BY: R Y A N P E T E R S
For most of us, money moves electronically and seemingly instantly. Paychecks arrive in your account on payday, credit card purchases are processed immediately, and business invoices show ‘paid’ right after you hit send. But the actual movement of dollars takes longer, passing through multiple banks and processing systems. That disparity between the apparent speed and actual settlement reveals the costs embedded in our payment infrastructure: Banks bundle transactions into daily batches rather than processing instantly, funds sit idle during multi-day transfers, and international payments route through long and costly chains of correspondent banks.
Stablecoins offer a different approach, wrapping the dollar in a digital token issued on a blockchain ledger that can move globally, around the clock, and settle in minutes. This results in fewer intermediaries, lower acceptance costs and faster cash. In the evolution from physical coins to paper money to digital banking, stablecoins represent the next step: Digital tokens backed by cash and Treasury bills that can always be exchanged for exactly one dollar.
The recent passage of the GENIUS Act has brought attention to this new technology, creating the first comprehensive federal framework for payment-grade stablecoins in the United States. While the broader cryptocurrency environment suffers from significant price volatility and speculation, it relies on robust blockchain infrastructure. Regulated stablecoins leverage this technological foundation to offer a practical way to move dollars that is faster, cheaper and more accessible than traditional payment systems while maintaining the stability and regulatory oversight that consumers and businesses demand.
Stablecoins backed by reserves also function as a distribution channel for U.S. Treasury bills. When individuals and companies hold these payment tokens, the backing consists of Treasury bills and short-term government securities, broadening the investor base for the safest government debt and providing more consistent demand for Treasury bills. The GENIUS Act’s provisions open the door to treating these tokens as cash equivalents on company balance sheets, which would further strengthen this distribution channel. It creates a beneficial cycle: High-quality government backing supports a reliable dollar token while increased stablecoin demand flows through to Treasury markets.
Ryan Peters is an assistant professor of finance and a former associate economist with the Federal Reserve Bank of Chicago.
More than any other payment method, stablecoins operate as a layer above existing settlement networks. Where Banking-as-a- Service relaxed licensing constraints but preserved settlement delays, stablecoins reduce the settlement constraint itself. International transfers today often rely on banks pre-funding accounts in foreign countries to create the appearance of instant delivery. When both sides of a payment route operate on blockchain networks and maintain dollar parity, value can move without tying up balances, resulting in fewer intermediary bank fees and less funds tied up during transfers.
This time-saving shift enables useful products. Credit lines can fund at authorization rather than days later. Corporate treasurers can move cash 24/7 instead of by batch window. Consumer and merchant wallets can settle with fewer reversals. Companies are already piloting real-time lending models where customer card swipes pull funding directly from credit facilities and settle instantly. Most users will never think about blockchains, but they will notice that funds sent on Saturday are spendable on Saturday.
For U.S. consumers and businesses, the benefits are straightforward. Card acceptance fees and chargeback insurance reflect a world that settles in batches and reverses transactions after the fact. When payments settle quickly and finally, fraud windows and cash flow problems shrink, especially for small merchants. Programmability enables features like escrow that releases automatically on delivery or payments that split across multiple recipients, making previously expensive custom work broadly accessible.
The largest potential gains sit abroad, where remittance fees still consume meaningful shares of wages, and small exporters and freelancers in developing markets wait days for correspondent banks to reconcile their money. In countries with fragile currencies, a dollardenominated token can be both a simple store of value and a practical way to transact with global suppliers using only a phone. None of this requires a new monetary order. It requires reliable redemption, modest fees and the ability to move value across borders without pre-funding and intermediated hand-offs.
Policy is catching up. With GENIUS, the United States has taken initial steps toward a federal framework for payment-grade stablecoins, and the U.K., European Union, Singapore, Hong Kong and Japan have advanced their own regimes. A common core is emerging: Full reserves in cash and short-dated government debt with legally enforceable dollar- for-dollar redemption, licensed issuers, regular disclosures, strong custody and security standards, and robust anti-fraud and sanctions controls. The aim is not to pick winners but to make issuer failure safe. If a stablecoin issuer stumbles, consumers should get their dollars back promptly.
The risks of stablecoin adoption are familiar ones: operational failures, custody lapses, issuer concentration, and the temptation to reach for yield with customer funds. They also have familiar mitigants: segregation, audits, disclosure and consequences. Recent failures at fintech intermediaries showed the costs of weak reconciliations and unclear ownership of funds. Stablecoin regimes should learn from that history rather than repeat it.
Done right, stablecoins make the dollar more useful at home and more accessible abroad. Merchants will see funds sooner and keep more of each sale. Families sending money home will keep more of what they earn. Treasury teams will manage cash with 24/7 liquidity rather than batch windows. And the U.S. Treasury will have one more steady hand in the bill market.
