What is the larger narrative of stablecoins?

Yiwu, USDT, these two seemingly unrelated terms are now being placed in the same context.

As the "World Capital of Small Commodities", in the past, merchants in Yiwu had to sell their goods to the Middle East, Latin America, and Africa, often going through layers of agent bank transfers, which not only took a long time and incurred high costs, but also often faced the risk of funds being held up.

In recent years, the situation has been quietly changing. According to a research report by Huatai Securities, in Yiwu, stablecoins have become one of the important tools for cross-border payments. Buyers only need to complete the transfer on their mobile phones, and the funds can arrive within minutes. Chainalysis has even estimated that as early as 2023, the on-chain stablecoin flow in the Yiwu market has already exceeded 10 billion USD.

Although subsequent research by the 21st Century Economic Report indicates that most merchants in Yiwu have not heard of or understand stablecoins, and only a few merchants support stablecoin payments, this precisely shows that it is still in the early stages, yet it has already shown signs of diffusion.

In other words, stablecoins are becoming the "new dollar" for global micro traders in cross-border payments—payment is not only the starting point for stablecoins, but also the most direct entry point for them into the global financial system.

From "Payment" to "Global Payment"

Stablecoins have diversified in their application scenarios: some use them for DeFi mining, some earn interest with them, and others use them as collateral assets. However, behind these uses, payment remains the core function.

Especially in the context of "global payments" for cross-border transactions, it is a scenario that starkly contrasts stablecoins with traditional finance.

As we all know, for a long time, the Society for Worldwide Interbank Financial Telecommunication (i.e., SWIFT) system has been the core pillar of cross-border transactions, but under modern financial demands, its inefficiency has become unsustainable— a cross-border remittance often has to go through multiple intermediary banks, with cumbersome procedures and slow settlement that can take several days to complete, during which the layers of additional fees keep the transaction costs high.

For businesses that rely on cash flow or individual users who need to remit money home, these delays and costs are almost unbearable. Simply put, although SWIFT still has global influence, it was not designed for the high efficiency demands of the digital economy.

In this context, stablecoins provide a fast, low-cost, and borderless alternative path. They inherently possess attributes of low cost, no borders, and real-time settlement. A cross-border transfer can be completed in just a few minutes without layers of intermediaries, and the fees are significantly reduced due to network differences.

For example, the transfer costs of stablecoins like USDT/USDC on mainstream Ethereum L2 networks have currently dropped to the level of a few cents per transaction, which is almost negligible. This makes stablecoins a natural viable solution for "global payments," especially in regions like Southeast Asia and Latin America where cross-border funds are active and traditional channels are not smooth, gradually becoming the mainstream choice for small payments.

More importantly, for underdeveloped or even economically unstable countries, stablecoins are not just "payment tools"; they also serve the function of short-term value storage—for users facing the risk of local currency depreciation, holding stablecoins means a more stable guarantee of purchasing power.

The dual role of "payment + hedging" is precisely the reason why "global payment stablecoins" deserve to be discussed separately.

Source: imToken Web (web.token.im) "Global Payment" (Remittance Type) Stablecoin

From the perspective of imToken, stablecoins are no longer a tool that can be summarized by a single narrative, but rather a multi-dimensional "asset collective"—different users and different needs correspond to different stablecoin choices (Further reading: "The Worldview of Stablecoins: How to Build a Classification Framework for Stablecoins from the User's Perspective?").

In this classification, "global payment stablecoins" (USDT, USDC, FDUSD, TUSD, EURC, etc.) are an independent category specifically aimed at cross-border transfers and value circulation. Their roles are becoming increasingly clear: they are not only the express lane for global capital flow but also the "new dollar" for users in turbulent markets.

Why can't the global system avoid stablecoins?

If "payment" is the original intention of stablecoins, then "global payment" is their most competitive application scenario. The reason is simple: stablecoins almost naturally align with the three major pain points of cross-border payments—cost, efficiency, and acceptability.

