Author: Lawyer Liu Honglin A conversation with a friend who works in cross-border payments. He's been in the industry for many years, and his company has done quite well in recent years. When discussing stablecoins, he asked me a very direct question: "Currently, cross-border payment companies like Airwallex and Lianlian offer many cheap and fast payment options. Why do businesses still need stablecoins? What problems do stablecoins actually solve?" This question is actually better than many questions asked at industry conferences. It doesn't start from concepts or the narrative of the cryptocurrency world, but from real business needs. Businesses won't change their payment systems just because a technical term sounds good. What businesses really care about is: will the money arrive? How long will it take? How much will be lost in the process? Will banks question it? Can the tax authorities explain it? Can the accounting department record it? Are there any regulatory issues? These questions are probably much more important than the concept of "decentralization." Stablecoins are not necessary. If a company conducts legitimate cross-border payments between Singapore, Hong Kong, the United States, the United Kingdom, and Australia, with both parties having bank accounts, payment institutions having established local clearing networks, sufficiently low foreign exchange costs, and complete compliance documentation, then traditional payment solutions are likely sufficient. This is why the founder of AirForex previously expressed skepticism about using stablecoins for cross-border payments in major G10 currencies: if certain mature currency cross-border payment routes can already achieve near real-time speeds and costs close to 0.01%, stablecoins are neither inherently faster nor inherently cheaper. This view may not cover all scenarios, but it is clearly a truth. Many people, when discussing stablecoins, easily equate "cheaper on-chain transfers" directly with "cheaper cross-border payments for businesses." This overlooks many factors: deposit costs, withdrawal costs, foreign exchange costs, wallet and custody costs, compliance review costs, tax and accounting costs, bank account stability, and the cost of explaining the source of funds if questioned. If the recipient ultimately still needs to receive funds in Euros, USD, or HKD, and the company's finances ultimately need to complete accounting and auditing in a bank account, then stablecoins only replace a certain segment with on-chain transfers; they do not automatically mean the entire path is cheaper. Stablecoins are not a hammer; you can't treat every cross-border payment issue as a nail. Conversely, you can't conclude that "stablecoins are meaningless" just because some routes in mature markets are already good enough. The global payment system is not limited to established systems such as the US dollar, euro, Hong Kong dollar, and Singapore dollar.Having lived in mainland China for a long time, it's easy to fall into the misconception that payment issues have been resolved. WeChat Pay, Alipay, UnionPay, and bank apps cover almost every aspect of daily life. For many Chinese, the flow of money seems naturally low-cost, instant, and convenient. However, looking at the global picture reveals that this is only the experience of a few markets. The World Bank's remittance price database shows that as of the third quarter of 2025, the average cost of global remittances was still 6.36% of the remittance amount. This, of course, refers to small-amount personal remittances and doesn't represent the costs of cross-border payments for all businesses, but it illustrates a fundamental fact: friction in global capital flows remains significant. Bank accounts are not widespread in many regions, and dollar accounts are even harder to obtain. Local currencies are unstable, cross-border remittances are slow and expensive, and small and medium-sized businesses engaged in international trade face challenges such as correspondent banks, intermediary banks, foreign exchange, prepayment pools, compliance reviews, and bank working day restrictions. Often, it's not that money can't arrive, but rather that the entire capital chain is too long, too slow, and too uncontrollable. Therefore, the most easily overlooked aspect in discussing stablecoins is conflating "payment" and "clearing." For the average user, payment means scanning a QR code, swiping a card, or transferring money. This action seems simple on the front end. However, the truly complex part of the financial system often lies behind the scenes. A cross-border payment, from the payer to the payee, may involve issuing banks, acquiring banks, payment networks, correspondent banks, intermediary banks, local clearing systems, foreign exchange, anti-money laundering reviews, and sanctions screening. The front end displaying "payment successful" does not mean the funds have been finally settled in the back end. The slow, expensive, and complex part is often not the payment action itself, but the clearing process. The value of stablecoins lies primarily in the second and third layers. It's not about everyone using USDC to buy coffee at convenience stores tomorrow, nor