What Has Stablecoin Ever Done For Us?

Regulatory developments such as the US GENIUS and CLARITY Acts, and the EU’s Markets in Crypto-Assets Regulation (MiCA) are beginning to make the integration of stablecoins into corporate payment systems more viable. But should companies act now to ensure their systems are ready for adoption? Jan Bakker, Senior Vice President Payments, Serrala, shares his views.

Stablecoins are primed to be a practical domestic and cross-border payments solution for corporate treasuries around the world. However, their acceptance is far from universal in this community because many – possibly even most – companies are not equipped for the operational overhaul that stablecoin adoption will almost certainly introduce.

For instance, because stablecoins can create almost instant payments, they demand clear corporate approval structures, strong visibility, and well-defined ownership. Their use also comes with a new regulatory playbook that is yet to be unified globally, or in the case of the US CLARITY Act (which aims to modernise sanctions enforcement and strengthen co-ordination between the private sector and US agencies), even gain full approval.

But the use of stablecoins in the corporate setting will, for many, become a competitive game-changer, suggests Bakker. The option of lower cost and instant cross-border payments may prove equally alluring for operationally challenged finance functions and executive boards seeking to uphold investor value.

And the keyword here is ‘option’ because stablecoins are unlikely to be the sole system of choice but instead become a useful complement to existing fiat-based payments systems; find a genuine use case and the driver for their adoption is boosted.

Rules vs rules

Having worked for a number of years on the banking side of the equation, implementing payment hubs, Bakker is now in the treasury technology space. From his dual perspective, he sees the current regulatory inconsistency as a hurdle for both stablecoin service users and providers, but one that will be resolved sooner rather than later.

“Europe has the clearest rules in place for stablecoin use, but from a treasury perspective, maybe not the greatest need for it,” he comments. “Across APAC, the picture is fragmented, with some markets such as Singapore and Hong Kong ahead and many others still to implement. In the US, the GENIUS [Guiding and Establishing National Innovation for U.S. Stablecoins] Act works in favour of stablecoin by creating the regulatory framework. CLARITY [full name: Digital Asset Market Clarity Act], once it is approved, will establish a broad regulatory framework for a US digital asset infrastructure.”

CLARITY, as stated, is yet to be approved. The remaining points of discussion here seem to be about implementation. These cover areas such as federal and state enforcement powers, stablecoin yields, banking safeguards, and protections for software developers. But for Bakker, the delay in its approval has no significant impact on the ultimate adoption of stablecoins, but is rather a process that serves to finesse that outcome.

Indeed, Bakker sees the regulatory process as a positive. “Regulation, especially in banking, has always been one of the major drivers for the execution of innovation,” he notes. “PSD2 and Basel III both steered banks towards making changes to the way they operate or the way they deal with their customers,” he explains. “The rules create necessary momentum. And the more regulation there is around topics such as stablecoin and digital assets generally, the more comfortable corporates will feel in using these new rails.”

Advance party

Some are already there. TMI reported in 2024 how J.P. Morgan and Siemens had worked in tandem to change how the latter’s cross-border intercompany payments were executed. It married Siemens’ in-house banking structure with J.P. Morgan’s creation of a first-of-its-kind tokenised deposit and programmable payments system to facilitate the process.

The event marked a significant moment both in how technology was, and is, being used, and in how large corporates are taking the initiative to drive banks towards investing in token-based cross-border cash movements and settlement cycles. At a client/bank level it signifies a rebalancing of the relationship.

But, Bakker notes, “there is a strong cultural element to this change too”. European markets, for example, are well used to driving change via regulatory input, but the US is less enthusiastic about regulation, the market preferring instead to steer its own path. Either way, progress is being made, of sorts.

A recent RedCompass Labs survey of 300 senior payments professionals across Europe, the UK and the US, found that 72% of banks are actively planning, building, piloting, and operating their own payment stablecoins. But only 10% have those capabilities live and in production. The report, Are banks actually ready for digital money?, suggests that 57% expect to build new infrastructure or materially upgrade existing systems to support stablecoins or tokenised deposits. However, regulatory uncertainty is the biggest barrier to adoption or scale – an issue cited by 35% of survey respondents.

On and off the rails

Despite the forward-looking work of partnerships such as J.P. Morgan and Siemens, generally, banks and other ecosystem providers are not fully sold on wider stablecoin adoption, Bakker believes. In his own organisation, Serrala, a major discussion point is creating a multi-rail strategy for its corporate clients.

“Banks offer certain rails but the way they deal with, for instance, batch-oriented versus real-time processing, is changing,” he comments. “The overlay of verification of payee and other fraud prevention and detection tools increasingly needs to happen in real time. I think many have, or are struggling with, the demands of that.” In addition, he sees banks facing deeper liquidity requirements to fund real-time processing.

“It’s putting a lot of stress on the banking system itself,” says Bakker. “It’s quite a challenge for them to balance all of these changes. And now they see new payment rail providers entering the market that could take away some of their transaction volumes.”

Meanwhile, the arrival of new PSPs with a stablecoin option offers no such concerns for some of the banks’ corporate clients. Indeed, notes Bakker, those that are already using stablecoin as a cross-border payments tool will be benefitting from the flexibility this system can offer. “They will be exploring the lower cost of payment transactions and processing, and gaining faster speeds and better reconciliation options, just by taking those payments out of the banking system.”

