To make stablecoins a truly mainstream payment method, a universally applicable and user-engaging interface layer must be established.

Author: Jack Forestell

Compiled & Edited by: Deep Tide TechFlow

Last week, the Senate passed the "Guiding and Establishing National Innovation for U.S. Stablecoins Act," abbreviated as the GENIUS Act. The passage of this act marks an important step for the United States in the regulation of stablecoins. At Visa, we support this and believe that stablecoin legislation could become a pivotal moment in the history of the payments industry. However, I say "could" because there are still many challenges to overcome for the widespread adoption of stablecoins. The emergence of stablecoins brings hope for a new era of programmable digital currency, but there is still a long way to go before they are truly mature.

Promoting the adoption of new payment technologies is not an easy task. It requires building trust among buyers and sellers, payers and payees on a global scale. This trust is not established overnight; it relies on a complex and tightly integrated set of capabilities, such as security, reliability, transaction assurance, fraud protection, dispute resolution, ease of use, and ongoing technological innovation.

To enable stablecoins to become the core infrastructure of the next generation of global digital payments, three key conditions must be met:

Layer One: Technical Foundation

A robust, scalable, flexible, and open technical architecture is needed to securely execute transactions at extremely high speeds and scales, ensuring zero errors, zero vulnerabilities, and zero security risks. In recent years, the rapid development of blockchain technology has provided viable solutions for this need.

Layer Two: Reserve Support

The core of stablecoins lies in the credibility of their value and stability. Stablecoins that are approved by regulatory agencies and backed by reserve assets provide a reliable answer to this issue.

Layer Three: Interface Layer

To make stablecoins a truly mainstream payment method, a universally applicable and user-engaging interface layer must be established.

• This layer needs to provide trust, rules, standards, security, and actual value for both parties in each transaction.

• It must have sufficient scalability to cover billions of users globally.

• At the same time, it needs to offer users a simple and convenient way to convert digital assets into their chosen fiat currency (i.e., users can easily use the value they obtain wherever needed).

However, relying solely on the infrastructure of stablecoins cannot fully address this critical issue. Without a well-developed interface layer, stablecoins will struggle to achieve the goal of becoming mainstream payment tools. They may work in certain specific scenarios, such as solving localized payment issues, supporting closed systems, or serving as the underlying infrastructure for wholesale fund flows and capital markets… but they will find it difficult to achieve large-scale application in mainstream payment areas.

Visa is working to address this issue. As a leader in the global payments industry, Visa has established one of the largest, most secure, and trusted interface layers worldwide. Over the years, we have invested billions of dollars to continuously optimize this layer, making it adaptable to different payment forms and allowing all users to easily integrate into the Visa ecosystem. By integrating our infrastructure, services, and connectivity capabilities, we provide seamless and secure digital payment experiences for billions of buyers and sellers globally. This unique combination is known as the "Visa as a Service" stack. Whether for small merchants or large banks and enterprises, the Visa stack is their preferred choice when they need to scale payment solutions. This also applies to partners in the cryptocurrency space. In recent years, we have collaborated with leading cryptocurrency and stablecoin platforms to provide them access to the Visa stack and help them achieve super-scalability in payments. Since 2020, we have facilitated nearly $95 billion in cryptocurrency purchase transactions and over $25 billion in cryptocurrency spending, totaling over $100 billion in fund flows.

Many people may ask, "What problems are stablecoins actually solving?" This is a very good question. For consumers and businesses worldwide, they have become accustomed to using Visa's 4.8 billion physical cards and nearly 14 billion digital Visa Tokens, which they consider the most convenient and reliable means of payment and receipt. Visa's payment system offers an exceptional payment experience, and we continue to invest to make it the most advanced, secure, and convenient choice. Visa users do not have to worry about the following issues when making payments:

• Will the merchant accept my payment?

• Do I need a dedicated wallet?

• Do I have the correct currency in my wallet? Am I on the right blockchain?

• What are the Gas fees for this transaction?

• Will my privacy be protected? Can someone see my transaction history and address without permission?

• Can I earn points or rewards?

• How do I access my credit limit?

• Who can I contact if I encounter a problem?

• Is this transaction secure?

Through Visa's payment network, these questions are no longer barriers for users, which is the core value we provide to users globally.

The vast majority of consumers and businesses will still choose to pay with fiat currency and enjoy the convenience brought by the Visa system. For payment solutions based on stablecoins, as long as they connect to Visa's payment network, they can also provide users with the same experience.

So, what problems can stablecoins solve? In certain specific scenarios, especially in emerging markets, stablecoins have shown significant potential, mainly reflected in the following areas:

• Users wishing to hold U.S. dollars but lacking convenient access channels.

• Regions where local fiat currencies are highly volatile, leading to economic instability.

• Some cross-border fund flow needs, such as international remittances or business-to-business (B2B) payments.

These scenarios present Visa with a new opportunity to expand its business, as they involve areas of fund flow that we have not yet fully covered. In these areas, we plan to leverage Visa's payment network advantages by collaborating with stablecoin platforms and partners, as well as global financial institutions, to provide innovative solutions.

However, in developed markets (such as the U.S.), it is less certain whether consumers and businesses will choose to use stablecoins for payments. This is because developed markets already have a rich array of payment options, such as making "digital dollar" payments directly through bank accounts, which are equally convenient and competitive.

The passage of the GENIUS Act provides a clear regulatory framework for stablecoins, creating possibilities for their further promotion. Visa is currently actively positioning itself in several directions within the stablecoin space, including:

• Deploying Visa certification and Visa Tokens to connect stablecoin payment platforms and their users with fiat currency and the Visa global payment network.

• Providing native settlement services that support stablecoins to make transactions more efficient.

• Developing cross-border fund flow solutions based on stablecoin technology to simplify international payment processes.

• Offering programmable currency solutions to customers to explore more possibilities in payments.

• Additionally, there are many innovative features currently in development.

Of course, truly achieving the comprehensive application of stablecoins in the payment field will still take time—and this is just the starting point.

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