Stablecoins gain traction in cross-border payments: What’s driving the shift

Stablecoins are rapidly emerging as a preferred tool for cross-border payments, offering a faster, cheaper, and more efficient alternative to traditional banking systems. US President Donald Trump last year signed a law establishing a federal regulatory framework for stablecoins.

Stablecoin cross-border payments operate on public blockchains, allowing funds to be transferred directly between digital wallets without intermediaries. Unlike traditional systems that rely on banks and can take two to five days to settle, stablecoin transactions are typically completed within minutes, with greater transparency and lower costs. 

As global businesses and financial institutions seek seamless ways to move money across borders, Stablecoins are moving from niche crypto use cases to mainstream financial infrastructure.

According to the World Economic Forum, the stablecoin market has grown significantly, with a combined market capitalisation exceeding $300 billion and transaction volumes running into trillions. This scale underscores their increasing relevance in global payments and financial systems.

Why stablecoins are gaining traction

One of the primary drivers is efficiency. Cross-border payments through legacy systems are often slow, fragmented, and expensive, particularly for businesses operating across multiple jurisdictions. Stablecoins address these challenges by enabling near-instant settlement and reducing reliance on intermediaries.

Manhar Garegrat, India Head, Liminal Custody, explains: "Stablecoins have emerged as one of the most reliable use cases within the broader crypto ecosystem. Unlike volatile cryptocurrencies, they are designed to maintain a stable value, typically pegged to fiat currencies like the US dollar, and have largely succeeded in holding that peg even during periods of market stress. What makes them particularly compelling is their ability to move large volumes of money, often billions of dollars, quickly and at a fraction of the cost of traditional financial systems."

Another key factor is accessibility. Stablecoins are particularly useful in regions with limited banking infrastructure or high transaction costs. They allow businesses and individuals to bypass traditional barriers, making global payments more inclusive.

Additionally, the ecosystem has matured rapidly. What began as a crypto-native experiment is now supported by regulated issuers and enterprise-grade platforms, increasing trust and adoption among institutions.

Expanding use cases beyond payments

Stablecoins are no longer limited to crypto trading. Businesses are increasingly using them for treasury management, cross-border B2B payments, and liquidity management.

"Today, businesses and institutions are exploring stablecoins for treasury management, using them to hold and move funds more efficiently across geographies without relying heavily on intermediaries. In addition, cross-border B2B payments are becoming a major use case," Garegrat added.

This shift reflects a broader transition, where stablecoins are evolving into core financial tools rather than speculative assets.

Key risks and challenges

Despite the growth, several factors could impact adoption. According to the World Economic Forum, a major concern is the strong linkage of stablecoins to the US dollar. Since most stablecoins are dollar-pegged, their expansion could further strengthen dollar dominance in global finance, raising questions around monetary sovereignty for emerging economies.

The WEF also notes that in countries facing inflation or weak currencies, stablecoins can accelerate currency substitution, making it easier for users to move away from domestic currencies—posing challenges for policymakers.

Regulation is another critical factor. In India, stablecoins are currently classified as Virtual Digital Assets (VDAs), attracting a 30% tax on gains and 1% TDS, which could limit adoption, as highlighted by Garegrat.