is it about merchants immediately using USDT for accounting and tax filing. What it changes is that the flow of funds that previously required coordination across bank accounts, jurisdictions, and working hours can now be partially handled by a 24/7 on-chain asset transfer system. This isn't glamorous, but it's crucial. If stablecoins were merely a self-indulgent activity within the crypto community, Visa wouldn't need to get involved. Visa is one of the world's most mature payment networks. It has no shortage of concepts, user base, or traditional financial partners. Its willingness to integrate stablecoins into its settlement system indicates that stablecoins are no longer just tools for trading crypto assets, but are beginning to address the core issues of traditional payment networks.In September 2023, Visa announced the expansion of its USDC settlement capabilities, supporting the Solana blockchain and partnering with major acquiring institutions such as Worldpay and Nuvei to test stablecoin settlements. Visa defined this as "modernizing cross-border money flows" in its announcement. Note that Visa wasn't at that time "allowing consumers to directly buy things with USDC." It was doing settlement. Visa officially disclosed that in the pilot program, Visa had moved millions of dollars worth of USDC between partners through Solana and Ethereum for settling fiat-denominated payments already authorized on VisaNet. In other words, the front end could still be a regular card payment, while back-end settlements between certain institutions could be completed using USDC. In December 2025, Visa further announced the launch of USDC settlement capabilities in the United States, allowing US issuers and acquirers to settle with Visa using USDC issued by Circle. At the time, Visa disclosed that as of November 30, 2025, its stablecoin settlement monthly volume had exceeded $3.5 billion annualized, emphasizing a specific benefit: the settlement window could be extended from the traditional five business days to seven days. In April 2026, Visa further expanded this pilot program, announcing that its global stablecoin settlement pilot supported nine blockchains, with an annualized settlement volume reaching $7 billion. While $7 billion sounds large, it's still relatively small within Visa's overall network. Visa's total payment and cash transaction volume disclosed for fiscal year 2025 was in the $17 trillion range. Therefore, the key point isn't that stablecoins have already transformed Visa. The key point is: why is Visa starting to integrate it into the settlement layer? Because Visa's competitive advantage has never been just about "card swiping." It's more like a global financial collaboration network connecting issuing banks, acquiring banks, merchants, payment service providers, and consumers, providing transaction rules, risk control systems, dispute resolution, authorization networks, and clearing and settlement capabilities. Therefore, Visa isn't concerned with whether users can buy a cup of coffee with USDC in the future. Its focus is on whether Visa can maintain its key position in the new clearing network if global fund clearing is increasingly handled by stablecoins and blockchain. This is why Visa focuses on stablecoin settlements, rather than simple crypto payments. This distinction is crucial. Many people, upon seeing "Visa + stablecoin," imagine consumers directly paying with USDC and merchants directly receiving USDC.The actual business process is as follows: users still use familiar wallets, bank cards, or fintech applications on the front end; merchants still receive USD, EUR, or local fiat currency on the back end; the on-chain transfer, fiat currency conversion, merchant settlement, and compliance review are jointly completed by payment networks, stablecoin issuers, partner banks, acquiring institutions, exchange service providers, and compliance service providers. For example, a European user holding USDC can make a payment to a US merchant through a compliant wallet or stablecoin-linked card. The front-end experience is likely similar to a regular credit card transaction. Merchants also don't want a sudden influx of USDC onto their balance sheets; they still prefer to receive USD because they need to use USD for accounting, tax payments, payroll, and procurement. Therefore, USDC can be transferred on-chain to a US partner institution, then converted to USD by a local partner bank or licensed institution, and finally settled to the merchant. The merchant still receives USD. However, the cross-border portion no longer relies entirely on the layers of traditional banking systems. What has been changed is the intermediate clearing layer. Why is this change important? Because the global dollar system in the past was essentially built on a banking account system. Cross-border flows of the US dollar heavily rely on commercial bank accounts, correspondent banking networks, SWIFT messages, clearing accounts, and bank operating hours. This system is very robust and mature, but it wasn't designed for the small-amount, high-frequency, real-time global fund flows of the internet age. Stablecoins bring about a change: for the first