The role and opportunity for stablecoins in traditional cross-border payments

Written by Matthew Jackson VP, Relationship Management, Freemarket

Stablecoins - cryptocurrencies whose value is (typically) backed by a reserve of assets pegged to a fiat currency like USD - are gaining traction as a new ‘digital asset’ in their own right, and as a potential opportunity for change in traditional financial markets and transaction workflows. Specifically, many payment service providers are considering the potential opportunities presented by this new ‘crypto’ medium of exchange and how they might challenge the traditional, bank-dominated payments status quo.

Created initially as an alternative, less risky, route to crypto investment (and for converting crypto/alt coins into fungible tokens), stablecoins are designed to maintain a more ‘stable’, less volatile value compared to the ‘big boy’ cryptos like Bitcoin and Ethereum - (interestingly, stablecoin can be ‘pegged’ to Bitcoin but that’s an article for another day). Whilst similar in concept to central bank digital currencies (CBDCs) - also very much on the radar in financial markets …