Opinion: Simon McLoughlin, CEO of CEO
In 2021, the startup witnessed a boom in fintech investment, raising approximately $229 billion worldwide. Higher interest rates and harsher economic conditions have since eased their vibrancy, but funds continue to accumulate in the sector. In fact, the global fintech sector is expected to rebound into investing activities throughout 2025.
Why are investors continuing to make big bets on this sector? The answer is simple. The current international financial system is in urgent need for modernization. Built for pre-internet age, this one relies on an outdated process, a chain of intermediaries, and a patchwork of non-standard regulations.
Aging and expensive system
Please take a quick photo as a case. Founded in 1973, Swift is the backbone of cross-border payments. Swift is just a messaging system that allows banks to communicate around transactions. It was not designed to manage funds or process transactions. As a result, the “make do and mend” approach, characterized by the spread of intermediaries and local payment railroads, has grown mainly around international payments.
This outdated, fragmented system creates significant friction in cross-border transactions, leading to delays, high costs and limited choices for individuals and businesses outside the major economic bloc. Currently, international payment fees are currently on average for businesses on average 1.5%, with remittances up to 6.3%. Payment may take up to several days to reach the recipient.
This system hinders global commercial transactions, particularly in the global South, and exacerbates financial exclusion.
Many of these friction points are resolved by Stablecoins and can be sent across borders as easily as sending emails. In fact, blockchain-based currencies could revolutionize global finance.
Democratize access to Fiat currency
For people in countries with unstable economies and unstable governments, Stubcoin provides a safe haven for savings. Stablecoins have fixed 1:1 for Fiat currencies such as the US dollar. Consumers in these regions offer ways to escape the country’s financial system with reliable, transparent alternatives that protect against inflation and currency devaluation. This is especially important in the Global South where economic instability can undermine the value of hard-earned income and savings.
According to UBS, consumers in developing countries are also attracted to stable ones because of the low risk of government interference with currency. Wealth management companies believe that stubcoins are increasingly considered “digital dollars” and are used for everything from savings to trading to remittances in these regions.
Empower small businesses and freelancers
Stablecoins can significantly reduce the costs and complexity associated with international payments, allowing small and medium-sized businesses and freelancers to participate in the global market in more equal arenas. This opens up new opportunities for entrepreneurship and economic growth in developing countries.
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With current payment systems, physical money does not cross borders. There is only information. Payroll companies considering paying freelancers in third countries cannot do that directly and should use systems like Stripe that use virtual bank accounts to avoid issues.
With Stablecoins, payroll companies can pay in any currency in any currency using crypto-on-lemp and off-ramp to make payments easier. For example, businesses pay in dollars. For example, you can turn on to Tether’s USDT (USDT) and send it to Freelancer’s digital wallet where you can hold it or off-ramp it into your local currency. Stablecoins proves to be an important tool to help businesses access global talent and bridge skills gaps.
Promotion of financial inclusion
By providing an alternative to traditional banking systems, Stablecoins also provides financial services to unbanked populations and small banking groups. This could be particularly transformative in regions where access to traditional financial infrastructure is limited, or in countries like Argentina, where there is less trust in the financial system across the country.
According to the bank’s international settlement, Stablecoins allow for a wide range of payments, provide gateways to other financial services, and replicate the role of transactional accounts as a springboard to broader financial inclusion.
Given its ability to provide access to financial services anywhere with an internet connection, Stablecoins is seeing explosive growth in emerging markets. Use cases are rapidly expanding across developing countries in Africa, Latin America and Asia, and are being used for hedging against inflation, remittances and cross-border payments, and as an easier alternative to US Dollar Bank. This growth trajectory is expected to continue for the next few years.
Shot of the arms of global business
Stablecoins is rapidly gaining popularity, already with a market capitalization of over $233 billion, while trading volume in 2024 reached $15.6 trillion, surpassing Visa’s. In an increasingly uncertain world, they provide a stable, low-cost, fast way to transfer money across borders, helping to increase the economic inclusion and smooth access to the global talent of employers. Stablecoins is a digital first financial tool for the digital-first world and is ideal for replacing the current Archaic International Payments system.
Opinion: Simon McLoughlin, CEO of CEO
This article is for general informational purposes and is not intended to be considered legal or investment advice, and should not be done. The views, thoughts and opinions expressed here are the authors alone and do not necessarily reflect or express Cointregraph’s views and opinions.
