Prevalent Limitations and Hybrid Models

For existing enterprises, the promotion and deployment of blockchain technology is mainly constrained by compliance, risk management, and consumer protection. No enterprise attempts to send raw blockchain transactions directly to merchants without any recourse. Chargeback, dispute resolution, and anti-money laundering responsibilities still rely on existing mechanisms.

The final result is a hybrid architecture. Stablecoins handle settlement and liquidity transfer, while bank cards, wallets, and trusted interfaces handle user experience and security. Therefore, rather than a new payment method, stablecoin cards are more accurately described as an invisible upgrade to the underlying architecture.

Users still see normal transactions. In reality, value is increasingly being transferred on-chain.

Paradigm Shift: Payment Cards as Bridges, Stablecoins as Settlement Methods

The core argument emerging between 2025 and 2026 is that the widespread adoption of stablecoins will be achieved through existing bank cards and payment infrastructure, rather than by forcing merchants or consumers to change their spending habits. While it has long been predicted that cryptocurrency payments will bypass Visa and Mastercard, global bank card networks still dominate the commercial sector due to their accessibility, trustworthiness, and consumer protection features. Stablecoins address a different set of issues: settlement speed, cross-border friction, and capital efficiency.

Two investors say:

• Rob Hadick (Dragonfly) stated in an interview that he expects "institutional use of stablecoins to surpass retail use" and sees B2B payments as a key driver—therefore, Dragonfly focuses on infrastructure building rather than just consumer-facing applications.