First of all, in terms of payment scenarios, cost and efficiency are the core.

As mentioned above, traditional cross-border remittances often require multiple intermediary banks, taking time measured in "days" and costing often dozens of dollars. In contrast, the advantages of stablecoins are clear; the transaction fees for a single transfer on the Ethereum L2 network are usually less than 1 USD, and they have become a commonly used tool for cross-border micro-payments in Southeast Asia, Latin America, and other regions.

According to the Keyrock report, traditional bank cross-border remittance fees are about 12.66% for $200, MTOs (Money Transfer Operators) about 5.35%, and mobile operators about 3.87%. In contrast, stablecoin platforms can reduce similar transfer costs to below 1%, significantly enhancing capital flow efficiency. Moreover, a stablecoin transfer usually takes only a few seconds to confirm on the Ethereum mainnet, and even shorter settlement times can be achieved on some L2s or emerging public chains. This experience is not on the same level as the T+N of the SWIFT system.

Secondly, in addition to efficiency and cost, whether the payment can be widely adopted also depends on whether the other party is willing to accept it.

This is attributed to the mutual achievement between the crypto market and stablecoins over the years—USDT, as the largest stablecoin globally, has long maintained a market value in the hundreds of billions level, making it the most widely accepted medium of payment. USDC, on the other hand, is favored by institutions due to its compliance and transparency, with a high penetration in the European and American financial systems.

Under continuous penetration, in countries like Turkey, Argentina, and Nigeria where local currencies have significantly depreciated, USDT has almost become a de facto "savings currency"; USDC attracts institutions with its transparent reserves and compliance, and has a high penetration rate in the European and American markets; although EURC is smaller in scale, it plays an irreplaceable role in cross-border settlements within the European region.

Finally, for payments, speed and cost are important, but "is the money really safe" is even more critical.

With the implementation of the U.S. GENIUS Act, the Hong Kong Stablecoin Regulation, and the successive pilots in markets such as Japan and South Korea, compliant issuance has gradually become the "passport" for stablecoins.

In the future, stablecoins that can enter the global payment system are likely to be "whitelisted players" on the path to compliance (see also "Gray Beasts vs. Whitelisted Players: Insights into the 'Fork Moment' Brought by Compliant Stablecoins").

In summary, the reason stablecoins are becoming the infrastructure for "global payments" is not by chance, but because they have a comprehensive advantage over traditional cross-border payments in terms of efficiency, cost, acceptance, and transparency.

Payment is the starting point and also a greater future

It is precisely for this reason that stablecoins, which have gradually expanded their "global payment" attributes, are now facing not only the trading demands of Crypto native users but also extending to a broader audience:

• Individuals and businesses with cross-border remittance or payment needs;
• Cryptocurrency traders who need to quickly transfer funds between different exchanges;
• Users facing domestic currency devaluation and seeking stable assets such as USD or EUR for hedging;

From this perspective, "global payments" are both the original intention of stablecoins and their most practical and urgent application scenario - they are not intended to overthrow the traditional banking system, but rather provide a more efficient, cost-effective, and inclusive supplementary solution, turning what used to require multiple intermediary banks and take several days for cross-border settlement into an action that can be completed in "a few minutes + a few cents."

The future trends are becoming increasingly clear. With the implementation of the U.S. "GENIUS Act", the enactment of Hong Kong's "Stablecoin Regulation", and the pilot programs launched in markets such as Japan and South Korea, global payment stablecoins will become an indispensable part of the financial system, whether for cross-border payments, corporate treasury, or individual hedging.

As we look back at the experimental attempts of Yiwu merchants to receive USDT, we may find that this is not just the story of a city, but a global microcosm—stablecoins are moving from the margins to the mainstream, from on-chain to reality, ultimately becoming the new infrastructure for global value flow.

From this perspective, payment is the starting point of stablecoins and also their greater future towards global financial infrastructure.