How Stablecoins Are Transforming Digital Money Transfer

POSTED BY Nick Maynard
An important challenger of cross-border international payments systems is blockchain-based money transfer solutions. The use of digital currencies provides a means by which token-based payments can be transferred instantly, on a P2P basis regardless of value and without third-party intermediaries in the settlement process. In addition, despite having instant settlement capabilities, blockchain allows a stop gap in the event that errors occur - unlike instant payments’ irrevocability.

Emergence of Stablecoins

However, not all ecosystem actors are as enthusiastic for the use of blockchain and cryptocurrencies in cross-border payments, mainly due to the volatility of these currencies. As such, one alternative has emerged to offer partial stability in cross-border transfer and payments involving cryptocurrencies, namely, stablecoins.

Stablecoins can be described as digital currencies recorded on distributed ledger technologies that peg their value to an external reference, a stable asset, such as a currency (ie, USD, CNY), commodity (ie, gold) or a financial instrument in a given market. In their current form, stablecoins are generally tied to the value of the USD and are designed to reduce volatility relative to unpegged cryptocurrencies, while also retaining their accessibility and 24/7/365 availability features, as well as their secure, fast, and cheaper transmit options. They are also multiple and private, which means they emerged outside of the state-sponsored systems and can use both public and private Blockchains.

Use Cases

The current use cases of stablecoins on public blockchains have surged from 2020, with the most common stablecoin use case for cross-border transactions being payments, in which these currencies have the potential to lower payment barriers thanks to their cheaper, real-time, or near-real-time P2P money transfer capabilities made between digital wallets, which would pose them as direct competitors to instant payment schemes. For payments, stablecoin transactions again make a difference in transaction fees and speed due to the underlying blockchain technology. Similarly, stablecoins can present an alternative to banks in international money transfer, as they are available 24/7; making them more accessible than cash obtained through the banking system.


The greatest challenge in stablecoins’ use going forward is what constitutes the nature of this cryptocurrency
and in fact, any other private cryptocurrency, namely, anonymity and by association, security, and integrity of financial systems. AML (Anti-money Laundering)/KYC (Know Your Customer) and CFT (Counter Financing of Terrorism) regulations need to be observed to the highest degree when cryptocurrency transactions are conducted, and the possibility of P2P transactions in some stablecoin arrangements needs to be considered as a risk.

This will translate into frameworks and measures to be adopted or designed from scratch by regulators for stablecoin governance. Like with any digital product and service, ensuring protection of consumers against any risks (ie, cybersecurity, product risks) is highly important.

Another risk associated with stablecoins is the availability of pegged assets. In cases where stablecoin issuers cannot guarantee the value of stablecoins and/or do not hold the necessary reserves, then the value of the stablecoin can become volatile and transaction risks emerge.

Future Outlook

Juniper Research anticipates that the current use cases and circulating supply of stablecoins will continue to
rise; contingent upon the successful implementation of the cryptocurrency in P2P and international money transfer in time. Nevertheless, this is expected to take a while, as governing mechanisms including rules and regulations for issues endemic to cryptocurrency transactions need to be realised, without hindering transactions and innovations in the money transfer space.
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► Digital Money Transfer & Remittances Market Research

Our latest research found:
  • The volume of digital domestic money transfer payments will exceed 300 billion globally for the first time in 2026, from 207 billion in 2022. This represents a growth of nearly 50%.
  • Superapps, where multiple services including payment and financial transaction processing are available in one app, are driving digitisation of previously cash-based payments, by including messaging and access to other services alongside payments.
  • The top three countries will account for just under 74% of global digital domestic money transfer transactions in 2026. The report identified the top three markets for usage as:
    • China
    • US
    • India
  • The appeal of social payments, in which payments are integrated into social platforms, has driven transactions in these three countries. WeChat Pay in China and Venmo in the US were cited by the research as examples of how social payments are driving domestic money transfer. Money transfer vendors must identify the most popular social platforms in each country and aim to create partnerships that enable social payments.
  • Differentiation is a key challenge for money transfer apps, particularly given the highly competitive market landscape. The superapp approach, where a marketplace of different services is offered in-app, is key to creating money transfer apps that offer greater value for users. Therefore, vendors must onboard other financial service providers and eCommerce merchants, to boost the unique user value their apps represent.