Stablecoins Reshape a New Paradigm for Global Capital Flow

Stablecoins, as one of the most practical tools in the field of digital currency, are providing a new and efficient infrastructure for traditional financial payment systems. Over the past year, the total market capitalization of stablecoins has grown by more than 50%, currently surpassing 250 billion USD, supporting the efficient flow of payment funds on a global scale of trillions.

Industry insiders generally agree on the value of stablecoins: it fully reflects the core capability of blockchain to transfer funds and value instantly, creating the possibility of building a complete business closed loop on-chain. However, true enterprise-level payment scenarios are far more complex than simple peer-to-peer transfers.

Currently, enterprise-oriented stablecoin applications mostly adopt the "stablecoin sandwich" architecture: using blockchain to replace traditional payment channels for horizontal value/funds transfer, while still relying on the traditional financial payment system at both ends. Although this design has clear improvements, it also limits the full realization of blockchain advantages.

This article will explore how stablecoins are applied in cross-border payments from the perspective of global capital transfer.

1. Analyze the existing global cross-border payment system;
2. Analyze the specific improvements of the stablecoin sandwich architecture in fund management, B2B payments, and card network settlements.
3. Discuss how to break through the limitations at both ends of the stablecoin sandwich to achieve full connectivity of blockchain value.

1. Background of Stablecoin Payments

Among the many applications of stablecoins, B2B enterprise payments are the most noteworthy. The latest report shows that the average monthly B2B enterprise payment amount increased from $770 million to $3 billion last year. A certain payment platform stated that stablecoins account for nearly half of its transaction volume, with 49% of customers actively using stablecoin payments.

The internal data of leading companies can better reflect the scale of niche markets. According to reports, a large payment company processes about $15 billion annually, with roughly half coming from B2B enterprise payments. Another company reported an annual transaction volume of $12 billion.

The use of global payments is becoming increasingly popular, primarily because the advantages of blockchain-based stablecoins become more prominent as traditional financial payment infrastructures become increasingly outdated. Although traditional networks facilitate over $100 trillion in global payment volume annually, businesses and banks still face enormous challenges such as complexity and delays.

2. Several Models of Global Cross-Border Payment

2.1 Bank Infrastructure Based on SWIFT

In interbank transactions across different countries, the entire process is divided into "message transmission clearing" and "fund settlement": a certain system is responsible for transmitting transfer instructions between banks, while the actual flow of funds only occurs between banks that have previously established correspondent accounts and can directly conduct lending transfers.

Only when both banks have connected to the system and are partners can the final transfer be completed. If there is no direct cooperative relationship, it is necessary to link the corresponding agent banks that have the appropriate interfaces and positions to complete the fund settlement.

With the need for more intermediary banks, issues such as extended settlement times of several days, rising costs, and difficulties in tracking have emerged. This has led to great inconvenience, as even cross-border payments between neighboring countries must go through banks in other regions.

2.2 Cross-border Fund Pool Model Based on PSP

The service model of the cross-border fund transfer provider (XBMT) has emerged, aiming to enable enterprises to complete global payments without directly going through traditional channels. This capability is also referred to as "global multi-currency account" or "local receiving account".

Its essence is a cross-border fund pool model, and the core service is to provide enterprises with a multi-currency fund pool to enable flexible payments between different countries.

XBMT is responsible for managing compliance and banking relationships, while enterprises receive a single multi-currency banking product that constitutes a "closed loop". This means there are no external operators or dependencies that add cost or complexity. Internal ledgers are like the meat in a sandwich, and local receiving accounts in various regions are the bread. Liquidity is managed internally among the accounts.

Despite the surface-level gloss, XBMT is still built on traditional rails, creating an "instant settlement experience" through sophisticated liquidity management. However, the speed and scale of such designs are always constrained by the available liquidity of XBMT in specific countries, as well as the settlement timeliness of its underlying settlement rails.

Some payment companies in developed countries have built relatively complete "global multi-currency accounts" or "local collection accounts", which can achieve relatively "zero-cost" fund disbursement. Compared to the "stablecoin sandwich" model, which incurs deposit and withdrawal costs at both ends, this has a greater cost advantage.

Therefore, using stablecoin for payments requires clear situational advantages and cannot be generalized.

2.3 stablecoin mode

Stablecoins represent a deeper leap: they leverage blockchain technology to reconstruct the way internet commerce operates.

The settlement cycle of stablecoins is equivalent to the block time of their issuing blockchain, which is an order-of-magnitude speed-up compared to traditional transfers. Any system relying on traditional methods can be replaced by a shared, verifiable ledger that can track the issuance and ownership of stablecoins.

Moreover, it is crucial that stablecoins are typically deployed on top of smart contract platforms, enabling innovative systems and workflows that traditional banking rails cannot achieve. On open and verifiable protocols, anyone can add functionalities to stablecoins without permission.

