How stablecoins integrate with global finance and payment rails

1) Executive summary (CIGI+1 framing)

Stablecoins are moving from niche crypto tools to programmable settlement infrastructure that can bridge domestic payment systems and enable always-on, low-cost, conditional payments. In CIGI Paper No. 331 (Aug 2025), Christian Catalini argues that successful integration turns on three pillars: programmable compliance, interoperable settlement, and credible backing/convertibility—together enabling instant settlement, cross-border reach, and policy-compatible privacy controls (e.g., ZK-assisted AML/CFT). Your “+1” layers live deployments from card networks (Visa/Mastercard), PSPs (Stripe, PayPal), and interbank rails (Swift) that are operationalizing those pillars. (CIGI)

2) State of play (late-2025)

• Size & momentum. The stablecoin sector is roughly $300B; major outlets and IFI trackers note accelerating net issuance in Q3 2025 and increasing links to traditional markets. (Financial Times)

• Policy backdrop.• EU MiCA: stablecoin titles (ARTs/EMTs) entered application in June 2024; ESMA’s Jan 17, 2025 statement pushed NCAs to wind down non-MiCA-compliant offerings by end-Jan 2025. (ESMA)• United States — GENIUS Act (July 18, 2025): establishes a federal framework for payment stablecoins (full-reserve backing, redemption rights, disclosures; federal/state issuer pathways). (Latham & Watkins)

• Macro/market linkages. BIS research finds dollar-stablecoin flows measurably affect 3-month U.S. Treasury yields (inflows lower, outflows raise) — evidence of real ties to money markets; BIS and IMF also flag potential spillovers and policy risks as usage grows. (Bank for International Settlements)

  
  

3) The plumbing: where stablecoins touch legacy rails

• Card networks (treasury settlement).• Visa expanded stablecoin settlement (more coins/chains/use-cases) and publicly reports having settled nine-figure cumulative volumes; it targets seven-day settlement and broader partner coverage. (Visa Investor Relations)• Mastercard is integrating stablecoins (e.g., USDG, USDC, PYUSD, FIUSD) via Mastercard Move/MTN and joining Paxos’ Global Dollar Network to enable issuer/acquirer flows. (Mastercard)

• PSPs & merchant platforms.• Stripe re-enabled crypto and launched stablecoin payments for subscriptions; Optimized Checkout now supports stablecoins by default, with treasury tools for holding/converting balances and sending to wallets. (Stripe)• PayPal/Paxos expanded distribution: PYUSD is now on Stellar (NYDFS-approved) and USDG launched in the EU as a MiCA-compliant USD stablecoin. (Stellar)

• Interbank/cross-network rails.• Swift announced it will add a blockchain-based shared ledger to its infrastructure to support tokenized payments (including stablecoins) with interoperability to existing networks, partnering with major banks and Consensys. (Swift)

4) Integration models (with concrete touchpoints)

A. Merchant acceptance → fiat settlement (PSP-mediated).Customers pay in a supported stablecoin from a self-custody or hosted wallet; the PSP handles on-chain collection, screening, conversion/treasury, and settles fiat to the merchant bank account or acquirer. In October 2025, Stripe enabled stablecoin payments for subscriptions and added default stablecoin support in Optimized Checkout, with tools to hold balances, convert to fiat, and send to wallets. (Stripe)

B. Card-network treasury settlement in stablecoins.Networks use approved stablecoins on approved chains to net issuer↔acquirer positions and fund treasuries, abstracting crypto from the point-of-sale. On July 31, 2025, Visa announced it will support more stablecoins, more chains, and more use cases within its settlement stack; Visa has also been piloting regional expansions of stablecoin settlement for cross-border flows. (Visa Investor Relations)

C. Bank/fintech distribution via issuer networks.Mastercard is integrating stablecoins (e.g., USDG, USDC, PYUSD, FIUSD) through Mastercard Move and Mastercard Multi-Token Network (MTN) and joining Paxos’s Global Dollar Network, enabling acquirers/banks to mint/redeem USDG for client flows. (Mastercard)

