“The cross-border payment system has been deteriorating over several decades”

Stablecoins have been in the news lately following Societe Generale’s decision to introduce a dollar-pegged cryptocurrency and reports that a number of other major global banks are set to follow suit. In his session titled “New vs old: what will change in how we execute payments, settle trades, and custody assets” at the upcoming PostTrade 360° 2025, Nick Philpott, co-founder and head of partnerships at Zodia Markets will explain why stablecoins are a viable alternative to cross-border correspondent banking as a means of moving value across borders at high velocity, low cost, and high reliability.

Also putting stablecoins in the spotlight is the recent progress on the regulatory front, notably, the US Senate passing the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act, establishing a regulatory framework for payment stablecoins.

Slow take-up

Despite these developments, many businesses still don’t make a distinction between stablecoins or cryptocurrencies pegged to a stable asset like the dollar and those that operate independently of a central authority, observes Philpott.  

“The cross-border payment system has been deteriorating over several decades,” he says. “Progress on the building blocks of the G20’s roadmap for enhancing cross-border payments has been mixed at best and the Financial Action Task Force is making it harder for international banks to want to provide correspondent banking services.”

This makes it difficult (if not impossible) to move money out of certain jurisdictions.

While it is relatively straightforward to establish a faster payment system between two jurisdictions with a maximum transaction value that works for medium sized enterprises, connecting wholesale, real-time gross settlement systems with much higher notionals is a lot more challenging.

Philpott uses the example of an oil company with a tanker full of crude that needs $120 million paying to underline the limitations of faster payment systems. “I want the audience to go away with an appreciation that there now is an alternative for the 20% of payments that cause 80% of their problems,” he adds. “Assuming most of your flows are US, EU, and UK, these payments will carry on being fine. But then every now and again you will need to move money from a country where repatriating fiat currency costs a fortune.”

Have you signed up yet to be in Stockholm for PostTrade 360° 2025 on 3–4 September? It’s free for securities operations pros, both trading and investor sides! (Vendor firm representatives need a sponsorship agreement.) The powerful event website lets you register, see all other delegates, schedule sessions and meetings, and message. Find all related articles, including loads of teaser interviews, here.