a16z Partner: How Stablecoins Can Cut the "Middle Tax" on Cross-Border Payments

Original title: Stablecoins: Payments Without Intermediaries

Original author: Chris Dixon, partner at a16z

Original Compilation: Felix, PANews

The internet has made information free and global. So why is transferring funds still so difficult and costly?

The early internet promised a future where anyone could publish, build, or trade without permission. Protocols like email and the World Wide Web were open and neutral, leading to an explosion of creativity, innovation, and entrepreneurship. However, it deviated from this path during its development.

Today, the global financial system resembles a patchwork quilt made up of corporate networks: centralized, closed, and predatory. Behind every transaction are intermediaries akin to Rube Goldberg machines (note: a type of overly complex mechanical contraption), such as point-of-sale systems, payment processors, acquiring banks, issuing banks, local banks, correspondent banks, foreign exchange trading platforms, credit card networks, and more. Each institution takes a cut, adding delays and imposing rules. These networks impose unnecessary taxes on business activities and stifle innovation. They turn what should be neutral channels into high-friction bottlenecks.

Stablecoins, which are cryptocurrencies pegged to stable assets like the US dollar, represent a way out, a reset—a means of bringing the internet’s original vision into currency.

Disruptive Opportunities of Stablecoins

The current payment system is not built for the Internet – it is built for a world of fee-based middlemen who have played a role in managing local partnerships, fraud prevention, and operations. Even today, international money transfers can be as high as 10% (in September 2024, the average fee for a $200 transfer was 6.62%). These are not just frictions – they are actually regressive taxes levied on some of the world’s poorest workers (PANews Note: It is generally believed that regardless of the size of the taxpayer’s income or property, and the level of affordability, they are all taxed in the same proportion, and as a result, those with high affordability have a low affordability rate, and those with low affordability have a high affordability rate, and the greater the affordability gap between taxpayers, the more obvious this phenomenon is, so taxes of this nature are called regressives). Today’s inherited system is slow, opaque, and exclusive, leaving billions of people underserved or even completely isolated from the global financial system.

For many businesses, traditional payment methods are extremely inefficient. Stablecoins can significantly improve this situation. B2B payments from Mexico to Vietnam typically require a clearing time of 3 to 7 days, with transaction costs ranging from 14 to 150 dollars for every 1000 dollars transacted, involving up to five intermediaries, each taking a certain percentage of commission. Stablecoins can bypass traditional systems such as the international SWIFT network and related clearing and settlement processes, making such transactions almost free and instantaneous.

This is not just talk—it’s already happening. Currently, companies like SpaceX are using stablecoins to manage their corporate funds (including repatriating funds from countries with volatile local currencies like Argentina and Nigeria). Companies like ScaleAI are using stablecoins to pay their global employees faster and cheaper. Meanwhile, in the B2C (business-to-consumer) space, Stripe is the first service provider to widely offer cryptocurrency payments, charging a 1.5% commission, which is only half of traditional payment methods. This could significantly increase profit margins for certain businesses: as a16z partner Sam Broner pointed out, a 1.5% margin increase could potentially double net income for businesses with very low margins, like grocery stores. (And in a competitive, blockchain-based market, transaction fees are expected to drop even lower.)

Unlike the old financial system developed on “islands”, stablecoins are inherently global. They operate on blockchain: anyone can build an open, programmable network. There’s no need to negotiate with dozens of cross-border banks; just connect to the network. People have realized these advantages. In 2024, the trading volume of stablecoins reached $15.6 trillion, comparable to Visa’s transaction volume. Although this figure mainly represents capital flow (rather than retail payments), its scale still indicates that we are on the brink of a transformation in financial infrastructure, one that does not rely on the patchwork of 20th-century systems.

On the contrary, it is possible to build entirely new, truly internet-native things – or what Stripe calls “the room-temperature superconductor of financial services,” where what is achieved is not lossless energy transmission, but lossless value transmission.

“WhatsApp” moment in the currency field

Stablecoins give us the first real opportunity to make currency open, instant, and borderless, just like the transformation that email brought to communication.

Reflecting on the evolution of text messaging. Before applications like WhatsApp appeared, sending a text message across borders meant paying 30 cents for each message. And if the message actually got delivered, that was considered lucky. Then, internet-native communication applications emerged: instant, global, free. Today’s payment methods are just like messaging in 2008: divided by national borders, hampered by intermediaries, controlled by “gatekeepers.”

Stablecoins provide a brand new alternative. Stablecoins do not piece together clunky, expensive, and outdated systems, but instead flow seamlessly on a global blockchain. These systems are programmable, composable, and designed for cross-border scalability.

Stablecoins have significantly reduced remittance costs: sending 200 USD from the United States to Colombia using traditional methods costs 12.13 USD; with stablecoins, the fee is only 0.01 USD. (The fee for converting stablecoins to local currency ranges from 0-5%, and due to increasing competition, the prices continue to decline.)

Just as WhatsApp revolutionized expensive international calls, blockchain payments and stablecoins are changing global remittances.

Regulation: From Bottleneck to Breakthrough

People often see regulation as a barrier, but wise legislation is the key to solving the problem.

Establishing clear rules for stablecoins and the cryptocurrency market could ultimately enable these technologies to move out of the sandbox and towards broader adoption. For years, DeFi has been trapped in a closed, circular, “coin-to-coin” economy. This is not because these tools are not useful, but because regulators have made it difficult for them to enter the traditional financial system.

This situation is changing. Policymakers are actively formulating rules to recognize and regulate stablecoins in order to maintain the competitiveness of the United States, protect consumer rights, and promote robust innovation. Careful regulation—such as a framework that distinguishes between network tokens and security tokens—can guard against bad actors while providing clear guidance for compliant participants. In fact, an upcoming bill that clarifies these regulatory rules may pave the way for broader adoption and integration into the global financial system.

Build public goods that benefit everyone

Traditional finance is built on private, closed networks. However, the internet has demonstrated the power of open protocols (such as TCP/IP and email) that drive global collaboration and innovation.

Blockchain is the native financial layer of the Internet. It combines the composability of public protocols with the economic power of private enterprises. They possess trustworthy neutrality, auditability, and programmability. By adding stablecoins on top of it, one gains something that has never truly been possessed: open monetary infrastructure.

You can think of it as a public highway system. Private companies can still build vehicles, conduct business, and create roadside attractions. But the roads themselves are neutral and open to everyone.

The role of blockchain networks and stablecoins goes far beyond reducing costs. They are giving rise to a new category of software:

· Programmatic payments between machines: A marketplace driven by AI agents automatically facilitates transactions for computing resources and other services.

· Micro-payments contributed by media, music, and AI: Just set some simple rules for budgeting, and let the “smart” wallet make the payments.

· Transparent payments with complete audit trails: Use these systems to track government spending.

· Global trade without cumbersome intermediaries: Instant settlement of international transactions at very low cost—this has already emerged.

The era of blockchain networks and stablecoins has arrived: technology, market demand, and political will are converging to make these applications a reality. A stablecoin bill may pass this year, as regulators weigh a framework that matches risks with proper oversight. Just as early internet startups thrived once it was clear they would not be shut down by telecom companies or copyright lawyers, cryptocurrencies are ready to bridge the gap from financial experimentation to critical infrastructure, with stablecoins leading the way.

There is no need to patch the old system; a better system can be rebuilt.

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