms, tokenized assets for real-time settlement, and smart contract-enabled payment systems to automate and streamline transactions, ensuring transparency and efficiency.
2. Develop Multi-Rail Solutions
To optimize customer choice and loyalty, banks should develop multiple payment systems that operate in parallel, including stablecoins and other traditional methods for cross-border transactions. Offering a platform where users can select between stablecoin payments, wire transfers, and digital wallets gives them flexibility and appeals to multiple customer segments at once.
3. Prioritize Compliance and Security
As the adoption of stablecoins and blockchain-based solutions grows, banks must prioritize compliance with regulatory standards by implementing advanced AML/KYC protocols through smart contracts. These can automatically validate the identity of users and ensure the transaction complies with local and international regulations. Using blockchain’s inherent transparency and immutability features enhances security, making it easier to track and report transactions, reducing the risk of fraud and ensuring data integrity in real-time.
4. Enhance Staff Training and Digital Competency
To successfully adopt blockchain and stablecoin technologies, banks must invest in comprehensive staff training programs that cover both the operational and strategic benefits of these technologies. Staff should be trained not only on the technical aspects but also on the potential products and businesses enabled by blockchain and stablecoins, such as instant payments, programmable money, and decentralized finance (DeFi) opportunities. A digitally competent workforce will be crucial for banks to stay competitive and adaptable as the landscape evolves.
The Future Is Now—Are You Ready?
The cross-border payments landscape is undergoing a seismic shift. Stablecoins are already proving their value in real-world transactions, and their adoption is accelerating. Financial institutions, fintechs, and payment networks must decide: Will they lead the charge in integrating blockchain-powered solutions, or will they risk being left behind?
Contact us to gain a greater understanding of cross-border payments and stablecoins via market research. Our team can produce a range of studies that can help your company with a variety of initiatives regarding RTP or other strategic topics. These market research intelligence projects can include:
Opportunity benchmarking: Uncovering the growth areas in different markets
Competitive intelligence: Knowing your competitor’s plans and strategies
Partner research: finding local partners to help you expand your footprint
Regulatory challenges: Anticipating changes that could affect your business
And much more.
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Dr. Ignacio E. Carballo
Director, Alternative Finance
Sourcesand footnotes:
In remittances, see “Cross-Border Payments Cost Could Be Cut by Blockchain, If It Can Only Solve the Scale Problem” (Access here). Also, in 2021 a study in Kenya showed that stablecoins can reduce transaction fees to 2.02% regardless of the value of the transaction, which is a significant improvement over PayPal fees (Access here) ↩︎
See ” What Is Stablecoins’ Place In The Future Of Cross-Border Payments?” (Access here) and ” Why stablecoins are the future of cross-border payments” (Access here) ↩︎
Wholesale transactions include cross-border payments related to Institutional Investors, Hedge Funds & Proprietary Trading Firms, Govs & Central Banks and Other Banks & Investors ↩︎
For instance, when a PSP like EBANX collects funds from shoppers in one country and instantly pays out to a merchant in another ↩︎
Ignacio E. Carballo
Dr. Ignacio Carballo is the Director of Alternative Finance at PCMI. He leads consulting engagements for the world’s most innovative institutions, helping them build a more inclusive and responsible financial system while maintaining a competitive edge in the market.
Prior to joining PCMI, Ignacio spearheaded several research projects for private, public, and multilateral organizations. He is a professor at various universities in Latin America and serves as Director of the Center for Alternative Finance at the Catholic University of Argentina.
Dr. Ignacio Carballo is the Director of Alternative Finance at PCMI. He leads consulting engagements for the world’s most innovative institutions, helping them build a more inclusive and responsible financial system while maintaining a competitive edge in the market.
Prior to joining PCMI, Ignacio spearheaded several research projects for private, public, and multilateral organizations. He is a professor at various universities in Latin America and serves as Director of the Center for Alternative Finance at the Catholic University of Argentina.
