When Technology Meets Forex Barriers: Why is the Rise of Stablecoins Difficult to Break the "Traditional Dilemma"?

Written by: Sidhartha Shukla, Bloomberg

Compiled by: Saoirse, Foresight News

Key points of this article

According to data from Visa and Allium, the trading volume of stablecoins has reached $5 trillion as of 2025, involving 1 billion payments.

When using stablecoins to exchange for different fiat currencies, costs similar to conventional exchanges will be incurred, including bid-ask spreads, exchange fees, intermediary fees, and slippage.

Mike Robertson, CEO of the foreign exchange infrastructure company AbbeyCross, stated when discussing the limitations of stablecoins as emerging payment tools: “In the cryptocurrency space, some believe that code and technology can solve all problems. But in the foreign exchange field, this idea is too naive.”

Although stablecoins have reached the peak that people expected, senior professionals in the fintech field still believe that as emerging payment tools, these tokens have limitations.

According to data from Visa and Allium, as of 2025, the total volume of stablecoin transactions has reached $5 trillion, involving 1 billion payments, which is not far from the total of $5.7 trillion for the entire year of 2024. Since Donald Trump was elected President of the United States in November 2024, the total market capitalization of these cryptocurrencies, which aim to track the prices of mature currencies like the dollar, has increased by 47%, reaching $255 billion.

The prospects of stablecoins are bringing a faster, lower-cost, and more efficient future for the payment sector, especially in cross-border payments. Data shows that this potential is gradually being realized, but there are still doubts about whether this technology can solve the long-standing issues that have plagued the foreign exchange business for decades.

When exchanging stablecoins for different fiat currencies (such as euros for Hong Kong dollars), many of the same costs as regular exchanges will be incurred.

“In the cryptocurrency space, some believe that code and technology can solve all problems. But applying this thinking to the foreign exchange field is overly naive,” said Mike Robertson, CEO of foreign exchange infrastructure company AbbeyCross. “Each currency has its unique dynamics. Moreover, most banks and payment institutions derive their profits from foreign exchange trading, not from transaction fees.”

The trading volume of stablecoins is expected to double compared to last year.

Source: Visa, Allium

Note: Data as of July 2025

Forex costs typically include the bid-ask spread, exchange fees, intermediary costs, and slippage. These costs also exist in cross-border cryptocurrency transactions and may be particularly pronounced during the capital inflow and outflow stages, posing a challenge to the “low-cost” claims made by stablecoin advocates.

The growth in stablecoin payment volume is mainly attributed to two major application scenarios: first, simplifying cross-border transactions that traditional financial institutions have insufficient coverage on; second, payment services in emerging markets.

The startup BVNK, which focuses on stablecoin payment infrastructure, is not particularly concerned with payment channels related to the British pound and the US dollar. According to Sagar Sarbhai, the Managing Director of BVNK for the Asia-Pacific region, the company is turning its attention to “alternative” payment channels, such as payment routes from Sri Lanka to Cambodia.

“Such routes typically require the involvement of multiple intermediaries, which not only increases costs but also slows down the process. Stablecoins simplify this process. Although the current costs may not necessarily be low, the speed is faster, and the efficiency of fund utilization is also higher,” he stated. Today, BVNK’s annual transaction volume is approximately $15 billion.

There are not only BVNK among the startups focused on helping enterprises engage in stablecoin business.

After experiencing a winter in the cryptocurrency industry in 2022, Conduit has transformed to enter the stablecoin payment sector. This startup has begun utilizing stablecoins, allowing users to remit through local systems such as Brazil’s Pix and receive payments via SEPA (the Single Euro Payments Area, a standardized payment system covering the EU and some European countries). According to CEO Kirill Gertman, the company’s annual processing scale currently reaches $10 billion.

Thunes, based in Singapore, and Aquanow from Canada are also trying to collaborate with stablecoin issuers and businesses to streamline payment processes.

“The rise of stablecoins is a business opportunity,” said Thunes CEO Floris de Kort, who raised $150 million in April this year. “The infrastructure may change, but people will always need to complete ‘last mile’ payment delivery using local currency and wallets.”

Venture capitalists reignite interest in stablecoins

Source: CB Insights

Note: Data as of July 23, 2025

Compared to the scale of mature payment operators, the above data may seem insignificant. According to Visa’s latest annual report, the payment processing scale of Visa alone is projected to reach $13.2 trillion in 2024, which is more than double the total volume of stablecoin transactions during the same period.

However, the rapid growth of the market has made payment giants highly alert. They are exploring the so-called “stablecoin interlayer” model: introducing stablecoins between two fiat currencies to bypass traditional banking networks such as the Society for Worldwide Interbank Financial Telecommunication (SWIFT), achieving transaction settlement within minutes, with a focus on markets with dollar liquidity shortages and inefficiencies in traditional systems.

In October 2024, Visa launched a platform that allows banks to mint, burn, and transfer tokens backed by fiat currencies, including tokenized deposits and stablecoins.

The recently passed “GENIUS Act” in the United States provides a clear regulatory framework for the world’s largest stablecoin market, allowing banks and payment institutions to enter the field with greater confidence. This has triggered a competitive response from global regulatory agencies, which are all formulating similar regulatory rules for stablecoin issuers.

“We are just beginning to see signs of exponential growth,” said Sarbhai of BVNK, “The foundation laid over the past five years may lead to an explosion in the next 12 months.”