D. Multi-network consumer stablecoins.PayPal USD (PYUSD) expanded beyond Ethereum: Stellar announced PYUSD is live (after NYDFS approval), explicitly targeting fast, low-cost payments use cases. (Stellar)

E. Interbank/cross-network interoperability.Swift disclosed it will add a blockchain-based shared ledger to its infrastructure (announced at Sibos, Sep 29 2025), aiming to connect tokenized payments (incl. stablecoins) with today’s bank rails to enable instant, always-on cross-border transactions at scale. (Swift)

5) Data & adoption snapshots to include

Rail & product launches (2024–2025).

• MiCA stablecoin titles applied June 30, 2024; ESMA’s Jan 17, 2025 statement instructed NCAs and market participants to bring ART/EMT services into compliance. Use these dates in your regulatory timeline. (ESMA)

• U.S. GENIUS Act signed July 18, 2025—first federal framework for payment stablecoins (full-reserve backing, redemption and disclosure requirements). Cite the White House fact sheet, Congress.gov bill page, and a major wire. (White House)

• Visa settlement expansion (Jul 31, 2025), Mastercard x Paxos USDG (Jun 24, 2025), Stripe subscriptions (Oct 14, 2025), PYUSD on Stellar (Sep 18, 2025), Swift shared ledger (Sep 29, 2025). Use these as dated milestones on the rails chart. (Visa Investor Relations)

  
  

Stablecoin integration into regulated markets.

• USDG (Paxos) launched in the EU with MiCA-compliant documentation; issuer materials and the MiCA whitepaper terms outline disclosure, reserve, and redemption commitments for EU users. (Paxos)

  
  

Policy lens on systemic linkages (for context boxes).

• BIS 2025 work highlights rising linkages to money markets and banks and flags policy challenges (integrity, stability, monetary sovereignty) as usage scales—use one callout for balance. (Bank for International Settlements)

  
  

6) Compliance & risk controls at the interface (what rails actually require)

A. Regulatory baselines now shaping product design.

• EU (MiCA): ARTs/EMTs became applicable June 30, 2024; ESMA’s Jan 17, 2025 statement instructs providers to assess and ensure compliance and refrain from non-compliant offerings. Expect authorization, whitepaper, reserve, governance, and disclosure requirements to be enforced at the PSP/exchange level. (ESMA)

• U.S. (GENIUS Act): establishes full-reserve, redemption, and periodic disclosure rules for payment stablecoins, with federal/state issuer pathways; rely on White House, Reuters/AP, and Congress.gov for statutory anchors until regulators publish implementing guidance. (White House)

  
  

B. Network/PSP control stack.

• KYC/AML, sanctions screening, and Travel-Rule compliance are being embedded at networks and PSPs; BIS stresses integrity controls as stablecoins scale across borders. Expect on-chain screening, wallet risk-scoring, and blacklisting/allow-listing to remain standard at the fiat interface. (Bank for International Settlements)

  
  

C. Issuer/venue risk policies that affect integration.

• Chain support & deprecations are used as AML/OFAC risk-management levers; e.g., Circle’s 2024 notice to discontinue USDC on Tron (with institutional migration window through Feb 2025). This type of issuer policy directly impacts PSP and network routing. (Circle)

  
  

D. Disclosure & convertibility expectations.

• MiCA-compliant whitepapers (e.g., USDG EU) and U.S. GENIUS disclosures formalize reserve composition, redemption rights, and counterparties—a prerequisite for deeper bank and card-network use. (Paxos)

  
  

7) Case studies (what’s actually live)

Visa: stablecoin treasury settlement at network scale.On July 31, 2025, Visa said it will support more stablecoins, more chains, and more use cases in its settlement stack (now including EURC, PYUSD and USDG; added chains include Stellar and Avalanche). Investor and newsroom posts plus trade coverage detail the expansion and rationale (always-on cross-border netting, faster treasury operations). (Visa Investor Relations)