time, US dollar assets can be transferred globally in real time using internet-based asset models. USDC and USDT are not central bank currencies issued by the Federal Reserve, nor are they bank deposits. Taking USDC as an example, Circle officially emphasizes that USDC is 100% backed by highly liquid cash and cash equivalents and can be redeemed 1:1 in US dollars; most of its reserves are invested in the Circle Reserve Fund, a government money market fund managed by BlackRock and registered with the US Securities and Exchange Commission. Therefore, USDC is not a "real dollar"; more accurately, it is an on-chain US dollar debt certificate backed by reserve assets and promised to be redeemed 1:1. However, its special feature is that this debt certificate can circulate on-chain in real time. From this perspective, compliant stablecoins like USDC are essentially closer to an "internet-based US dollar money market fund share." Behind it all are short-term US Treasury bonds, cash, escrow accounts, redemption mechanisms, and compliant disclosures; at the front end is a digital dollar that can circulate on the blockchain. This is also the key to Circle's business model. Circle did not become a stablecoin giant through "transfer fees."Coin Metrics' analysis of Circle's IPO filings shows that Circle's revenue in 2024 was approximately $1.7 billion, with 99% coming from interest income from USDC reserves. Simultaneously, it paid approximately $1.01 billion in distribution costs to distribution partners such as Coinbase and Binance. This data is quite interesting. It illustrates that Circle's essence is not merely a blockchain technology company, but a financial infrastructure company that digitizes, productizes, and globally distributes dollar assets. The larger the circulation of USDC and the more reserve assets it holds, the higher the interest income. However, USDC's expansion is highly dependent on exchanges, wallets, payment networks, banks, merchants, and various ecosystem partners, so Circle must share a significant portion of its revenue with distribution channels. This also explains why Circle needs Visa. Circle has digital dollars, but lacks a global merchant acceptance network like Visa. Visa has a global payment network, but lacks its own mainstream on-chain dollar assets. Therefore, they are not simply competitors, but rather complementary. Circle solves the problem of "where do on-chain dollars come from?" Visa solves the problem of "how do on-chain dollars enter the real world?" One is responsible for assets, the other for the network; one for issuance and redemption, the other for connecting issuing banks, acquiring banks, and merchants; one puts the US dollar on the blockchain, the other connects the on-chain US dollar back to the traditional financial system. Stripe's acquisition of Bridge is also completing a piece of the puzzle. Stripe is already one of the world's most important internet payment infrastructure companies. In February 2025, Stripe announced the completion of its acquisition of stablecoin infrastructure company Bridge. Bridge's positioning is straightforward: to provide businesses with an end-to-end platform for receiving, storing, exchanging, issuing, and spending stablecoins. Why did Stripe buy Bridge? Because internet commerce is becoming increasingly globalized. Creators, developers, merchants, platforms, AI agents, and cross-border service providers all need faster, cheaper, and more flexible ways to move funds globally. If stablecoins begin to become the next generation of clearing tools, Stripe cannot simply stand by and watch. PayPal's launch of PYUSD follows a similar logic. In August 2023, PayPal launched PYUSD, a stablecoin backed by US dollar deposits, short-term US Treasury bonds, and similar cash equivalents, and can be redeemed 1:1 in US dollars. Why are these companies all moving towards stablecoins? It's not because they suddenly embraced the idealism of the cryptocurrency world. Rather, it's because they've foreseen a real trend: the future global payment network may gradually evolve from a "bank card network + bank account network" to a hybrid structure of "traditional account network + stablecoin clearing network." This is why I believe stablecoins deserve serious study.It's not about conceptual allure, but rather its ability to address a very specific problem within the global financial system: the global flow of money remains too slow, too expensive, and too fragmented. Of course, the risks of stablecoins cannot be ignored. The Bank for International Settlements (BIS) adopted a restrained stance on stablecoins in its 2025 annual economic report: it acknowledged their potential in tokenization and noted their use in crypto assets and cross-border payments in emerging markets lacking access to US dollars; however, it emphasized that stablecoins cannot yet become the backbone of the future monetary system in terms of its unity, resilience, and integrity. The Financial Stability Board (FSB) also emphasized the need for consistent, effective regulation, supervision, and cross-border coordination of global stablecoin arrangements in its 2023 recommendations on global stablecoin regulation to address