Stablecoins to replace old FX rails, but off-ramps remain a chokepoint

Stablecoins are increasingly being adopted in emerging markets as a more cost-effective solution for cross-border payments compared to traditional foreign exchange (FX) infrastructure, according to research firm Delphi Digital. These digital assets offer a cheaper alternative, especially in corridors where legacy FX systems can incur combined fees of up to 8%, such as payments to Argentina or Nigeria.

Structural Advantages of Stablecoin Rails

Delphi Digital highlighted that 81% of the cost in traditional cross-border payment corridors is attributed to servicing the underlying banking infrastructure. Stablecoin networks, in contrast, eliminate many of these expensive operational components. They enable atomic settlement, negating the need for pre-funded local currency liquidity. Furthermore, volume thresholds and intermediary chains become obsolete as stablecoins settle directly against the US dollar, simplifying the process and reducing costs.

“Stablecoin rails eliminate most of what makes these corridors expensive to operate.”

This efficiency allows users in emerging markets to significantly cut remittance costs, often down to pennies, and facilitate instant transactions by bypassing traditional banking systems.

Off-Ramps: The Remaining Bottleneck

Despite the advantages, access to off-ramps, such as bank accounts or interbank rails, remains a critical chokepoint for broader stablecoin adoption. The primary friction points are often outside the blockchain itself. While stablecoin minting and burning are near-instantaneous, the integration with traditional banking systems, which often rely on batch processing, introduces significant delays.

“Closing the gap is as much a regulatory problem as a technical one.”

Delphi Digital suggests that stablecoins are unlikely to replace major FX corridors immediately. However, they are poised to make significant inroads in emerging markets where infrastructure costs are high and banks are less competitive in offering efficient cross-border solutions.

Growing Stablecoin Supply Amidst Market Volatility

The total supply of stablecoins has seen a notable increase, rising 2.5% in the past month to reach $316 billion as of Tuesday, according to DeFiLlama. This growth occurred even as broader cryptocurrency valuations have declined. Emerging markets are identified as a key driver of this demand, with users seeking more affordable access to dollar liquidity and efficient cross-border transfer mechanisms.

Investment continues to flow into stablecoin payment providers. For instance, Singapore-based Dtcpay recently raised $10 million in a Series A funding round led by Vertex Ventures Southeast Asia & India, aimed at scaling its compliant stablecoin-based payment network.