Of course, banks will understand that corporates are not about to jettison traditional payment rails in favour of a new digital mechanism. The transfer of some funds using stablecoin is possible, and this may present corporates with a more optimal route, notes Bakker.

This is perhaps why some banks are now stepping up to stablecoin. It is a strategic approach in which they run both rails in parallel, giving all-important client optionality. But, he adds, “at some point these rails have to join”. This is the so-called on- and off-ramp mechanism that enables fiat money to be converted in and out of stablecoin.

“Alongside generating a serious corporate use case, on- and off-ramping presents the biggest challenge today for the industry because if liquidity is locked up in a digital wallet, many treasurers will question whether this is really where they want it to be,” comments Bakker. “Conversely, if there is flexibility around the on/off ramp, it will surely drive adoption.”

Building on solid ground

The ideal roadmap for stablecoin and traditional fiat currency rails operating harmoniously is around cross-border payments, suggests Bakker.  “What Siemens set out to do, and the approach we recommend and are exploring ourselves, is to ‘start simple’,” he says.

The infrastructure is in place to enable the use of a stablecoin, but he cautions companies against putting the deployment of stablecoins ahead of any properly considered business case. “Among the most viable use cases would be for cross-border payments for a specific supplier – paying one located in Brazil out of the US, for example,” he suggests.

Once valid grounds for the use of stablecoins have been established, it is essential to build controls around supporting processes and mechanisms, says Bakker. “Only then should users begin to consider scaling up to different geographies, automating across multiple transaction types, or treating them as regular payment modalities.”

When a successful stablecoin structure has been established, users may begin to consider the balance between this set-up and payments traffic through regular rails. By applying KPIs, it should reveal how, as more use cases emerge, the benefits of stablecoin can be better leveraged and the balance between rails redistributed.

“On the corporate side, there needs to be a strong degree of payment infrastructure flexibility to enable switching between the different rails,” says Bakker. He adds that an in-house payment infrastructure, or use of cloud-based platforms, enables more flexibility towards different initiatives, aiding users to become “more experimental” in their approach and outlook.

Pivot point

The movement of banks towards a more active stance on stablecoins will, of course, be driven in part by corporate appetite for their use. In Europe, the roll-out of the Wero digital wallet, promoted by the bank consortium-led European Payments Initiative (EPI), is enabling users to receive money and pay direct from their bank account, 24/7 and in almost real-time. It may mark a significant change in expectations for users.

In the Netherlands, for example, Bakker explains that Wero will officially absorb the transactions, and brand, of the domestic online payments system, iDEAL. The transition into Wero over the coming months enables iDEAL users to make cross-border online payments with much the same ease as they have done domestically.

It is noteworthy that the Dutch Central Bank has now assumed oversight of iDEAL and Wero. The transition of the former into the latter is aimed at creating a unified, future-proof European payment system. In doing so, it raises considerable user expectations around payment system convenience and reach.

“This is driving corporates, and even banks, to see that maybe they should be thinking more about open banking and new payment rails without taking their percentages on transaction fees,” comments Bakker. “And once the pressure for change builds – and it is building now – driving some of those other discussions, about stablecoin adoption for example, becomes the logical next step.”

But a word of warning. Having pronounced the regulatory environment as the driver for technological adoption, Bakker is not certain that the current fractured ruleset around stablecoin use will support much of an argument for adoption. “It really depends on the scenario. If we talk about cross-border payments globally, then I think the regulatory environment is still challenging. There is still too much variance across different geographies and territories.”

Within Europe, the digital euro is gaining support, albeit more as a cash-equivalent than a digital payment per se. But in the US, Bakker says there is mounting appetite to move away from current payment modalities, notably cheques and credit cards, where beneficiaries must wait a relatively long time for their cash to arrive. That desire for speed may also be attributed, in part, to the reset of expectations created by real-time and 24/7 systems elsewhere.

Speed of entry

Indeed, comments Bakker, speed is of the essence for most businesses today. “I think the market is starting to look more to account-to-account transfers and stablecoin transactions because the speed at which they can access their funds improves reconciliations, cash flows, and ultimately drives liquidity optimisation.” It just needs that regulatory consensus to start building critical mass.

So while Bakker sees the US market as generally keen to push on with a complementary stablecoin-based payments structure, he feels the European market may, for now, be a little too wedded to more traditional payments services – even modern variants such as virtual cards, where he feels bank profits and client rebates are tempting. The current set-up in Europe, he notes, “is not necessarily the best incentive for all players to move on”.

Nonetheless, for companies operating in a domestic arena, speed in clearing and settlement cycles, having early visibility in fraud cases, and ensuring optimisation of working capital may finally prove the most important drivers for stablecoin adoption. For international and global enterprises, the same benefits endure, says Bakker, but the leading lure in this context he feels will be cross-border speed and FX optimisation.

It will ultimately be the sharp-end of business where the discussion really matters. Bakker cites the challenge of a current client – a large organisation – that annually executes around 30 acquisitions. “One aspect it often struggles with during these acquisitions is establishing new banking infrastructures and new payment rails, especially in developing markets,” he explains.

“In this context, the use case for a stablecoin structure is now being explored with this client because it can make the onboarding process for the acquired companies so much quicker.” It’s a practical use case with a positive business impact. Stablecoin, it seems, is primed to offer treasurers and their organisations a rather interesting cash flow and payments alternative.