Stablecoins¹ are emerging as the most credible “killer app” in the crypto ecosystem. Policy momentum through the GENIUS Act, Circle’s entry into the public markets, and Stripe’s acquisition of Bridge have pushed stablecoins into the mainstream. Yet the practical impact on payments, liquidity, and regional financial systems remains uneven. This memo examines where stablecoins are meaningfully reshaping financial infrastructure, where progress is overstated, and where the investable opportunities are beginning to take shape.

1. Payment: Real Innovation Behind Inflated Narratives

Looking past the $40T stable transaction volume hype

Stablecoin networks processed more than $40 trillion in transfers in 2024, outstripping Visa and Mastercard combined. But <10% of these transfers reflect real-world payments, as corroborated by the extraordinarily high value per transaction and a close correlation between velocity, defined as transfer volume divided by aggregate supply, and BTC prices. For now, payment remains a peripheral use case eclipsed by crypto trading.

Stablecoin remittance: Faster, but not (yet) cheaper

Remittance is often cited as the most promising payment application for stablecoins. In reality, however, the economics are murky.

While stablecoins eliminate prefunding and allow near-instant settlement, they do little to reduce the dominant cost drivers in remittance: onboarding, licensing, compliance, and fraud management, circumscribing the margin for improvement in the first place.

Moreover, stablecoins introduce new frictions. Because stablecoins are still minimally accepted as a medium of exchange, stablecoin-based transfers require converting fiat currencies into and out of the stablecoin ecosystem, incurring transaction fees in a way similar to correspondent banking. And due to the dearth of natural liquidity, the FX margins for stablecoins tend to be steeper and more volatile, particularly in exotic corridors.

Closed-loop fintechs still offer structurally lower costs by offsetting flows across their global account networks. Stablecoins offer a differentiated value proposition for subscale remittance players but do not yet offer a cost advantage against scaled incumbents.

A new messaging protocol alone does not transform the payment system. Moving money compliantly and frictionlessly at scale requires substantial infrastructure and value-add services, creating opportunities for:

• Orchestration layers that find and execute optimal on/off-ramp (e.g., XWeave)
• Stablecoin-native KYC / AML stacks that meet the added complexity in verification, tracing, and monitoring (e.g., Scorechain)
• B2C remittance that layers earning and credit on top of transfer (e.g., Flyra)
• Innovative liquidity aggregation solutions that minimize slippage and volatility in unidirectional corridors

Other stablecoin use cases - Promising but still early

Stablecoins’ potential lies in not only revamping existing use cases, but also enabling new ones, for which our age has no shortage.

Agentic commerce is creating demand for a programmable, divisible, and real-time settlement layer. Stablecoins are well suited for microtransactions executed autonomously at scale. While still early, we are seeing foundational efforts, like Coinbase’s x402, Google’s AP2 protocol, and Stripe’s Agent Commerce Protocol. Opportunities abound as we usher in the agentic economy, with the caveat that the collateral reallocation of working capital and legal complexities may stretch the timeline beyond technical readiness:

• Purpose-built blockchain that facilitates fair distribution of economics (e.g., Kite AI)
• Infrastructure that allows users to express intent and define objectives (e.g., Anoma)
• Solutions that securely connect agents to funds without direct access (e.g., Payman)

Stablecoin also offers a native means of payment and unit of account for tokenized assets. In a tokenized economy, goods and services would be represented on-chain, enabling direct exchange for tokenized dollars. That said, few assets have been tokenized to date and tokenised treasuries or money market funds, if regarded as indistinguishable from tokenised dollars, might serve as alternatives to stablecoin.

2. Liquidity and Credit: A New Dollar System Takes Shape

Stablecoins to draw liquidity away from the eurodollar market

The $13 trillion Eurodollar market - a system of U.S. dollar deposits in overseas banks - depends on offshore intermediaries and carries both regulatory and counterparty risks. The GENIUS Act marks a structural shift: payment stablecoin issuers may now hold reserves directly at the Federal Reserve, bypassing offshore banks entirely. This reduces systemic risk and gives users direct access to central bank money.