  Chris Dixon (a16z) believes that stablecoins are the "Whats App of the monetary world," enabling instant, borderless transactions. This means that anyone providing such a transaction interface (potentially a stablecoin card company) will benefit greatly. Investors generally believe that due to the efficiency of stablecoins, their integration into daily life is inevitable, and the current transitional model (stablecoin cards) is a pragmatic choice to invest in this trend as the ecosystem matures. Despite rapid development, stablecoin cards face a series of structural risks that could slow their adoption or create points of failure. These risks involve multiple aspects, including regulation, network, economics, and liquidity. Regulatory bottlenecks: Regulation remains the biggest uncertainty. Major jurisdictions, notably the United States, are discussing specific frameworks for stablecoins that could substantially restrict the stablecoin model, such as limiting banks or trust companies from issuing stablecoins, restricting transaction sizes, or limiting yield-generating projects. Even without new regulations, regulators wield significant influence: the U.S. Securities and Exchange Commission (SEC) can reclassify yield-generating stablecoin projects, the Financial Crimes Enforcement Network (FinCEN) can strengthen its monitoring of cryptocurrency-to-fiat currency transactions, and banking regulators can pressure partner banks to exit the cryptocurrency space. Sanctions compliance further complicates matters, as stablecoins can be frozen at the smart contract level, forcing issuers to continuously monitor settlement processes. Payment card networks may also implement geographic restrictions under regulatory pressure. While existing companies and startups are actively engaging with policymakers, the regulatory outcome in 2026 remains an either-or driver: constructive rules could unlock the potential of stablecoins, while restrictive rules could force companies to scale back operations. Network centralization and platform closure risks: This model structurally relies on a few payment gateways, primarily Visa and Mastercard. Changes to network policies can immediately cripple an entire project, as demonstrated by previous regional suspensions of exchange-linked cards. If a cryptocurrency card issuer experiences significant compliance issues or reputational incidents, the network may increase collateral requirements, tighten limits, or suspend services across a wide area. The concentration of card issuers exacerbates this risk, with a few payment processors supporting dozens of front-end projects. The failure of one card issuer, whether operational, financial, or regulatory, can ripple through numerous consumer-facing brands, making counterparty risk a significant concern. The trade-off between compliance and data privacy: Card-based spending fully integrates stablecoins into the regulated financial system. Transactions require KYC-verified entities and generate detailed metadata, which is retained and shared with regulators. This undermines many privacy features of on-chain transfers and may hinder privacy-conscious users or businesses. Linking wallet addresses to card identities can also broaden the scope of surveillance and analysis. Simultaneously, card issuers and payment processors become high-value targets for cybersecurity. Breach of wallet credentials or personal data can severely damage trust. Vulnerable Unit Economics: Many cryptocurrency card projects rely on high rewards from venture capital, favorable fee rates, or geographic arbitrage. As rewards normalize and regulatory pressures lead to declining fees, profit margins shrink rapidly. Previous cases of major projects cutting rewards demonstrate this sensitivity. Furthermore, foreign exchange costs, potential bank fees for stablecoin withdrawals, fraud losses, and chargeback processing also put pressure on issuers, all of which must be borne by them. Unlike established banks, many cryptocurrency card issuers lack long-term fraud history data or scalable risk teams, increasing their downside risk during periods of growth or stress. Liquidity and Redemption Risks: The system assumes that stablecoins can always be reliably redeemed at face value. However, if market confidence in mainstream stablecoins is lost due to regulatory actions, reserve issues, or technical glitches, settlement can be disrupted, forcing issuers to suspend related projects. Redemption delays or restrictions undermine the promise of instant settlement. Furthermore, when operating costs are in local currency while settlement assets are USD-denominated stablecoins, issuers face currency mismatch issues, resulting in hedging costs. Bank partner risk remains, as issuers still rely on banks for issuance, fiat currency withdrawals, and merchant payments. DeFi Integration and Consumer Protection: Some projects integrate DeFi yield strategies into bank card balances, introducing smart contract risk into consumer payments. If the protocol collapses, regulators will require regulated card issuers to fully compensate users for losses, regardless of whether the losses originated on-chain. This mismatch between experimental infrastructure and consumer protection expectations poses a serious risk pattern if not strictly controlled. Stablecoin Issuer Centralization: On-chain liquidity remains concentrated on USDT and USDC. Disorderly exits or restrictions on either side will force users to migrate rapidly, potentially leading to market volatility and operational stress. Conversely, even a temporary decline in confidence in USDC could cause issuers to halt settlements to avoid asset losses. While decentralization has improved, the concentration risk at the stablecoin layer remains significant. Overall, stablecoins integrate regulatory, network, economic, and liquidity risks into a single system. Individually, none of these risks are fatal, but adverse developments at multiple levels can lead to sudden project closures, margin calls, or a decline in user trust. The sustainability of this model depends not only on growth but also on the effective absorption of these risks as the industry scales. 2026 Outlook Scenario 1: Conservative Scenario – Stable Growth Adoption has increased, but at a slow pace. Stablecoin settlement remains in the pilot phase, not the default setting, as regulators grant only limited authority (e.g., the US framework effectively restricts issuance to banks or trust companies). Banks continue to resist consumer-facing stablecoin yields, dampening their promotional efforts. Each network is making minor expansions to its pilot programs, but the rules remain largely unchanged. Funding continues, but the focus is shifting from aggressively launching new projects to compliance and infrastructure development. The winners are existing companies (Visa, Mastercard) and large-scale full-stack issuers (Rain, Reap), which are able to thrive under restrictions, especially in high-demand emerging markets. Smaller projects and exchange-branded payment cards will be the losers, as they cannot afford the additional costs of licensing and compliance (requirements like MiCA will naturally become a screening criterion), while merchant-side stablecoin payments remain in the pilot phase. Trading volume is projected to increase from approximately $18 billion to approximately $30 billion (annualized) by the end of 2026, with valuations stabilizing. Barring major shocks, this category will remain "significant but still niche." Scenario 2: Basic Situation – Accelerated Integration, Controllable Friction Growth accelerated again as technology and regulatory policies were gradually implemented. Visa and Mastercard expanded their settlement options, allowing more card issuers to join on-chain settlement, and potentially adding a second stablecoin (e.g., PYUSD or Euro settlement options) for specific transaction channels. A cautious yet proactive regulatory environment reduced key frictions: clearer guidance on consumption tax policies and more explicit licensing policies in Asian hubs boosted market reserve confidence. The selective reopening of capital markets, including potential initial public offerings (IPOs) or large strategic transactions, validated the value of the sector. Winners included payment networks and full-stack issuers: payment networks achieved settlement profitability and had the potential to package "stablecoin-supported" services for banks; while issuers like Rain gained corporate distribution channels and expanded partner programs. Large fintech companies with distribution channels (such as Revolut and Cash App) and payment processors (such as Stripe) are quietly capturing cash flows by embedding stablecoin payment gateways into existing products. At risk are banks that fail to adapt to the growth in stablecoin circulation (in this scenario, global stablecoin circulation will reach approximately $500 billion by 2026), and "L1 payment" tokens that lose their voice as stablecoins integrate into the mainstream payment system. By the end of 2026, stablecoin-linked cards will no longer be a fringe case in the cryptocurrency space, but rather an extension of modern fintech, achieving measurable penetration in specific markets. Scenario 3: Accelerated Adoption – Entering the Mainstream Market Favorable policies and a favorable macroeconomic environment have driven this change. Major jurisdictions have provided clear and supportive stablecoin frameworks, including reliable issuance pathways for non-bank issuers and stronger safeguards to mitigate the risk of bank runs. The consistently attractive cash yields have drawn more users and businesses to stablecoins, pushing their market capitalization close to $1 trillion. Major platforms are also joining the fray: large tech and business ecosystems are making stablecoin financing or merchant settlement the default option, and Visa/Mastercard has transitioned from pilot phases to core network integration (stablecoins are considered legitimate settlement currencies in all regions). The application of stablecoins is expanding from back-end settlements to front-end areas such as B2B, payments, and treasury management. The winners will likely consolidate into a few platforms: Visa may maintain its leading position and significantly expand stablecoin settlements; top cryptocurrency-native issuers will become dominant infrastructure or acquisition targets; Stripe is leveraging stablecoins as a cross-border back-end to accelerate merchant adoption. Emerging market consumers will benefit greatly, able to spend as easily as they would with US dollars and participate in global trade. As funds shift, correspondent banks and traditional remittance operators will be losers, and Mastercard could also be affected if Visa's lead evolves into a winner-takes-all scenario. The development of central bank digital currencies (CBDCs) may accelerate again as a policy response, but large-scale consumer-facing CBDCs are unlikely to emerge in most major markets until after 2026. In conclusion, what these scenarios have in common is that stablecoins are injecting new functionality into payments, but they are doing so by working with existing systems rather than completely replacing them. Institutional investors should closely monitor regulatory milestones (each milestone will influence the likelihood of which scenario occurs), network policy changes (any signs of Visa/Mastercard tightening or relaxing cryptocurrency rules are a bellwether), and actual adoption metrics at the consumer and settlement ends. Optimistic scenarios offer substantial growth and potential excess returns for early leaders in the space, effectively spawning a new wave of fintech giants. Pessimistic scenarios do not signify the complete failure of the idea (unless cryptocurrencies are banned globally, the utility of stablecoins is unlikely to disappear), but rather that the path to development will be slower and more bumpy—perhaps taking several years to fully realize its potential, and some early entrants may not survive the transition period. Currently, 2026 appears to be the year stablecoin cards move from proof-of-concept to the daily lives of millions, even if most people are completely unaware of the rapid flow of USDC or DAI in the background when they swipe their cards.