Stablecoins in cross-border payments: Is now the right time?

Moving value across a blockchain (fast, cheaply, around the clock) works. USDT and USDC supply alone now exceeds $250 billion (CoinGecko, June 2026). B2B payment volume on these rails reached $226 billion in 2024, up 733% year-on-year (McKinsey and Artemis Analytics, 2026). Regulatory frameworks are finally catching up: MiCA in the EU and the GENIUS Act in the US are setting up the benchmarks that institutional treasurers need to take into account.

And yet the gap between technical possibility and institutional reality remains the defining story of cross-border payments today. Understanding it matters not just for the banks navigating it, but for any infrastructure provider that wants to be part of what comes next.

The competitive pressure is real, but investment appetite isn’t there yet

Ask any senior payments executive whether digital-asset rails are part of the future, and the answer is unanimous. Ask them how much is actually being invested today, and the number, in our experience, is very different: five to ten per cent of digital transformation budgets, at most. And what about the rest? Banks continue to prioritise fiat modernisation: ISO 20022 migration, SWIFT GPI optimisation, FedNow, SEPA Instant and other real-time payment upgrades.

This isn’t complacency. Banks aren’t betting against stablecoins or tokenised deposits; they’re betting that the transition will take longer than the market narrative suggests, and that moving too early with immature infrastructure carries real risk. The priority is compliance first, pilots second.

What is sharpening the urgency, though, is the threat of disintermediation. Remittance platforms and payment specialists (Wise, Ripple, Ant International) have already proven that alternative rails can strip margin from the correspondent banking model. For now, corporates are mostly just asking why cross-border transfers still take two days, rather than reaching for blockchain rails themselves. But once non-bank actors start answering that question at scale, the pressure on incumbents will intensify.

The compliance problem nobody has solved

Moving a stablecoin from A to B is not the hard part. Operationalising it is. Three compliance problems stand out in practice.

• Know Your Transaction (KYT) is the most acute. In traditional correspondent flows, sanctions screening and transaction monitoring follow well-established frameworks. In stablecoin flows, the rules are different, and the industry is still writing them. What does it mean to sanctions-screen a stablecoin transaction?  

• Finality is the second obstacle. Legal finality exists on RTGS systems. An overlay infrastructure sitting above a blockchain cannot unilaterally redefine what finality means for a regulated institution. Any viable stablecoin clearing architecture needs to integrate with, not override, the legal frameworks banks operate under. Questions around cut-off times, pre-funding and intraday credit remain largely unresolved, especially for high-risk transactions.  

• Client caution is perhaps the most underestimated barrier. Many corporate treasurers remain deeply conservative. Until accounting treatment, ERP integration, tax reporting, and error-handling are properly codified for stablecoin-based settlement, the transition complexity and costs as well as the downside of a failed transaction simply outweigh the efficiency gain. And the level of internal education required is consistently underestimated.

A tiered market is taking shape

Not all banks are at the same point, and the divergence is widening.

• Tier 1 leaders (JPMorgan, HSBC, Deutsche Bank) are running live or near-live programmes. JPMorgan’s Deposit Token (JPMD), piloted on an Ethereum Layer 2 blockchain in 2025, is the clearest signal: a tokenised deposit product designed for institutional cross-border settlement with built-in compliance controls. These institutions aren't waiting. They're building infrastructure they expect to monetise over the next decade, largely as a defensive hedge against disintermediation by non-bank stablecoin issuers. At the same time, Tier 1 players are exploring stablecoin issuance, seeing an opportunity to set standards and monetise specific use cases, especially cross-border treasury.  

• Tier 2 and below are watching and waiting. The pattern is familiar: let the JPMorgans and Deutsche Banks validate the path, then follow.  

• Cross-border and FX specialists are a distinct segment worth watching. These institutions are already using stablecoin “sandwich” flows for specific high-friction corridors. They’re not waiting for a universal solution. They’re extracting value where the ROI is already demonstrable.

Where does this leave us?

The next three to five years are widely seen as the critical transition: the moment when digital-asset rails move from strategic option to commercial reality. The banks and infrastructure providers that enter that window with clear answers on compliance, finality, and integration will be the ones positioned to capture volume as it shifts.

Stablecoins won’t replace correspondent banking overnight. But they will (steadily, selectively, then rapidly) make its friction visible. Every corridor where a faster, cheaper, more transparent alternative exists becomes one where incumbents need to compete or cede ground.

Implications for PSPs

For payment service providers, the stablecoin transition is not a spectator sport. PSPs sit precisely at the intersection where the friction is most visible, and where the opportunity is therefore greatest.

The correspondent banking model's inefficiencies are not abstract to PSPs. They are priced into every FX spread, every settlement delay, every reconciliation overhead passed on to merchants and platforms. When stablecoin rails remove that friction for specific corridors, the PSP that has integrated those rails captures the margin that previously went to the correspondent chain.  

The strategic question isn't whether to engage, but how, and the answers differ by corridor, by compliance posture, and by client. At PaymentGenes, we help Enterprise Merchants, PSPs, Banks and fintechs make exactly these kinds of decisions.