Stablecoin Payments Still Need FX and Local Settlement

The following is a guest post and opinion from Danyel Arenas, Co-Founder and CEO at KiiChain.

Visa’s launch of its Stablecoin Platform is a sign that stablecoins are moving into mainstream financial infrastructure. The platform gives banks, fintechs and payment providers a way to access, hold, move and redeem stablecoins within a Visa-managed environment.

As that access improves, however, foreign exchange becomes a bigger part of the equation. Stablecoins can simplify the movement of value across borders, but each payment still needs to connect with the currency required at its destination.

For that reason, local-currency liquidity and FX settlement are becoming increasingly important to the next phase of stablecoin payments.

Stablecoin payments create more demand for FX infrastructure

Consider a fintech serving businesses across Brazil, Mexico and Colombia. Stablecoins can provide a common asset for moving value between these markets, while its customers continue to operate in different currencies.

That means each corridor still requires FX pricing, sufficient liquidity, conversion and settlement. Depending on the market, those functions may involve different providers and integrations, adding complexity as the fintech expands.

This connection between stablecoin payments and foreign exchange is also starting to show up in regulation. Brazil’s central bank, for example, now treats activities including international payments using virtual assets and the purchase, sale or exchange of fiat-referenced virtual assets as foreign-exchange operations.

Although wider use of dollar stablecoins could reduce some demand for local currencies in certain situations, especially for treasury holdings or international trade, that does not remove the need for local settlement.

Businesses still pay employees, taxes and domestic suppliers in national currencies, while merchants price goods in the currencies their customers use. So even when USDC or USDT carries value across borders, an FX conversion is often still required before the funds can be used locally.

Local stablecoins need access to global dollar liquidity

Local-currency stablecoins can bring currencies such as the peso or real on-chain, making them easier to use alongside stablecoin-based payment infrastructure. At the same time, dollar stablecoins such as USDC and USDT remain important sources of global liquidity, particularly for cross-border payments and international trade.

For the two to work together, there needs to be an efficient market between them. A peso stablecoin may need to be exchanged for USDC, reais or another currency somewhere in the payment flow. Without sufficient liquidity, reliable pricing and efficient settlement between those assets, bringing more local currencies on-chain does little to solve the underlying conversion problem.

Functioning FX markets provide that connection. They allow liquidity to move between global dollar stablecoins and local currencies, while giving market makers a way to rebalance positions as demand changes across different corridors.

However, access to liquidity is only part of the challenge. The way FX transactions are executed and settled also needs to keep pace with a payment system that increasingly operates around the clock.

On-chain FX can bring the currency layer closer to 24/7 payments

Traditional FX still depends heavily on banking hours, while cross-border payments and currency settlement can take hours or even days when several intermediaries and correspondent banks are involved. That creates a mismatch when stablecoins themselves can move at any time.