‍How stablecoins are reshaping global remittances

Stablecoins are transforming cross-border payments, particularly in regions like Africa and Latin America, where high remittance volumes and financial exclusion have made traditional systems inefficient and expensive. 

With the promise of faster settlements, lower fees, and broader access, stablecoins have increasingly become an attractive alternative to previous remittance methods. But with innovation often comes risk, and as stablecoin adoption accelerates, fraud is evolving in new and complex ways. 

For remittance providers, this shift is both an opportunity and a challenge. To stay competitive, businesses must embrace stablecoins while investing in tailored fraud prevention strategies that protect users and revenue.

As financial inclusion expands, so too must our commitment to digital safety. Bringing more people into the system only works if they’re protected once they get there.

The growing role of stablecoins in cross-border payments

Stablecoins are a type of cryptocurrency whose value is pegged to a ‘stable’ asset like fiat currencies (e.g. USD) or commodities (e.g. gold), providing the benefits of crypto without the price volatility. Popular stablecoins like USDC and USDT have become foundational infrastructure for cross-border payments, offering a more efficient alternative to traditional systems.

A16zcrypto details the disruptive opportunity for stablecoins, highlighting the fact today’s payments stack wasn’t built for the internet, but instead for “fee-taking middlemen”. In this system, the exorbitant costs and delays disproportionately affect the world’s poorest and most financially vulnerable.

“The [current] system we’ve inherited is slow, opaque, and exclusionary, and it leaves billions of people underserved or entirely cut off from the global financial system.” 

Stablecoins offer a radically different paradigm. When applied to the remittance industry, they deliver: 

• Lower fees: Traditional remittance often charges ~6-10% or more in transaction fees (World Bank). Stablecoins drastically reduce this by removing layers of intermediaries 
• Faster settlements: Especially across time zones and countries where banking systems are fragmented or inefficient, stablecoin transactions can clear in seconds or minutes instead of days
• Borderless access: Even users without bank accounts can send and receive stablecoins via mobile wallets, making it a more inclusive solution for the underbanked 
  

Why stablecoins matter more in Africa and Latin America 

In regions like Africa and Latin America, stablecoins are not just a technical innovation - they’re solving real problems at scale.

In Africa, remittance flows reached over $95 billion in 2023, with a significant portion flowing into countries like Nigeria, Kenya, Ghana and Egypt. These economies are mobile-first, with high crypto adoption and deep reliance on cross-border income. Mobile money services are widespread and smartphone penetration continues to rise - setting the stage for mass adoption of crypto-powered payments. 

Similarly, in Latin America, countries like Argentina, Brazil, Venezuela and Colombia have seen stablecoin usage skyrocket as people seek refuge from inflation, access USD-equivalents, and transfer value efficiently in highly regulated or unstable financial environments.

A number of factors are driving this momentum - from currency instability in local economies to regulatory limitations on international money movement to informal economies that thrive on mobile-first, P2P solutions and diaspora communities who need affordable ways to send money home.

The foreign exchange drought plaguing African economies

Africa's economic landscape is being reshaped by a critical shortage of foreign currency. Approximately 70% of nations across the continent are grappling with severe foreign exchange shortages, leaving businesses paralysed in their attempts to access the dollars essential for their operations. 

Stablecoins have emerged as a lifeline for these businesses, enabling them to maintain operations, pursue growth, and contribute to strengthening local economies despite the widespread FX crisis.

Breaking the remittance cost barrier with digital solutions

The prohibitive costs of traditional money transfer systems have driven many Nigerians toward stablecoin adoption as a practical alternative for cross-border transactions. Stablecoins have become the backbone of Nigeria's cross-border remittance ecosystem, offering unmatched speed and affordability for everyday users.

The financial advantage is striking: sending a $200 remittance from Sub-Saharan Africa using stablecoins costs approximately 60% less than conventional fiat-based remittance channels. This dramatic cost reduction is particularly significant in Nigeria, where stablecoin adoption has accelerated in response to runaway inflation and the Naira's precipitous decline to historic lows in February 2024.

In these contexts, stablecoin-powered remittances are simply more aligned with the local reality. Looking ahead, the role of stablecoins in global remittances will only expand as businesses look to using stablecoins to manage liquidity and reduce their exposure to currency volatility.

In Part Two, we unpack the “Stablecoin Sandwich” — a layered approach that blends stablecoins with local fiat on/off-ramps for faster, smoother, and more accessible money movement.

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