Visa's stablecoin platform makes it easier to move value across borders, but each payment still needs local currency conversion. On-chain FX could solve the bottleneck, says KiiChain CEO.
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Visa's launch of a stablecoin platform for banks and fintechs is the latest sign that the technology is moving into mainstream financial infrastructure. The platform gives institutions a way to access, hold, move and redeem stablecoins inside a Visa-managed environment. As that access improves, foreign exchange becomes a bigger part of the equation, according to Danyel Arenas, co-founder and CEO of KiiChain.
Arenas wrote in a guest post that stablecoins can simplify the movement of value across borders. Each payment still needs to connect with the currency required at its destination. For that reason, local-currency liquidity and FX settlement are becoming increasingly important to the next phase of stablecoin payments.
Consider a fintech serving businesses across Brazil, Mexico and Colombia. Stablecoins can provide a common asset for moving value between these markets, while its customers continue to operate in different currencies. That means each corridor still requires FX pricing, sufficient liquidity, conversion and settlement. Depending on the market, those functions may involve different providers and integrations, adding complexity as the fintech expands.
Regulation is starting to reflect that connection. Brazil's central bank now treats international payments using virtual assets, and the purchase or sale of fiat-referenced virtual assets, as foreign-exchange operations. That puts stablecoin-based cross-border flows under the same rules as traditional FX, Arenas noted.
Although wider use of dollar stablecoins could reduce some demand for local currencies in certain situations, especially for treasury holdings or international trade, that does not remove the need for local settlement. Businesses still pay employees, taxes and domestic suppliers in national currencies. Merchants price goods in the currencies their customers use. So even when USDC or USDT carries value across borders, an FX conversion is often still required before the funds can be used locally.
Local-currency stablecoins can bring currencies such as the peso or real on-chain, making them easier to use alongside stablecoin-based payment infrastructure. Dollar stablecoins such as USDC and USDT remain important sources of global liquidity, particularly for cross-border payments and international trade. For the two to work together, there needs to be an efficient market between them. A peso stablecoin may need to be exchanged for USDC, reais or another currency somewhere in the payment flow. Without sufficient liquidity, reliable pricing and efficient settlement between those assets, bringing more local currencies on-chain does little to solve the underlying conversion problem, Arenas said.
Functioning FX markets provide that connection. They allow liquidity to move between global dollar stablecoins and local currencies, while giving market makers a way to rebalance positions as demand changes across different corridors.
Access to liquidity is only part of the challenge. The way FX transactions are executed and settled also needs to keep pace with a payment system that increasingly operates around the clock. Traditional FX still depends heavily on banking hours. Cross-border payments and currency settlement can take hours or even days when several intermediaries and correspondent banks are involved. That creates a mismatch when stablecoins themselves can move at any time.
On-chain FX offers a different operating model. Pricing, liquidity access and settlement can operate beyond banking hours. Pay-ins, payouts and FX swaps can also be coordinated in parallel and settled with verifiable on-chain finality, Arenas wrote. For payment companies, this can bring several fragmented functions into a more unified infrastructure layer. The provider can focus on the currency the customer sends and the currency the recipient receives, while liquidity sourcing, conversion and settlement happen underneath.
It could also make expansion across markets easier. Instead of rebuilding liquidity relationships and settlement processes for every new corridor, payment providers could connect additional currencies through shared FX infrastructure.
Arenas said the strongest cross-border payment solutions will likely hide most of that complexity. A business should not need to understand which stablecoin, network, bridge or liquidity source sits between the currency it sends and the currency its counterparty receives. For the user, the questions are simpler: what currency am I sending, what currency will arrive, at what rate and how reliably. The infrastructure that answers those questions well will determine how far stablecoin payments can move beyond digital dollars and into everyday economic activity.
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