Why Stablecoins Are Being Discussed as the Next Standard for Financial Infrastructure 〜The Limits of Cash, Cards, and Bank Transfers and the Emergence of Next-Generation Payments〜
In previous articles, we explored why blockchain is being re-evaluated as a form of social infrastructure and discussed the design principles required when it is considered as national infrastructure. In this article, we turn to the form of money that could circulate on top of this new infrastructure layer: stablecoins*.
*There are many types of stablecoins with varying types of “fiat backings”, but for this article we assume that stablecoins have a government-mandated 1:1 peg with government-issued cash and cash equivalents. Examples include USDC and JPYC.
Stablecoins are increasingly discussed in the context of financial infrastructure largely because existing payment systems have structural limitations.
Cash has long served as the most fundamental means of payment supporting economic activity. However, it is not well suited for online transactions or cross-border economic activity, and it also involves operational costs such as storage, transportation, and management. In cross-border situations, for example, people often need to exchange physical cash at airport currency exchanges or bank counters, typically incurring fees of around 2 percent or more. As the digital economy continues to expand, relying solely on physical currency has become increasingly impractical.
Card payments significantly improved convenience, but the structure behind them remains complex. Payment transactions typically involve multiple intermediaries. The networks that authorize transactions (card networks) operate separately from the banking systems that ultimately settle funds between institutions. As a result, when a consumer makes a purchase of 1,000 yen, a cash payment allows the full amount to reach the merchant immediately, whereas card payments typically involve several percent in fees and settlement delays of several weeks. From the perspective of efficient capital utilization, such costs and delays are not always optimal.
Similar time gaps exist in financial markets. In securities trading, for instance, there is often a delay between the transfer of ownership and the availability of funds. When selling stocks, it typically takes around two business days (T+2) before the proceeds become available.
Bank transfers provide highly trusted infrastructure, but they are often constrained by business hours and weekdays. In Japan, for example, it is not uncommon for corporate accounting staff to visit bank branches in person to handle payments, withdrawals, tax payments, or currency exchanges. These tasks require travel and waiting time, which can create operational inefficiencies. Cross-border transfers also involve multiple financial institutions and networks, often increasing costs, extending processing times, and reducing transparency.
Against this backdrop, demand is growing for payment infrastructure that is more efficient and flexible.
Blockchain technology enables open participation while making recorded data extremely difficult to alter. This structure allows economic activity to take place on the basis of shared trust among participants. For example, functions such as issuing and transferring money can be executed in a transparent and verifiable manner.
One particularly important feature is that commercial transactions and the movement of funds can be processed on the same network. Traditionally, these processes have been handled separately by distinct database systems that have failed to become interoperable both nationally and globally. Blockchain networks- many of which are referred to as “world [computer] machines” - integrates these processes, allowing ownership transfer and payment settlement to occur simultaneously; for example through T+0 settlement.
Stablecoins issued and transferred on blockchain networks are especially notable in this regard. They can operate 24 hours a day, 365 days a year, and depending on the network design and use case, they can enable near-instant settlement. By simplifying intermediary structures, stablecoins may reduce costs while improving the efficiency of fund transfers.
Smart contracts further expand these possibilities by enabling the automation of financial processes. For example, currency exchanges - such as converting Japanese yen to U.S. dollars - could be executed automatically, and access to global investment products such as foreign government bonds or listed equities could become easier. Transactions that previously required waiting for T+2 settlement before initiating the next investment could evolve into continuous, instantaneous, and automated financial services.
Another important aspect is global interoperability. Stablecoins can function as a shared digital payment layer for cross-border transactions, helping address inefficiencies that have long existed in international financial infrastructure.
At the same time, stablecoins are not intended to fully replace existing financial institutions. Rather, blockchain technology is increasingly viewed as a way to complement the current financial system and build a more efficient financial infrastructure. By issuing financial instruments - including stablecoins - on blockchain networks, financial institutions may gain broader access to global markets and create new types of financial services.
However, for stablecoins to achieve widespread real-world adoption, alignment with regulatory frameworks and compliance requirements will be essential. Progress in both institutional design and technology will be necessary. For example, Circle CEO Jeremy Allaire has repeatedly emphasized that regulatory clarity around stablecoins helps create an environment in which companies and financial institutions can participate with confidence. Similarly, Coinbase CEO Brian Armstrong has noted that clear regulatory frameworks would allow companies to build financial infrastructure and innovate within compliant environments, rather than relocating their activities overseas.
