Stablecoins - The Future of Crossborder Finance

Stablecoins, once a niche concept tethered to the fringes of cryptocurrency markets, have rapidly emerged as a mainstream force in global finance. Today, the global monthly average supply of stablecoins is $214 billion, with a monthly transfer volume of just over $4 trillion.  

These digital currencies are designed to maintain a stable value by pegging to an asset like a fiat currency, combining the speed and programmability of crypto with the reliability of traditional money. As we enter 2025, venture investors and financial institutions alike are asking: Are stablecoins the future of finance?

Stablecoins 101: Origins, Evolution, and Regulation

What exactly is a stablecoin? In simple terms, a stablecoin is a digital currency whose value is tied 1:1 to a stable asset (typically a fiat currency like the US dollar or euro). It began primarily as a tool to mitigate volatility for crypto traders, with early examples like Tether (USDT) launching in 2014 and USDC in 2018. Initially restricted to cryptocurrency exchanges, stablecoins quickly evolved into versatile instruments adopted widely across traditional financial markets and digital commerce.

Significant regulatory developments in recent years have accelerated stablecoin adoption. Europe's introduction of the Markets in Crypto-Assets (MiCA) legislation in 2024 provided clear frameworks around issuer accountability, reserve transparency, and consumer protection. Simultaneously, the United States moved closer to comprehensive stablecoin regulations, which bolstered institutional confidence. This regulatory clarity paved the way for major fintech and payments players – including PayPal, Stripe, Visa, and Mastercard – to integrate stablecoin functionalities.

By February 2025, global stablecoin circulation surpassed $4.1 trillion, marking a 115% year-on-year increase, driven by use cases in cross-border payments, digital wallets, and decentralized finance (DeFi), transforming these once-specialized tokens into mainstream financial assets. These developments, as highlighted in our recent 2025 Fintech Market Report, underscore stablecoins' growing significance in reshaping financial services.

Stablecoin Use Cases

Stablecoins initially found product-market fit in cross-border payments, offering faster and cheaper alternatives to traditional remittance methods. This remains an important use case, and  beyond remittances and basic B2B payments, stablecoins are now unlocking a host of new applications that we highlight below:

• Cross-border Payments: Enable instant international transfers at significantly lower costs compared to traditional banking systems, greatly benefiting migrant workers and international businesses.

  • For example, layer one protocols like Stellar have been instrumental in bringing stablecoin applications to life. In fact, multiple fiat currencies have been tokenized as stablecoins on Stellar – not just USD, but also EUR, JPY, AUD, and others – via regulated issuers. As a result, hundreds of fintech apps and wallets in emerging markets are built on Stellar to leverage stablecoins for payments and savings. 

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• On-Chain Trade Finance: Facilitate streamlined, real-time global trade settlements using stablecoin escrows, reducing paperwork and improving liquidity for SMEs engaged in cross-border trade.

  • For example, in January 2024, Japan’s largest bank (MUFG) announced a project to explore using permissionless blockchain stablecoins for trade settlement with emerging market importers.

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• Treasury and Liquidity Management: Provide businesses a unified liquidity tool for efficiently managing global cash flows, enabling real-time, round-the-clock settlement, significantly reducing the complexity of corporate treasury operations, and facilitating instant issuance of yield-bearing stablecoins to automate treasury yields.

  • For example, our portfolio company, Walapay, is currently partnering with Paxos to issue yield-bearing stablecoins instantly, for automatic treasury yield. 

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• Tokenized Assets and DeFi: Act as collateral and settlement currency within decentralized finance platforms, facilitating loans, liquidity pools, and seamless transactions for tokenized real-world assets such as bonds and real estate.

  • For example, startups like Meru allow individuals in Bolivia the ability to access USDC through their platform and to generate high yield returns.  This provides thousands, and soon millions, of consumers the opportunity to hold a more stable and interest bearing currency.

The Future of Cross Border Finance

While crypto faced a downturn in 2023, institutional adoption is growing with Bitcoin ETFs and renewed interest in blockchain payments. 130+ countries are exploring digital currency programs, and consumer trust continues to grow as tokenization and stablecoin adoption grows.

The trajectory of crypto in 2025 is defined by increasing institutional adoption, regulatory clarity, and the deepening integration of stablecoins into financial systems worldwide. In the coming years, we believe stablecoins and the acceleration of faster, cheaper international money movement will be the defining trends shaping the crypto landscape.

At the end of the day this will drive a win-win for those that adopt the technology and the consumers they serve.  Financial institutions who learn to adopt these efficiencies will be able to improve margins, transparency and efficiency for their internal treasury management systems.  Over time, as these efficiencies become more commoditized, consumers will benefit from more cost effective ways to send money globally.