PayPal Holdings and Convera are among a slew of payments companies and fintechs vying to offer new ways of using stablecoins for international transactions. 

While some, such as PayPal, are seeking to incorporate the cryptocurrency into consumer and merchant transactions, others are offering new twists for companies in their payment practices. 

All the activity revolves around a bid to make international payments faster, less complex and more affordable, for consumers and businesses alike. The convoluted paths of cross-border payments, including fees and foreign exchange practices that increase the cost, have long stymied G20 nations’ efforts to simplify the transactions.

At PayPal, the company said last month that its own stablecoin, PYUSD, will now be available for use – buying, selling, transferring and holding – in the PayPal digital app in 68 additional countries, including Colombia, Costa Rica, Greenland, Honduras, Peru and Singapore, according to a March 17 press release.

Prior to last month, the San Jose, California-based company’s stablecoin was only available in its app in the U.S. and the United Kingdom, even though it was circulating in other countries through other crypto wallets, like the one offered by the crypto exchange Coinbase.

“We have a current relationship with these consumers and businesses around the world, and now we're letting them engage with our stablecoin in a meaningful way… so [giving them] the ability to have faster and cheaper cross-border payments,” May Zabaneh, PayPal’s general manager of crypto, said in an interview last week, regarding the app extension.

Stablecoin innovation has been spurred partly by the enactment last year of the Genius Act in the U.S., which for the first time is offering some regulatory structure in the cryptocurrency arena, specifically for stablecoins. While that law will drive new federal oversight, regulators still have concerns.

Stablecoin regulatory concerns remain

Stablecoins are cryptocurrencies tied to fixed values, like fiat currencies, and therefore they’re considered a steadier store of value than crypto coins such as bitcoin. 

However, the word “stable” may be a misnomer without proper regulations to ensure that the cryptocurrency will withstand market stress and have appropriate reserves backing it, Federal Reserve Gov. Michael Barr said Tuesday. He detailed areas where regulation has yet to be put in place.

“Key issues include regulation of reserve assets, the potential for regulatory arbitrage, the scope of permissible activities for stablecoin issuers beyond stablecoin issuance, appropriate capital and liquidity requirements, anti-money laundering controls, and consumer protection requirements,” Barr said.

Despite the potential benefits of stablecoins reducing remittance costs and providing tools for more efficient management of global trade, there are also threats related to the possibilities of stablecoin use for laundering money and funding terrorism, he said.

“Caution is warranted because we have a long and painful history of private money created with insufficient safeguards,” Barr said.

The Treasury Department on Wednesday issued its first proposed regulation related to the Genius Act and asked for public comments on its plan to oversee state regulation of stablecoins in instances where companies opt for state purview.

That's an option only in instances where stablecoins have no more than $10 billion in outstanding issuance, per the Genius Act. That state oversight must be "substantially similar" to the federal regulatory framework and approved by the Stablecoin Certification Review Committee, per the law.

Convera, Ripple target stablecoin uses

The commercial, cross-border payments services provider Convera has teamed up with the blockchain and crypto company Ripple to allow the transfer of the crypto for businesses, the companies said in a Tuesday press release.

They aim to build on the “stablecoin sandwich” settlement model, where payments start and finish in a fiat currency, but use stablecoins for settlement between those points.

By tying Convera’s global network and foreign exchange expertise with “Ripple’s liquidity, settlement, and digital asset capabilities,” the companies seek to provide faster and more reliable cross‑border payments – especially in places where other options are limited, the release said.

There are “parts of the world with emerging currencies, where you have far less efficient distribution of currencies, and that means it's slow, it's error-prone, and it's expensive,” Convera CEO Patrick Gauthier said in an interview last month. “Stablecoins introduce a way of doing this better. You could almost think of stablecoins as the mobile phone of money.”

Still, Gauthier emphasized that stablecoins are still evolving in terms of use cases and generate relatively low payments volumes. Seattle-based Convera, which was spun off from Western Union in a sale to the private-equity firm Goldfinch Partners and investment firm The Baupost Group in 2021, specializes in global B2B payments. 

Convera’s CEO also noted that existing payment mechanisms work well in many areas and will sometimes be preferred. “Stablecoins and tokenized payments are an important emerging technology to process payments, without a doubt,” he said, also referencing those that move on digital tokens. That said, they’re “not a full replacement for everything that exists.”

Startups spearhead stablecoins

There will be plenty of competitors, including new ventures, springing into the stablecoin realm. 

The startup Nium, a business with bases in San Francisco and Singapore that has financial backing from card network giant Visa, has launched a service by which companies that hold stablecoins can issue stablecoin-funded cards for cross-border use on the Visa and Mastercard networks. That will enable the use of those cards at merchants worldwide, the company said in a Monday press release.

Some former PayPal executives have gotten into the act with the startup Sokin, a British company that has raised $50 million on the proposition of offering on-ramps and off-ramps for using stablecoins in 170 countries around the clock. Sokin, whose investors include banking titan Morgan Stanley, is pitching its services to corporate finance teams as a means to move international payments faster and with less expense.

Another startup, New York City-based OpenFX, is focused on foreign-exchange conversions via stablecoins for large sums being transferred by companies. OpenFX said this week it has raised $94 million to keep building its business.

“We think the changing regulatory environment is a driver of integration between DLT/blockchain, cryptocurrencies and stablecoins into the broader payments and financial services ecosystems,” RBC Capital Markets analyst Daniel Perlin said in a note to clients Tuesday.