On the chain, stablecoins are building a trillion-dollar circulation network
Written by: Pzai, Foresight News
On June 7, Jack Zhang, founder of cross-border payment platform Airwallex, stated on X: "I can't see how stablecoins can reduce fees - the slippage from stablecoins to receiving currency is much more expensive than the interbank foreign exchange market," and further bluntly said, "I still haven't seen a use case for how cryptocurrencies have helped anything in the past 15 years," quickly sparking community discussion.
Jack, who previously worked as an engineer at the National Australia Bank, has a deep traditional financial background. When encountering emerging stablecoin payments, he also believes that stablecoins themselves do not have many advantages compared to traditional methods. Consequently, some crypto users engaged in a detailed discussion under his tweet. This article will take you through the debate about the pros and cons of stablecoins.
The Core Demand of "Regulatory Arbitrage"
Simon Taylor, Strategy Director of crypto compliance product platform Sardine, stated that the value of stablecoins is not in reducing withdrawal costs, but in being more cost-effective for Southern countries and possessing global liquidity and settlement speed. Richard Liu, co-founder of Huma Finance, emphasized that existing banking infrastructure still cannot solve current compliance extension issues, and stablecoins bring a "different mode" to cross-border payments, directly stating that the traditional banking system is "predatory".
In the current market, stablecoin trading volume has rapidly soared. From the perspective of real economic use, stablecoin trading volumes across continents have already exceeded hundreds of billions of dollars. With Airwallex's annual transaction volume of around $130 billion, it can be seen that in the global scale, stablecoins already have an advantage in surpassing traditional cross-border payment transaction volumes.
In these adoptions, stablecoin scale growth mainly exists in Southern countries. For financially underdeveloped regions, users easily encounter compliance issues when using traditional payment methods (for example, KYC limitations on identities in Southern countries, national sanctions, and fund source processing all have shortcomings). B-end payment settlement companies are also constrained by transaction settlement license thresholds between different jurisdictions, leading to longer fund turnover and business development cycles. When local currency liquidity is small, stablecoins can serve as the most accessible circulating medium for users, reducing asset holding-side risks. Thus, stablecoins have become many people's "regulatory arbitrage" choice and the most convenient way to hold "offshore US dollars".
When Circle Rises, Are Traditional Platforms Anxious?
On June 6, Airwallex announced completing a $300 million financing at a $6.2 billion valuation. Simultaneously, Circle went public on the NYSE with a first-day stock price surge of 168.48% and a market value exceeding $18.4 billion. As the stablecoin market becomes increasingly prosperous, this tweet also reflects traditional cross-border payment platforms' attention to market competition. Especially when the capital recognition difference between the two is so significant, the market's tilt towards on-chain finance is so evident. The total on-chain stablecoin transaction amount in 2024 reached $27.6 trillion, for the first time exceeding the annual total of Visa and Mastercard (about $25.5 trillion), marking that its payment network scale has substantially threatened the dominance of traditional giants.
The root of traditional platforms' anxiety lies in stablecoins' reconstruction of cross-border payment logic. On one hand, stablecoins' efficiency advantages of 24-hour real-time settlement and costs significantly lower than the SWIFT system directly impact traditional cross-border payments' speed and fee advantages. On the other hand, in financially underdeveloped regions (such as Latin America and Southeast Asia), stablecoins have become a "survival tool" for avoiding identity restrictions, capital controls, and local currency depreciation, which is an incremental market difficult for existing traditional banking systems to cover.
However, apart from existing stablecoin advantages, traditional platforms still hold stage-specific defensive barriers. Stablecoins currently face a structural shortcoming of "high withdrawal costs" - significant slippage losses when exchanging fiat currency through centralized exchanges or payment card channels, which is much higher than the interbank foreign exchange market. The lack of local fiat currency liquidity pools further limits direct payment scenario penetration. Additionally, traditional financial institutions maintain advantages in B2B payments and retail scenarios through clearing networks, compliance licenses, and banking system integration. However, in the long term, if issuers like Circle can break through fiat currency exchange bottlenecks through CBDC tokenization or local stablecoins, traditional platforms' anxiety may transform into an urgent need for forced transformation.
