Stablecoin: The End of SWIFT?

Author: Sylvain Saurel, Translated by: Shaw Golden Finance

In the current era where globalization shapes corporate competitiveness, a striking paradox still exists: cross-border payments, as the lifeblood of global trade, are the slowest, most costly, and least transparent links in the financial system. The infrastructure originating from the 20th century, represented by the Society for Worldwide Interbank Financial Telecommunication (SWIFT) network, struggles to meet the 21st century's demands for flexibility, transparency, and sovereignty. Processing times often extend to several days, and costs accumulate with each intermediary step, leaving the flow of funds a mystery for corporate financial executives.

Meanwhile, a silent revolution is quietly underway, driven by the least conspicuous yet most useful crypto asset: stablecoins. Unlike the other cryptocurrencies that are highly volatile, these tokens backed by traditional currencies such as the US dollar or euro have been serving as a massive channel for currency. The relevant data is shocking. In 2024, the transaction volume settled through stablecoins reached an astonishing $24 trillion. Even more striking is that of this total, $7.6 trillion was used for actual payments—a figure that is already five times the annual processing volume of giants like PayPal.

This trend is no longer a weak signal. Strategic moves such as payment giant Stripe's acquisition of the startup Bridge confirm the acceleration towards a more modern, faster infrastructure with less reliance on traditional banking channels. In the face of this phenomenon, a pragmatic and powerful technological alternative is emerging: the "stablecoin sandwich". This is by no means a mere act of innovation, but a complete transformation in architecture that is likely to redefine the rules of the game in international payments.

SWIFT System: An Inherited Legacy on the Brink of Collapse

To understand the scope of this innovation, we must first assess the limitations of the existing system. SWIFT was created in the 1970s; it is not 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."

Assuming a company in Paris needs to pay a supplier in São Paulo in Brazilian Real. Its French bank may not have a direct account with the Brazilian supplier's bank. Therefore, this transaction typically goes through one or more intermediary banks, which are often large international banks headquartered in New York or London. Each intermediary bank will check the transaction, deduct fees, perform currency conversion (usually at unfavorable exchange rates), and then pass the instructions to the next link in the chain. This multi-layered process explains why there can be a delay of two to five business days, the accumulation of costs (transfer fees, intermediary bank fees, exchange rate spreads), and a lack of traceability. For companies, this means a loss of time and money, as well as a loss of control over their cash flow.

"Stablecoin Sandwich": A New Framework for the 21st Century

The concept of "stablecoin sandwich" proposes to bypass this series of intermediaries through an extremely simple three-step structure.

1. First Layer (Local Conversion): The company initiating the payment does not need to change its habits. It pays using the local currency (for example, euros). Professional payment service providers will immediately convert these euros into highly liquid stablecoins, such as USDC (backed by US dollars) or EURC (backed by euros). This conversion takes place on liquidity-rich platforms, ensuring the best exchange rates.
2. Intermediate Layer (Blockchain Transfer): The stablecoin amount is then transferred to the digital wallet of the vendor in the target country/region via a public blockchain (such as Ethereum, Solana, or Tron). This transfer is the core of the system: it is almost instantaneous (taking only a few seconds to a few minutes), secured by cryptographic technology, and its fees are very low and predictable, regardless of the transfer amount.
3. Final Layer (Local Exchange): Once the stablecoin reaches its destination, the provider will immediately exchange it for the recipient's local currency, such as the Brazilian Real. Similarly, the transaction takes place in a highly liquid local market. The funds will then be transferred to the provider's traditional bank account.

The payee can receive the expected local currency amount without any interaction with cryptocurrency. The issuing company simply makes the payment locally. This "sandwich" structure absorbs all the complexities of cross-border transfers. This approach has significant strategic advantages: it allows companies to make payments to the payee on the blockchain without directly adopting cryptocurrency internally. It is a simple and gradual way to expand payment channels without changing currencies or disrupting their accounting and financial structures.

Three Decisive Advantages of Corporate Competitiveness

For chief financial officers and finance executives, the advantages of this model are direct and measurable.

First is speed. Reducing delays from days to minutes is a revolution.

For companies importing key components, making payments to suppliers in Asia or Latin America almost immediately can ensure smooth delivery and avoid disruptions in the production chain. For small and medium-sized enterprises that often face tight cash flow, receiving payments in minutes instead of waiting a week can significantly improve working capital and financial transparency.

Secondly, there is economic efficiency. Disintermediation has a direct impact on costs. By eliminating intermediary bank fees and obtaining more competitive exchange rates at both ends of the transaction chain, businesses can save a significant amount of costs, with potential savings of about 1% to 3% on certain payment channels. For funds flowing in the millions of dollars annually, these savings are strategically significant. Furthermore, transparency is also crucial: fee information can be known in advance, avoiding unpleasant surprises.

The third is scalability and inclusiveness. The "stablecoin sandwich" model is particularly suitable for companies operating in regions where major correspondent banking services are insufficient or lacking, especially in Africa, Southeast Asia, and Latin America. It enables businesses to reach suppliers or customers in countries with weak banking infrastructure or significant currency volatility. By using the US dollar (via stablecoins) as a transfer tool, it can mitigate the impact of foreign currency fluctuations during the process of fund transfers.

The Hegemony of Digital Dollar: America's Strategic Advantage

From a geopolitical perspective, this payment revolution is not neutral. The emergence of stablecoins has not threatened the dominance of the US dollar; rather, it has greatly reinforced 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 it’s between Singapore and Mexico, or between Nigeria and Turkey, every transaction conducted using these assets is essentially priced in US dollars.

This phenomenon gives the United States a decisive advantage. While other economic powers (such as Europe) are theorizing and experimenting with the digital euro, but making slow progress, the private sector in the United States has already built and deployed a private infrastructure for the digital dollar on a global scale. These fast and efficient new financial channels extend the influence of the dollar beyond traditional banking channels.

Stablecoins are not only tools to evade American power, but are instead becoming carriers of its hegemony. They anchor the dollar more firmly at the core of the global digital economy, making it an indispensable currency for blockchain transactions. This "dollarization" of the new financial circuit gives Washington indirect but significant influence, as the primary issuers of stablecoins are centralized entities regulated by the U.S. Although the stablecoin revolution appears decentralized, it is likely to reinforce the dollar's position as a key pillar of the global financial system in the coming decades.

Powerful Currency and Sovereign Leverage

In addition to technological innovation and its geopolitical implications, this is also about monetary strategy and resilience. By breaking free from the constraints of almost complete reliance on traditional banking networks, stablecoin payments provide unprecedented operational flexibility. Businesses are no longer constrained by bank operating hours, public holidays, or the decisions of intermediaries in different time zones.

In the context of escalating geopolitical tensions and financial fragmentation, access to certain payment networks can be used as a means of exerting pressure. Therefore, to maintain economic sovereignty, diversifying payment channels has become crucial. The "stablecoin sandwich" is emerging as a powerful monetary engineering lever, based on stable and highly liquid digital assets, aimed at constructing payment flows that are more resilient, less centralized, and less susceptible to attacks.

Although public institutions (such as the EU, which has developed the MiCA regulation for the crypto asset market) are working on regulating asset tokenization, and central banks are cautiously exploring central bank digital currencies (CBDC), companies have already taken action. They can no longer wait five to ten years for these projects to materialize. By adopting the "stablecoin sandwich" model, they are addressing the immediate demands for liquidity, speed, and control in international payments. This is not a sudden break but a natural evolution driven by the pursuit of operational performance. The replacement of SWIFT may not be a grand event, but rather a gradual transition led by those companies already building the future of finance on the ground.