Stablecoins Cross Borders, But Local Currency Conversion Remains an Obstacle

Stablecoins have been gaining traction in recent times, and their use is becoming increasingly widespread. However, despite their convenience, stablecoins still require conversion into local currencies to be usable in various markets.

A recent development by Visa's Stablecoin Platform has made it possible for banks to access and hold stablecoins without having to build the infrastructure themselves. While this offers improved access, it also highlights a new challenge: foreign exchange (FX) conversion.

When transferring value across borders using stablecoins, the actual currency used in each market still needs to be determined. This requires FX pricing, sufficient liquidity, conversion, and settlement - all of which can be complex and time-consuming processes.

The issue is particularly evident when considering businesses operating in multiple countries. Even with a single common asset like USDC or USDT for shifting value between markets, the need for local settlement remains.