Stablecoins are a good fit for payments, but they have a "ramp" problem, according to Tanner Taddeo.
"There are companies that are sitting on stablecoins, but when you need to move them from 'stablecoin x' into a local currency, the off-ramp issue is a problem," Taddeo, CEO of Stable Sea, told American Banker.
Taddeo founded Stable Sea in late 2024, along with a group of other Block staffers who were part of TBD, a decentralized finance unit that
That model makes stablecoins the most likely form of cryptocurrency to be used for payments, but there are complexities in processing that have held that back, namely the difficulty in moving stablecoins to traditional currency to complete a transaction. "If you are a business, you need to get to the local 'fiat' currency for local processing," Taddeo said.
Ramp to payments
The value of stablecoin transactions in 2024 reached $15.6 trillion, according to
Off-ramping technology is fragmented and is still evolving, Taddeo says, adding that there is a market for a platform that can manage the technology, compliance, risk and other steps involved in the transfer of stablecoins to traditional currency.
"With more stablecoins there are going to be more stakeholders, merchants and other users," Taddeo said.
Stable Sea sees an opportunity initially in business payments, where stablecoins can be used to expedite supply chain transactions but cannot be used as the actual tender for those transactions. That is because it's unlikely that stablecoins can support all of the sender and recipient's financial and payment needs. "If you want to send money to South Africa for payroll, you still have to move that stablecoin to South Africa and its recipients and do the conversion," Taddeo said.
Winning converts
The challenge for Stable Sea or any firm that wants to support stablecoin payments at the point of sale is convincing people why stablecoins are necessary for that purpose.
"Whether or not these stablecoins are adopted in a retail payment environment will depend on whether retailers are actually willing to accept these stablecoins on a basis comparable to cash or credit card payments," Joel Telpner, a lawyer who specializes in blockchain and related technology for Sullivan & Worcester, told American Banker.
The underlying factors driving mainstream adoption include how easy it is for both consumers and retailers to understand, access and actually use stablecoins as a means of payment; whether the transaction costs are comparable to the costs of using a credit card; the ultimate liquidity for stablecoins necessary to facilitate redemption or exchange into fiat currency; and the extent to which multiple stablecoins converge to comparable features and standards so that both consumers and retailers are able to utilize them without significant initial hurdles, Telpner said.
Some of the other
"Stablecoins have seen significant global adoption due to their permissionless nature, enabling anyone to use them without approval from a centralized entity," Mark Greenberg, the Global Head of Consumer at Kraken, a cryptocurrency exchange, told American Banker.
Being based on distributed ledgers, stablecoins appeal to both consumers and merchants. For consumers, transaction fees can be much lower than the high remittance costs of traditional financial systems, Greenberg said. "For small and medium-size businesses, blockchain-based payments are irreversible and permanently settled, eliminating charge-back fraud," he said.
The risk connected to the reserves backing stablecoins has also decreased because of the proliferation of issuers, according to Greenberg. "A surge in new issuers has reduced concentration risk, strengthening the ecosystem," Greenberg said, noting the growth of large and highly supported assets like USDT, USDC and USDG.
"People don't have to worry about volatility, which is crucial. When holding stablecoins, they always know exactly how much their money is worth," Bilal Khaled, director of trading at D24 Fintech Group, told American Banker.
