Stablecoins: The End of SWIFT?

Author: Sylvain Saurel, Translated by Shaw Jinse Finance

At a time when globalization is shaping corporate competitiveness, a striking paradox persists: cross-border payments, the lifeblood of global trade, are the slowest, most costly, and least transparent part of the financial system. Twentieth-century infrastructure, exemplified by the Society for Worldwide Interbank Financial Telecommunication (SWIFT) network, struggles to meet 21st-century demands for flexibility, transparency, and sovereignty. Processing times often stretch for days, fees accumulate with each intermediary, and the exact flow of funds remains a mystery to corporate treasurers.

Meanwhile, a quiet revolution is quietly underway, driven by the least visible yet most useful crypto-asset: stablecoins. Unlike other volatile digital currencies, these tokens, backed by traditional currencies like the dollar or euro, already serve as monetary gateways on a massive scale. The data is staggering. By 2024, transactions settled via stablecoins will reach a staggering $24 trillion. Even more remarkable, of this total, $7.6 trillion will be used for actual payments—five times the annual volume processed by giants like PayPal. This trend is no longer a subtle signal. Strategic moves like payments giant Stripe's acquisition of the startup Bridge confirm the accelerating move toward a more modern, faster infrastructure that relies less on traditional banking channels. A pragmatic and powerful technological alternative is emerging: the "stablecoin sandwich." This isn't simply an innovation; it's a fundamental architectural shift that has the potential to redefine the rules of the international payments game. To understand the scope of this innovation, we must first assess the limitations of the existing system. Created in the 1970s, SWIFT isn't a payment system, but a secure messaging service that allows over 11,000 financial institutions to exchange transfer instructions. The funds transfer itself relies on a complex network of "correspondent banks." Imagine a company in Paris needs to pay a supplier in São Paulo in Brazilian reals. Its French bank may not have a direct account with the supplier's bank in Brazil. Therefore, the transaction typically passes through one or more intermediary banks, often large international banks headquartered in New York or London. Each intermediary bank checks the transaction, deducts a fee, converts the currency (often at unfavorable rates), and then passes the instructions to the next link in the chain. This chain of transactions explains delays of two to five business days, the accumulation of costs (transfer fees, correspondent bank fees, exchange rate differences), and the lack of traceability. For companies, this means lost time, money, and control over their cash flow. The "Stablecoin Sandwich": A New Architecture for the 21st Century The "stablecoin sandwich" concept proposes bypassing this series of intermediaries through a remarkably simple three-step architecture. The company initiating the payment doesn't need to change its practices. Payments are made in local currency (e.g., euros). A specialized payment service provider instantly converts these euros into a liquid stablecoin, such as USDC (backed by the US dollar) or EURC (backed by the euro). This conversion occurs on a platform with sufficient liquidity, guaranteeing the best exchange rate. The stablecoin amount is then transferred to the digital wallet of the provider in the destination country via a public blockchain (e.g., Ethereum, Solana, or Tron). This transfer is the core of the system: it's nearly instantaneous (taking seconds to minutes), cryptographically secure, and offers extremely low and predictable fees regardless of the amount transferred. The final layer (local exchange): Once the stablecoins arrive at their destination, the vendor immediately converts them into the recipient's local currency, such as Brazilian real. Again, the transaction takes place in the liquid local market. The funds are then transferred to the vendor's traditional bank account. The recipient receives the expected amount in local currency without having to interact with the cryptocurrency at all. The issuing company simply makes the payment locally. This "sandwich" structure absorbs all the complexities of cross-border transfers. This approach offers a key strategic advantage: it allows companies to pay recipients on the blockchain without having to directly adopt cryptocurrency internally. It's a simple and gradual way to expand payment channels without having to change currencies or disrupt their accounting and financial structures. Three Decisive Advantages for Business Competitiveness For CFOs and treasurers, the advantages of this model are immediate and measurable. First, speed. Reducing delays from days to minutes is a game-changer. For companies importing critical components, almost immediate payments to suppliers in Asia or Latin America ensure smooth deliveries and avoid disruptions in the production chain. For small and medium-sized enterprises, which often face tight cash flow, receiving payments in minutes instead of a week can significantly improve working capital and financial transparency. Second, economic efficiency. Disintermediation has a direct impact on costs. By eliminating correspondent banking fees and obtaining more competitive exchange rates at both ends of the transaction chain, businesses can achieve significant cost savings, ranging from 1% to 3% on certain payment channels. These benefits are strategically significant for millions of dollars in annual funding flows. Transparency is also crucial: Fee information is available upfront, avoiding unpleasant surprises. Third, scalability and inclusiveness are key. The "stablecoin sandwich" model is particularly well-suited for companies operating in regions underserved or poorly served by major correspondent banks, particularly in Africa, Southeast Asia, and Latin America. It enables businesses to reach suppliers or customers in countries with weak banking infrastructure or volatile currencies. By using the US dollar (via a stablecoin) as a transfer vehicle, the impact of foreign currency fluctuations during fund transfers can be avoided. Digital Dollar Hegemony: America's Strategic Advantage From a geopolitical perspective, this payments revolution is not neutral. Far from threatening the dollar's dominance, the emergence of stablecoins has significantly entrenched it. One thing is clear: the vast majority of the most liquid and widely used stablecoins (USDT, USDC) are backed by the US dollar. Whether between Singapore and Mexico or Nigeria and Turkey, every transaction using these assets is effectively denominated in US dollars. This phenomenon gives the United States a decisive advantage. While other economic powerhouses, such as Europe, are theorizing and experimenting with a digital euro but progressing slowly, the US private sector has already built and deployed private infrastructure for a digital dollar globally. These fast and efficient new financial channels extend the dollar's influence beyond traditional banking channels. Far from being a tool to circumvent US power, stablecoins are becoming a vehicle for its hegemony. They anchor the dollar more firmly at the heart of the global digital economy, making it an indispensable currency for blockchain transactions. This "dollarization" of new financial circuits gives Washington indirect but considerable influence, as the primary issuers of stablecoins are centralized entities regulated by the US. Despite its seemingly decentralized nature, the stablecoin revolution is likely to solidify the dollar's position as a key pillar of the global financial system for decades to come. Powerful Currency and Sovereign Leverage Beyond technological innovation and its geopolitical implications, this is also about monetary strategy and resilience. By freeing themselves from near-total reliance on traditional banking networks, stablecoin payments offer unprecedented operational flexibility. Businesses are no longer constrained by bank opening hours, public holidays, or the decisions of intermediaries located in different time zones. Against a backdrop of growing geopolitical and financial fragmentation, access to certain payment networks can be used as a lever of pressure, making diversified payment channels crucial to safeguarding economic sovereignty. The "stablecoin sandwich" is emerging as a powerful lever of monetary engineering, based on stable and liquid digital assets, to create more resilient, less centralized, and less vulnerable payment flows. While public institutions (such as the EU’s MiCA regulation on crypto-asset markets) work to regulate asset tokenization, and central banks cautiously explore central bank digital currencies (CBDCs), businesses are already taking action. They can no longer wait five to ten years for these projects to take off. By adopting the “stablecoin sandwich” model, they are responding to the immediate need for liquidity, speed, and control over international payments. This isn’t a sudden break, but a natural evolution driven by the pursuit of operational performance. The replacement of SWIFT will likely be less of a grand event and more of a gradual transition led by businesses already building the future of finance on the ground.