potential financial stability risks. What does this indicate? It means that once stablecoins enter global clearing infrastructures, it's no longer a purely technical issue, but rather a matter of financial regulation, monetary sovereignty, anti-money laundering, sanctions compliance, reserve asset management, and cross-border cooperation. In the cryptocurrency narrative, stablecoins are often portrayed as "bypassing banks." However, in the business models of companies like Visa, Stripe, and PayPal, stablecoins are not intended to circumvent regulations, but rather to be integrated into regulatory processes. Many Chinese entrepreneurs understand stablecoins as "circumventing regulations." But Visa understands stablecoins as "upgrading clearing." These two logics are completely different. This is something Chinese companies especially need to pay attention to. In the context of mainland China, stablecoins cannot be simply understood as "more convenient cross-border payment tools." In 2021, the People's Bank of China and ten other departments issued the "Notice on Further Preventing and Handling Risks of Virtual Currency Trading and Speculation" (Yinfa [2021] No. 237), which clearly states that virtual currencies do not have the same legal status as legal tender, do not have legal tender status, and should not and cannot be used as currency in the market; engaging in business activities such as exchanging legal tender for virtual currencies, exchanging virtual currencies for each other, and providing information intermediary and pricing services for virtual currency transactions are illegal financial activities.On February 6, 2026, eight departments, including the People's Bank of China, the National Development and Reform Commission, the Ministry of Industry and Information Technology, the Ministry of Public Security, the State Administration for Market Regulation, the Financial Regulatory Commission, the China Securities Regulatory Commission, and the State Administration of Foreign Exchange, jointly issued the "Notice on Further Preventing and Handling Risks Related to Virtual Currencies" (Yinfa [2026] No. 42), which reiterated that virtual currency-related business activities are illegal financial activities and are strictly prohibited within China. The notice also made more specific regulatory arrangements regarding RMB-linked stablecoins, the issuance of virtual currencies by domestic entities and their controlled overseas entities, and the tokenization of real-world assets. Therefore, Chinese companies should not simply conclude that "we can also use stablecoins for payments" just because Visa, Stripe, and PayPal are all using stablecoins. Regarding the use of stablecoins, I usually advise Chinese companies to ask themselves three questions first. The first question is: Where is the business entity located? If the entity is in mainland China, with business, customers, employees, suppliers, revenue, and expenses all within the country, then stablecoin payments are unnecessary and should not be used. So-called USDT payments, stablecoin payroll, and on-chain liquidity pools may all pose high risks under the current regulatory framework. The second question is: Where is the transaction scenario? If a company already has overseas entities, overseas customers, overseas teams, and overseas suppliers, and its business takes place in jurisdictions that allow the compliant use of stablecoins, then stablecoins can be studied as a funding tool. However, this does not mean that companies can arbitrarily receive and exchange coins. It still needs to complete a closed loop through local licensed institutions, bank accounts, tax processing, and accounting systems. The third question is, what operational problems do stablecoins actually solve? If traditional payment solutions are already cheap, fast, and stable enough, then there is no need for stablecoins for the sake of stablecoins. However, if a company is dealing with global freelancer payments, small-amount, high-frequency cross-border settlements, on-chain native businesses, unbanked users, and markets where obtaining US dollars is difficult, then stablecoins may truly generate value. The valuable stablecoin system of the future is unlikely to be a completely bankless "de-banked finance." Instead, it will increasingly resemble a hybrid structure: front-end users will still use familiar wallets, bank cards, and payment tools; back-end merchants will still receive fiat currency; and the middle layer of cross-border clearing networks will increasingly be completed jointly by stablecoins, blockchain, banks, and payment networks. This is also the most noteworthy aspect of the Visa and Circle collaboration. It doesn't tell us that traditional finance is going to be wiped out by crypto finance. On the contrary, it tells us that traditional finance is absorbing crypto finance.Stablecoins are evolving from a medium of exchange within the cryptocurrency world into a new type of clearing module in global payment networks. This won't happen overnight, nor will it occur simultaneously in all countries and scenarios. But the direction is becoming increasingly clear. This may be the true significance of stablecoins.