Opinion by: Morgan Krupetsky, vice president of Onchain Finance at Ava Labs
On the heels of the GENIUS Act’s passing, the next era of stablecoin usage is being driven by a growing cohort of fintechs and neobanks — integrating stablecoins into their product and service offerings, going where traditional systems have found it economically or operationally infeasible to do so, and, as such, growing their competitive edge.
These challenger systems are providing a direct way for people and businesses to more readily access and store stable value in mobile wallets; to navigate financial stability concerns around hyperinflation and currency volatility; to effectuate remittances and other cross-border transactions; to access credit and savings; and ultimately to spend down or against their holdings in real time.
This ability to access, earn and spend programmable money has created a stablecoin order of operations — a playbook that’s poised to truly democratize financial access and enable broad-based economic inclusion.
Stablecoins enable access
In the first instance, stablecoins offer a clear and fundamental benefit from a financial access perspective. With over a billion adults still excluded from the financial system, they provide an easy and instant on-ramp to the US dollar.
Particularly in the Global South and emerging markets, they serve as a stable alternative to a potentially volatile local currency and a reliable store of value.
For businesses and individuals grappling with currency fluctuations, stablecoins have been a game-changer. In Argentina, where inflation has exceeded 100 percent annually, small businesses and freelancers are increasingly turning to USDC and USDT to invoice international clients, pay salaries and protect their earnings.
In Latin America alone, stablecoins account for nearly 30% of remittances in certain corridors. At the same time, other countries, such as Turkey, use USDT as a hedge against inflation and currency devaluation risks.
Fintechs are stepping in to provide US-dollar access and, in some cases, banking services to historically underserved individuals and businesses — going where traditional systems have found it economically, operationally or technologically infeasible to do so.
The ability to earn
With an over $265 billion stablecoin market cap, the “earn” proposition for stablecoins marks the next phase of their evolution. To that end, many of these same fintechs and neobanks are also integrating blockchain-enabled products and services that enable their customers to earn or receive rewards on their stablecoin holdings.
Related: Western Union picks Solana for its stablecoin and crypto network
In some cases, crypto exchanges integrate DeFi borrow/lend platforms directly into their exchange or their non-custodial wallet offerings to allow users to lend their stablecoins and earn a return. In other cases, companies can tap into the growing tokenized money market fund ecosystem.
This capability provides a powerful antidote for those grappling with high inflation or with limited access to traditional savings vehicles. In emerging and developing economies, where only a quarter of adults use a savings account, those often underserved by legacy banking infrastructure can now more easily make their money work for them.
In Nigeria, Fonbank enables users to convert their earnings into dollar-denominated stablecoins and access onchain savings products that offer yields far above local bank rates. These tools allow users to preserve value, earn passive income and bypass local currency devaluation all through a mobile phone.
With mobile and global internet penetration continuing to rise, fintechs have the opportunity not only to keep up with but also to leapfrog certain incumbents.
When it’s time to spend
The ultimate goal for stablecoins is to become a primary medium of exchange, allowing users to transact without needing to off-ramp them into the fiat economy. In this “spend” phase, they transition from a digital asset to a more ubiquitous payment tool.
Platforms are already making this a reality with stablecoin-backed cards, allowing users to make instant, low-cost cross-border payments and everyday purchases simply by tapping to pay anywhere Visa is accepted. For emerging and developing markets, this provides a vital way to bypass expensive remittance fees, slow bank transfers and limited banking access, fundamentally improving financial inclusion.
Some companies are even layering on crypto or stablecoin rewards programs, creating a way for everyday spending to further drive digital adoption and engagement.
From “crypto casino” to real-world utility
Ultimately, while the global debate and discussion linger around stablecoin classification and utility, a new, efficient and inclusive financial system is already being built. Fintechs and neobanks are already demonstrating that stablecoins — through their evolving capabilities to store, earn, and pay — are a vital component for offering net-new assets and capabilities and expanding global operations.
Stablecoin adoption is a rapidly unfolding reality, showcasing the undeniable value of programmable money beyond the crypto casino.
Already, stablecoin transfer volume in 2024 surpassed the combined volumes of Visa and Mastercard. Once seen primarily as instruments of speculation or trading liquidity, stablecoins are rapidly becoming something far more fundamental: programmable money that can serve as the backbone for responsible world-scale digital finance.
Opinion by: Morgan Krupetsky, vice president of Onchain Finance at Ava Labs.
This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