From a macro perspective, faster and more interactive financial payments can directly expand global GDP: companies can receive payments more quickly, allowing funds to flow into downstream processes faster, thereby reducing management costs and capital occupation caused by settlement delays. When the settlement cycle is compressed from "days" to "seconds" or "minutes", its ripple effects will sweep across the entire economy. At the same time, the existence of verifiable standards allows financial innovation to occur globally without permission for the first time, which is a qualitative change that traditional financial systems cannot achieve.

3. The Application of Stablecoins in Global Payments

3.1 Enterprise Capital Management

For example, in the case of corporate fund management: suppose a company has an obligation to pay in currency b in country B on a certain date. They must prepare for a fund transfer from country A in currency a before the payment is due.

This is the prepaid fund process, and the corporate finance team must consider the preparation time required to execute payments in a timely manner.

The team must open an account at a local bank in order to make payments on time. Sometimes, to support this, the company may seek short-term loans from partners in the region. The longer the global fund settlement delays, the greater the foreign exchange risk exposure, and the higher the capital requirements for the corporate finance department. For companies that only want to execute global payments, managing derivatives to hedge currency risk and calculating short-term liquidity will significantly increase operational expenses.

Stablecoins simplify this system by eliminating the requirement for control over international settlement delays.

We can see the role of the "stablecoin sandwich" structure: although the initial deposits and withdrawals at both ends must still touch the fiat currency system, the existence of stablecoins allows for smooth completion of the capital flow between the two fiat "ramps."

By using stablecoins, the entire processing procedure is split into local transfers conducted within Country A and Country B, while the blockchain facilitates global liquidity settlement between both parties in the middle. ( Note: In order for this exchange to be successful, there must be sufficient liquidity on-chain to convert A stablecoin to B stablecoin. )

3.2 B2B enterprise payment

The process of global B2B enterprise payments is similar to corporate fund management, but B2B scenarios can yield greater benefits because B2B payments are often more complex, and their success or failure may impact other aspects of business operations.

In this type of payment, banks in different countries are usually directly linked to the delivery of a service or goods. This means that all parties will be more sensitive to the tracking of payment progress. For example, in the "pre-financing" diagram mentioned earlier, the cost of pre-financing may depend on the real-time status of a payment.

In addition, if the payment channels required by enterprises are relatively niche, they often need to go through multiple international transfer routes to complete the fund allocation. Such routes may lack a clear progress reporting mechanism and are also limited by the banks' non-24/7 operating hours, which can easily extend the payment time.

When these B2B cross-border payment processes are executed with stablecoins in the middle of the chain, a series of additional benefits will emerge at the enterprise level:

• Both parties can clearly and in real-time manage and monitor the payment status.
• Financing can be directly linked to time-sensitive raw materials or delivery nodes, allowing businesses that are highly dependent on the timely arrival of goods to avoid significant risks or delays.
• As the risk decreases, the cost of capital also declines, and the turnover speed of capital accelerates; with the maturation of stablecoin integration solutions, this effect will bring considerable productivity improvements globally.
• Similar to the scenario of corporate fund management, agency bank links, pre-financing needs, and most foreign exchange exposures have basically been removed. The entire process has been compressed from 3 days in the past to just a few seconds, and there is no need to consider market closures, resulting in a significant reduction and simplification of working capital needs.

3.3 Card Organization Network Settlement

In the card organization network, the issuing institution sends payment on behalf of the cardholder to the acquiring bank of the merchant, which receives the payment and credits it to the merchant's account. These banks do not directly settle debts; they are all connected to a payment network, conducting net settlement between banks during business hours on weekdays. Each bank must maintain a prepaid balance for timely wire transfers.

A certain payment company began trialing the use of stablecoins for settlement between acquiring banks and issuing banks as early as 2021. This method of using stablecoins replaced the wire transfer process, opting instead for USDC on Ethereum and Solana. After completing card authorizations on specific dates, the company uses USDC to debit or credit the banks of both parties involved in the transaction.

Since the system operates on the company's internal network, its net effect benefits the partners within the network. This is most similar to the closed-loop system of XBMT, but the large scale of the card organization network benefits the issuing/acquiring institutions ( because they previously had to manage global payments ).

The advantages of stablecoins are similar to those of capital management, but these advantages belong to the banks within the network: they can reduce the capital requirements needed for timely international transfers, thus avoiding foreign exchange risks. In addition, the openness, verifiability, and programmability of blockchain lay the foundation for credit and other financial infrastructure among banks within the network.

Four, Outlook

Currently, most stablecoin applications remain at the "sandwich" structure itself and have not made further breakthroughs. In reality, very few enterprises actually use on-chain payments and stablecoins. As long as any link still needs to touch the fiat currency track.