Mastercard x Paxos (Global Dollar Network) + Move/MTN.On June 24, 2025, Mastercard announced it will join Paxos’ Global Dollar Network and enable USDG, PYUSD, USDC, FIUSD across Mastercard Move and Multi-Token Network (MTN), aiming to let acquirers/banks mint/redeem and settle with compliant stablecoins. (Mastercard)

Stripe: stablecoin subscriptions for SaaS.On Oct 14, 2025, Stripe launched stablecoin payments for subscriptions with tooling to hold balances, convert to fiat, and send to wallets—PSP-mediated acceptance with fiat settlement to merchants. (Stripe)

PayPal: PYUSD on Stellar (multi-network distribution).Sep 18, 2025: PYUSD went live on Stellar (after NYDFS approval), targeting low-fee, fast consumer payments; PayPal had previewed plans in June. (Stellar)

Swift: interbank interoperability via a shared ledger.Sep 29, 2025 (Sibos): Swift announced it will add a blockchain-based shared ledger to its infrastructure to connect tokenized money—including stablecoins—with existing rails for instant, always-on cross-border settlement. (Swift)

8) Geopolitics & macro linkages (IMF/BIS balance of views)

• Liquidity link to safe assets. A BIS working paper (2025) finds that stablecoin inflows tend to lower 3-month U.S. Treasury yields by ~2–2.5 bps within ~10 days, while outflows raise them more than inflows lower them—evidence of two-way links with money markets. (Bank for International Settlements)

• IMF lens: benefits and risks. IMF pieces in Sept 2025 highlight faster, cheaper cross-border payments but warn about dollarization, capital-flow volatility, and supervisory gaps as usage scales globally. (IMF)

• Market sizing context. Recent IFI/think-tank notes peg the sector around $300B with a sharp Q3-2025 net-creation jump; debates continue on spillovers and supervisory perimeters. (Center For Global Development)

  
  

9) What changes for end-users & merchants (practical effects)

• Merchants (via PSPs): Stablecoin acceptance without crypto ops—PSP handles collection, screening, FX/treasury, and settles fiat to acquirers/bank accounts (e.g., Stripe subscriptions). Benefits: lower acceptance costs in some corridors, faster settlement windows, programmable payouts/loyalty. (Stripe)

• Card-network participants: Issuers/acquirers can net positions in stablecoins on approved chains, improving weekend/after-hours liquidity while keeping POS flows card-native (Visa pilots/expansion). (Visa Investor Relations)

• Consumers: Wallet payments with card-like protections emerging via network/PSP partnerships; multi-network coins (e.g., PYUSD on Stellar) shrink fees/latency for P2P and cross-border. (Stellar)

• Banks/fintechs: On-/off-ramp and mint/redeem functions via networks (Mastercard + Global Dollar Network) provide compliant distribution without building new rails from scratch. (Mastercard)

  
  

10) Open issues to watch into 2026 (no hype, just the blockers/enablers)

1. Interoperability among tokenized monies. How Swift’s shared ledger, card-network programs, and on-chain bridges interoperate with tokenized deposits and CBDC pilots will determine cross-network UX and risk management. (Swift)

2. Issuer/regulatory convergence. With MiCA in force and a U.S. federal framework in place, watch implementing guidance (disclosures, redemption SLAs, RWA eligibility) and how this shapes which coins PSPs/networks route by default. (IMF)

3. Run and concentration risks. BIS flags integrity and liquidity risks if growth accelerates; venue, custodian, and chain concentration remain critical for operational resilience. (Bank for International Settlements)

4. Merchant economics & pricing. Whether stablecoin rails consistently undercut card/ACH costs for specific flows (cross-border, high-risk, weekends) is an empirical question as pilots scale (Visa/Mastercard/PSP data forthcoming). (Visa Investor Relations)

5. Geopolitics of dollar-stablecoins. IMF/BIS warn on dollarization and policy spillovers; local-currency stablecoins and regional bank-issued tokens may be encouraged in some jurisdictions. (IMF)