Why Stablecoins Will Transform Global Finance in the Next Two Years

In 2024, the stablecoin market grew by 57% and analysts expect the sector’s expansion to accelerate further to reach a total market value of $500 billion in the coming year. And this is just the start. In our view, stablecoins will transform global finance in the next two years, carving out a place for themselves at the heart of the international payments system.

Stablecoins reach maturity

In part, this success will come from the fact that stablecoins have evolved into credible digital assets. Stablecoins are not cryptocurrency. Rather they are a digital representation of fiat currencies stored on the blockchain. As mainstream adoption of stablecoins gathers pace, they are becoming mature, trustworthy, and risk-free financial instruments. 

Take RLUSD, Ripple's new stablecoin, for instance, designed as it is to be a fully regulated financial instrument. Its launch was approved by New York Department of Finance Services, and it operates in accordance with a New York Trust Company charter. What's more, RLUSD is exclusively backed by USD fiat currency held in banks that are registered with regulators and subject to regular audits. 

The viability of stablecoins for delivering digital financial services is being noted by all major industry stakeholders. This includes regulators, with the world’s 25 largest financial centres currently establishing rules for stablecoins. Banks are also taking note and pursuing blockchain initiatives that include stablecoins. The Bank for International Settlements (BIS), for example, is experimenting with stablecoins as a way to facilitate cross-border payments. 

Meanwhile, a growing number of businesses are looking to use stablecoins for payroll and other cross-border payments. Firms can benefit from the low fees, global reach and instant transactions possible on blockchain – with service providers converting stablecoins into fiat currency deposits in their customers’ business accounts at the end of the process. 

Hardwiring payments into digital systems

Stablecoins are much better suited to handling cross-border payments than conventional infrastructure. This is in part because the internet was not designed with payments in mind. As a result, even in our digital age, businesses and consumers alike are forced to rely on analogue financial infrastructure to move money. 

SWIFT, for instance, is nothing more than a messaging platform that notifies banks to initiate transactions. This is a slow, manual system, and one in which each bank in the payment chain takes a cut. Credit card companies dominate as the only practical option for international payments, profiting from exorbitant fees for what is essentially the movement of information.

The fragmented payments system not only delays transactions, hampering liquidity, but also adds layers of complexity and reduces transparency.

Stablecoins solve these inefficiencies at a stroke, providing direct, low-cost, and borderless payment capabilities, while removing the need for intermediaries. As a result, they overcome the flaws of legacy banking systems and give individuals and businesses the ability to transact globally without hidden costs or delays. 

The emergence of an interoperable stablecoin ecosystem

By embedding a universal, decentralised payment system into the fabric of the internet, stablecoins are not just filling a gap—they are redefining the future of money in a truly globalised economy.

In many ways, the rise of stablecoins echoes the early days of the fiat dollar in the US, when local banks and mints issued their own versions of currency tailored to regional needs. Stablecoins are charting a similar course, with the potential for businesses, municipalities, and other organisations to issue their own branded digital money under strict guidelines. Imagine a world where farmer unions, local governments, and multinational corporations launch stablecoins to serve their communities—empowering them with customisable, stable, and efficient financial tools.

This digital dollar ecosystem will be interoperable. Unlike the fragmented and cumbersome systems of the past, stablecoins make it cheap and easy to move between different forms of money, all within a single digital wallet. This will enable a dynamic, decentralised, and highly adaptable financial landscape where every organisation can tailor solutions to its specific needs, while users enjoy effortless transactions across stablecoin networks. Just as the fiat dollar unified the early American economy, stablecoins are poised to bring unprecedented flexibility and inclusivity to the global financial system.

Stablecoins vs. CBDCs

Central banks are alert to this potential, and many are actively pursuing a Central Bank Digital Currency (CBDC), which provides a digital version of a nation's fiat currency issued by the central bank. In fact, 134 countries and currency unions, representing 98% of global GDP, are currently exploring a CBDC.

However, there are clear concerns around CBDCs. Foremost is the privacy risk, given that CBDCs effectively grant governments control over what could be designed as programmable and trackable currency. The ability to monitor every transaction in real-time could allow governments to scrutinise individuals' spending habits and financial activities on an unprecedented scale. Rather than freeing up financial transactions in the way stablecoins do, CBDCs have a distinct "Big Brother" feel to them. 

Borderless transactions at speed

Stablecoins are the future of international payments, offering lightning-fast, borderless transactions on public, interoperable blockchain networks. They eliminate the need for banks and credit cards, reducing costs and delays while seamlessly handling currency exchanges. Businesses should start experimenting with stablecoins today to stay ahead. The future of payments is here—don’t get left behind.