Stablecoins promise a revolution in international payments. But how realistic is their use in treasury? Alongside these settlement platforms, a new digital form of money is attracting attention: stablecoins are meant to offer corporate treasurers an alternative for international payments. But how practical are they for corporate payment transactions.
Similar to physical cash, stablecoins can be held and transferred by any person or company as digital bearer instruments. Bank accounts are not required. Unlike bank deposits, which can only be held by customers of the issuing bank, stablecoins can be transferred directly between wallets globally. This distinguishes stablecoin transfers from traditional correspondent banking, which often requires multiple bookings on accounts at different banks.
Despite their potential, the use of stablecoins in payments is still in its early stages. According to a study by Artemis, which analysed payment transactions of the 30 largest stablecoin payment institutions, less than 1% of global stablecoin transaction volume currently relates to actual payments. The market is dominated by transfers within the crypto industry. However, the payments sector is growing – particularly through new regulation, banking consortia, and major payment service providers showing strong interest in stablecoins.
The fact that stablecoins are rarely used for corporate payments so far is mainly due to a lack of market infrastructure. Users still hold their liquidity primarily in traditional bank deposits. To use stablecoins, treasurers must first convert their bank deposits into stablecoins. Likewise, the recipient often has to convert them back into bank deposits in the local currency after the transaction, also to receive deposit interest from the bank.
This creates friction in the speed and efficiency of stablecoin transfers and makes companies dependent on service providers that perform so-called on- and off-ramping. Currently, this function is mostly offered by crypto exchanges, which are rarely used by treasurers. Another challenge is the lack of international legal frameworks regulating stablecoin issuers and the transfer of this new form of money. Integration into existing ERP and treasury systems is also not widespread.
Missing global ISO 20022 messaging standards and limited interoperability with traditional banking systems currently make corporate payment transactions difficult. To make stablecoins widely usable for payments, bank- and corporate-compliant infrastructures must be established. Some banks already offer regulated crypto custody and transfer solutions and are working on on- and off-ramping services. Banks will therefore play a critical role in combining the potential of stablecoins with established treasury processes and compliance requirements in payment transactions.
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