A new study from Juniper Research has found that stablecoins are making rapid progress in the cross-border market in particular, with them representing a key way to bypass slow, expensive and difficult-to-track existing cross‑border payment rails.

Stablecoins are cryptocurrencies that have their value pegged to a fiat currency or commodity, removing the volatility inherent to a typical cryptocurrency.

Cross-border Use Cases Promising, but Competition Growing

By 2028, the value of cross-border stablecoin payments will represent almost 73% of total stablecoin payments transaction values globally – showing the dominance of cross-border use cases.

Stablecoins can be effective, as they remove stages in the cross-border process, increase speed of transactions and settlements, and improve traceability. The research, however, identified the main obstacle for further growth as being acceptance, with stablecoin roll-outs needing new networks to be built and scaled.

Research author Nick Maynard explained: “Stablecoins have vast potential to unlock the flow of money across borders, but payment platforms need to roll out acceptance strategies for this to progress. MTOs (Money Transfer Operators) can leverage stablecoins in a wholesale manner, but this will need networks to be built across wide geographic footprints.”

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Another challenge to stablecoin growth is the role of CBDCs (Central Bank Digital Currencies). CBDCs are digital coins issued by a central bank, which are pegged to the country’s fiat currency.

While CBDCs are at an early stage of development, they too have strong potential for cross-border. The advantage CBDCs have is their central bank backing, meaning roll-outs should be at a faster pace. However, given the size of the cross-border space, and the very nascent stage of CBDC development, stablecoins have strong prospects for growth alongside CBDCs.