This potential outflow of deposits is similar to the rise of money market funds (MMFs) in the 1980s and 1990s which attracted bank depositors seeking higher yields amid regulatory interest rate caps, causing notable deposit outflows from commercial banks. This disintermediation pressured banks' traditional low-cost funding and prompted innovations like negotiable certificates of deposit and securities-based lending. MMFs’ shift demonstrated how alternative liquid instruments can fragment deposit bases, driving banks to adjust funding sources and risk management strategies.

Stablecoins to add volatility to bank funding

Stablecoin flows—highly sensitive to risk sentiment—can amplify liquidity swings. Research by the BIS finds that a two-standard-deviation inflow of roughly $3.5 billion into stablecoins reduces 3-month Treasury yields by 2 to 2.5 basis points within 10 days; outflows have two to three times the impact in the opposite direction. This asymmetry is likely intensifying due to “stablecoin looping,” a leveraged strategy in which users rehypothecate stablecoins across DeFi lending platforms to capture incentives. As of September 2025, looping was estimated to account for 30% of all activity on Ethereum-based DeFi. The leverage embedded in these loops heightens the risk of forced liquidations and accelerates shifts between bank deposits, treasuries, and stablecoins.

The regional impact: higher funding costs for subscale banks and SMEs

As stablecoins pull deposits into U.S. treasuries, foreign banks—especially in emerging markets—face a shrinking deposit base and increased reliance on wholesale funding. Banks with direct access to U.S. funding lines will borrow cheaply; others will face rising offshore dollar costs. The pressure will be most acute for tier-2 banks and smaller lenders in developing economies, which play a central role in SME credit. The table below shows examples of smaller Southeast Asian banks who are currently benefiting from cheap dollar funding that might face higher funding cost.

While banks currently maintain their competitive edge despite high service costs due to their lower cost of funds, this advantage, particularly in USD funding for regional banks, is likely to diminish over time. The erosion of funding advantages will create openings for alternative lenders and fintech underwriting and distribution models across Southeast Asia.

Large banks are responding with aggressive lobbying while developing their own tokens.

In April 2025, the US Treasury Department report estimated that up to $6.6 trillion in deposits could flow from banks to stablecoins depending on whether they can pay interest to users. Banks recognize that deposit disintermediation is a real threat. They are lobbying for amendments to the GENIUS Act to restrict any form of interest or yield paid to stablecoin holders.

Simultaneously, large banks are creating competing instruments - bank tokens and tokenized deposits - that mimic stablecoins but retain commercial bank safety. These instruments appeal to major stablecoin holders due to features like programmability, real-time settlement, easy reconciliation, and integrated compliance. They are blockchain-based digital tokens representing a direct claim on bank-held deposit funds, analogous to how fiat-backed stablecoins represent a claim on issuer-held funds.

For instance, Citibank, following the launch of its Token Services unit dedicated to tokenizing deposits, has started promoting bank tokens over stablecoins. While these institutions anticipate stablecoins and bank tokens will coexist, they are actively advocating for greater adoption of bank tokens. Other examples of bank tokens initiatives, shown in the table below, illustrate how banks are constructing programmable settlement layers that remain anchored inside the banking system. The significant interest from the financial services ecosystem opens new opportunities for startups building escrow, compliance automation, and real-time settlement tooling that bridge tokenized deposits with legacy infrastructures.

3. Looking Ahead: Opportunity Is Building, but Unevenly Distributed

2025 has been a breakout year for stablecoin-related investment, with capital shifting from trading infrastructure toward real-world use cases (see Appendix 1). Yet Southeast Asia trails global markets despite its high adoption of digital wallets and cross-border payments (see Appendix 2). Regulatory fragmentation, inconsistent on/off-ramp quality, and limited merchant acceptance still constrain experimentation. Despite improving product maturity, our conversations suggest few local startups have surpassed $1m ARR. At Integra Partners, we expect stablecoins to redefine how value moves across borders, how liquidity is intermediated, and how financial services are built. The investable frontier lies in the infrastructure that makes stablecoins usable at scale: compliant rails, liquidity networks, merchant-side enablement, agentic payments, and the connective tissue between tokenized deposits and the traditional financial system. As these layers mature, they will form the foundation for a decade of innovation in how money is created, transferred, and programmed.

¹ Stablecoin in this article refers to USD-pegged stablecoins.

Appendix

Appendix 2: Notable Public Stablecoin-related Fundraises in 2025, SEA