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Stablecoins are no longer best understood as a specialist corner of the crypto market.
Stablecoins across the payment stack
They are increasingly being tested as practical settlement instruments across the payments stack, from tokenised assets and cross-border transfers to trade finance, retail payments and emerging forms of agentic commerce.
A new report, ‘Stablecoins across the payment stack: Applications, adoption and regulatory readiness’ developed with The Payments Association’s Digital Currencies Working Group argues that stablecoins are beginning to solve a problem that conventional payment systems struggle to address: how to move value instantly, programmably and with settlement finality across digital environments.
That matters because the next generation of financial services is likely to be more automated, more tokenised and more cross-border than the infrastructure supporting it today.
Tokenised assets need tokenised money
One of the clearest use cases is the settlement of tokenised real-world assets. The on-chain RWA market now exceeds $27 billion, covering instruments such as private credit, government debt, real estate and funds.
Forecasts cited in the report suggest tokenised assets could become a multi-trillion-dollar market by 2030.
Yet tokenisation exposes a structural weakness. If an asset is represented on-chain but the cash leg still settles through traditional banking rails, many of the advantages of tokenisation are diluted.
Delivery-versus-payment becomes slower, more fragmented and exposed to settlement risk.
Stablecoins offer a practical bridge. Their programmability allows payment conditions to be embedded into transactions, while atomic settlement enables asset and cash legs to complete simultaneously.
For institutions, this could make tokenised assets more investable, although concerns remain around regulation, reserve quality, counterparty exposure and reputational risk.
Agentic commerce creates a new payments requirement
A more speculative, but potentially powerful, driver is agentic commerce. As AI agents begin to search, negotiate and transact on behalf of consumers or businesses, they will require payment rails designed for machine-initiated activity.
Card systems were built largely for human-initiated, single transactions. They are poorly suited to high-frequency, low-value or conditional payments between autonomous agents.
Stablecoins, by contrast, can operate within smart contract environments, enabling automated settlement, micropayments and programmable commercial logic.
The report points to initiatives such as Google’s Agentic Payments Protocol and Coinbase’s stablecoin tooling as early signals of where the market may move. The attraction is clear: an AI agent could assemble a purchase, verify fulfilment and trigger settlement without relying on legacy payment workflows.
The unresolved questions are equally significant, particularly around liability, consent, consumer protection and accountability when autonomous systems initiate payments.
Cross-border payments remain the obvious application
The best understood stablecoin use case remains cross-border payments. Traditional correspondent banking can be slow, costly and opaque, particularly in lower-volume corridors. Stablecoins offer near-instant settlement, continuous availability and a more transparent transaction record.
This is especially relevant for remittances, treasury flows and supplier payments. Average remittance costs remain well above international policy targets, while businesses continue to face delays, trapped liquidity and foreign exchange friction.
Stablecoin-based models can reduce the number of intermediaries involved, lowering cost and improving visibility.
Corporate interest is rising for precisely this reason. The “stablecoin sandwich” model, where fiat is converted into a stablecoin, moved on-chain and converted back at the destination, is increasingly being viewed as a treasury tool rather than a crypto experiment.
Trade finance and retail payments test adoption
In trade finance, stablecoins could provide the missing settlement layer for blockchain-based documentation. Smart contracts can define release conditions, while stablecoins provide immediate payment once those conditions are met.
This could reduce dependence on paper-heavy processes such as letters of credit and improve working capital flows in supply chains.
Retail adoption is more uneven. Stablecoins are gaining traction in markets affected by inflation, currency instability and limited banking access. Major networks and platforms, including Visa, Mastercard, PayPal and Stripe, are also building stablecoin capabilities into familiar payment experiences.
Even so, UK consumer usage remains heavily concentrated in cryptoasset trading rather than everyday spending.
UK regulation will determine the pace of growth
The UK’s stablecoin framework is advancing, but important gaps remain. HM Treasury, the Financial Conduct Authority and the Bank of England are developing a divided regime for systemic and non-systemic stablecoins. Issuance and safeguarding are moving into regulation, while the treatment of stablecoin payments continues to evolve.
This matters because stablecoins will only become mainstream payments infrastructure if legal certainty keeps pace with technical capability.
The opportunity for the UK is considerable: it has strengths in fintech, law, regulation and digital finance. But the market now needs clarity on authorisation, reserves, settlement finality, consumer protection and cross-border interoperability.
Stablecoins are not a universal replacement for existing payment rails. Their importance lies elsewhere: in providing digital money for environments where speed, programmability and finality are becoming essential.
For the payments industry, that makes them less a crypto story than an infrastructure story.
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