PaymentsTalk: Stablecoin Rails Are Eating Fiat Settlement: How the next generation of card infrastructure is being built

What are stablecoin cards?

As for the mechanics, stablecoin cards are like regular ones except that authorisation on stablecoin balances happen on the blockchain. Stablecoin adoption for a variety of use cases has been on the rise recently. One of their advantages is that they can be used to top up an account at weekends. Developments with stablecoins impact almost everyone, well beyond the crypto and blockchain sphere. Clients of Rain – which relies on Fireblocks for its critical institutional-grade custody and security layer – can provide a number of services to their customers, including crypto and collateral cards. There are also fintech apps that abstract the stablecoin element from the end user relying on Rain’s technology.  

Players in the stablecoin space

The past 18 months have seen a huge uptake in stablecoin use. While transactions’ value was about $200M on Fireblocks one and a half years ago, today it’s approximately $2Bn, and with major players in the fintech arena adding stable coin backed cards to their offerings, it seems that we’re still only scratching the surface. While Rain is a member of the Visa and Mastercard networks, there are non-banks members too, such as Fireblocks. On stablecoin rails, members can authorise and settle with the card networks directly without or with only limited bank dependencies, which enables 24/7 settlement relying on a borderless infrastructure. Thanks to its programmability, stablecoin infrastructure has collapsed the stack that may have previously included 3-4 vendors. 

Blockchain has made great strides since Ethereum L1, which was still very slow and expensive. Today, although still far from being perfect, blockchains can already execute sub-second blocks at the cost of less than a penny.  The profile of stablecoin users has changed during this shift too. Today, their clientele includes not only crypto natives but also payment fintechs and incumbent banks. When Rain started in 2021, it provided decentralised autonomous organisations (DAOs) with cards and today it has large financial institutions and banks among its clients. Some incumbents, such as Visa, have decided to join the fold of fintech innovators and embrace disruptive technologies such as stablecoins, thus providing the infrastructure for other fintechs too. While adoption is accelerating, stablecoins are still mostly B2B, used between schemes, acquirers and merchants. The most popular emerging B2C use case right now is payments to gig economy workers, growing 20-30 per cent quarter on quarter. Meanwhile, only about five per cent of the payment volume is made up of consumers paying a business with stablecoins or crypto. Traditionally, there have been two barriers to the roll-out of fintech products: regulation and infrastructure. Stablecoins solve the second, while the GENIUS and the Clarity Act in the US and MiCA in the EU now offer guidelines and reassurance for providers and users, increasing adoption. 

The panel’s advice

• Today, you can start a financial institution that runs solely on stablecoins – without an actual bank behind it.
• Understand first what benefits and efficiencies stablecoins can bring to your business – for example, internal treasury movement, new neobank products or cost reduction.  
• In the medium term, the volume of locked capital between businesses will decrease and businesses incorporating stablecoin payments into their models will certainly benefit from the new technology.
• Digital assets shouldn’t be the only rail a business relies on but – to thrive – it must be connected to SEPA or other global protocols in the region where it operates and, if it’s an international payment provider, it must be connected to digital assets, otherwise it’s bound to lose business.
• Stablecoins are not necessarily cheaper; they are faster.