a16z Partner: How Stablecoins 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 money 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, sparking creativity, innovation, and entrepreneurship. But it has strayed off course in its development.

Today, the global financial system resembles a patchwork quilt of corporate networks: centralized, closed, and predatory. Behind every transaction are intermediaries akin to Rube Goldberg machines—point of sale systems, payment processors, acquiring banks, issuing banks, local banks, correspondent banks, foreign exchange platforms, credit card networks, and more. Each entity 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, cryptocurrencies pegged to stable assets like the dollar, offer a way out—a reset—a means of bringing the internet's original vision into currency.

Disruptive Opportunities of Stablecoins

The current payment system was not built for the internet—it was built for a world filled with fee-charging intermediaries (who once played roles in managing local cooperation, fraud prevention, and operations). Even today, international remittance fees can reach as high as 10% (in September 2024, the average fee for a $200 remittance was 6.62%). These are not just frictions—they are effectively regressive taxes imposed on some of the world's poorest workers. The inherited system is slow, opaque, and exclusive, leaving billions underserved or completely cut off from the global financial system.

For many businesses, traditional payment methods are highly inefficient. Stablecoins can significantly improve this situation. B2B payments from Mexico to Vietnam typically take 3 to 7 days to settle, with costs ranging from $14 to $150 for every $1,000 transaction, passing through as many as five intermediaries, each taking a percentage. Stablecoins can bypass traditional systems like the international SWIFT network and the associated clearing and settlement processes, making such transactions nearly free and instantaneous.

This is not just theoretical—it is already happening. 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 global employees faster and cheaper. Meanwhile, in the B2C space, Stripe is the first major provider to offer cryptocurrency payments widely, charging a 1.5% fee, which is only half of traditional payment methods. This could significantly boost profit margins for certain businesses: as a16z partner Sam Broner pointed out, for low-margin businesses like grocery stores, a 1.5% margin increase could double net income. (And in competitive, blockchain-based markets, transaction fees are expected to drop even lower).

Unlike the old financial system that developed in "silos," stablecoins are inherently global. They operate on blockchains: anyone can build open, programmable networks. There is no need to negotiate with dozens of cross-border banks; just connect to the network. People are already recognizing these advantages. In 2024, stablecoin transaction volumes reached $15.6 trillion, comparable to Visa's transaction volume. Although this figure primarily represents capital flows (rather than retail payments), its scale indicates that we are on the brink of a transformation in financial infrastructure that does not rely on the patchwork of 20th-century systems.

Instead, we can build entirely new, truly internet-native things—or what Stripe calls "the room-temperature superconductor of financial services," where the goal is not lossless energy transfer but lossless value transfer.

The "WhatsApp" Moment in Currency

Stablecoins give us the first real opportunity to make currency open, instant, and borderless, just as email transformed communication.

Think back to the evolution of texting. Before apps like WhatsApp, sending a text across borders meant paying 30 cents per message. And if the message actually got delivered, that was considered lucky. Then, internet-native communication apps emerged: instant, global, free. Today's payment methods are like messaging in 2008: divided by national borders, burdened by intermediaries, controlled by "gatekeepers."

Stablecoins offer a completely new alternative. They do not piece together clunky, expensive, and outdated systems; they 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 from the U.S. to Colombia using traditional methods costs $12.13; using stablecoins, the fee is just $0.01. (The fee for converting stablecoins to local currency ranges from 0-5%, and prices are continuing to drop due to increased competition).

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

Regulation: From Bottleneck to Breakthrough

It is easy to view regulation as a barrier, but wise legislation is the key to solving the problem.

Establishing clear rules for stablecoins and the crypto market could ultimately allow these technologies to move out of the sandbox and into broader adoption. For years, DeFi has been trapped in a closed, circular, "coin-to-coin" economy. Not because these tools are ineffective, but because regulators have made it difficult for them to enter the traditional financial system.

This situation is changing. Policymakers are actively crafting rules to recognize and regulate stablecoins to maintain U.S. competitiveness, protect consumers, and foster innovation. Thoughtful regulation—such as a framework distinguishing between network tokens and security tokens—can guard against bad actors while providing clear guidance for compliant entities. In fact, a forthcoming bill clarifying these regulatory rules could pave the way for broader adoption and integration into the global financial system.

Building Public Goods That Benefit Everyone

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

Blockchains are the native financial layer of the internet. They combine the composability of public protocols with the economic power of private enterprises. They possess trusted neutrality, auditability, and programmability. Adding stablecoins on top of this will yield something that has never truly existed: an 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 new categories of software:

· Programmatic payments between machines: AI-driven markets automatically match transactions for computing resources and other services.

· Micropayments for media, music, and AI contributions: Just set some simple budget rules and let "smart" wallets make the payments.

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

· Global trade without cumbersome intermediaries: Instant settlement of international transactions at extremely low costs—this is already happening.

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 could pass this year, and regulators are weighing frameworks that match risks with appropriate oversight. Just as early internet startups thrived once it was clear they wouldn't 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 old systems; we can reconstruct better systems.