Stablecoins have rapidly evolved from a niche crypto concept into a foundational element of digital finance. According to Noam Hurwitz, head of engineering at Alchemy, stablecoins are now the backbone of internet-based payments—surpassing traditional financial rails in onchain transaction volume. This shift marks a pivotal moment in how value moves online, with stablecoins emerging as the default settlement layer for global transactions.
Hurwitz emphasized that adoption has been nothing short of “explosive,” driven by their efficiency, speed, and cost-effectiveness. In fact, he noted that stablecoins have already outpaced Visa and Mastercard in onchain transaction volume by 7%. This milestone underscores a broader transformation: money is increasingly being digitized, tokenized, and settled instantly across decentralized networks.
The Rise of Onchain Financial Infrastructure
Companies like PayPal and Stripe are integrating stablecoin technology to leverage blockchain’s advantages—faster settlement, reduced fees, and 24/7 availability. These fintech giants recognize that traditional banking systems are too slow and expensive for real-time global commerce.
Alchemy plays a central role in this ecosystem, serving as the underlying infrastructure provider for major players including Robinhood Wallet, Visa, Stripe, Circle, and PayPal. By powering stablecoin transactions at scale, Alchemy enables seamless movement of digital dollars across platforms and borders.
Hurwitz explained that stablecoins make money “cheap, fast, global, and secure to transfer.” These attributes have fueled widespread adoption across diverse use cases—from cross-border remittances to decentralized prediction markets like Polymarket.
Stablecoins and Real-World Assets
One of the most significant developments in the stablecoin space is their growing connection to real-world assets (RWAs), particularly U.S. Treasury securities. Tether, the largest issuer of stablecoins, holds approximately $113 billion in U.S. debt—more than some sovereign nations, including Germany.
This massive treasury exposure generated $13 billion in profits for Tether last year alone. Far from being speculative instruments, stablecoins are now deeply embedded in traditional financial markets through their reserve holdings.
“Tokenized money is the base of the tokenized financial system,” Hurwitz stated. He described the current wave of innovation as “exciting,” where everything from bonds and deposits to real estate can be represented digitally and traded instantly.
Institutional Adoption: JP Morgan’s Kinexys
A key indicator of maturing market confidence is institutional participation. JP Morgan’s launch of Kinexys—a tokenized bank deposit on a public blockchain—represents a major breakthrough. Unlike closed-loop systems, Kinexys operates on an open network while maintaining compliance and control.
The permissioned token allows institutional clients to access yield-bearing deposits with features such as:
- 24/7 settlement
- Near real-time liquidity
- Interest accrual for holders
This hybrid model demonstrates how traditional finance can coexist with decentralized infrastructure, offering efficiency without sacrificing security or regulatory alignment.
Regulatory Clarity Fuels Growth
The recent passage of the GENIUS Act (Guiding and Establishing National Innovation for US Stablecoins) by the U.S. Senate marks a turning point in regulatory oversight. The bill establishes federal standards for stablecoin issuance, reserve requirements, and consumer protection—providing much-needed clarity for businesses and investors.
Hurwitz welcomed the development:
“With the recent passage of the Genius Act, the regulatory landscape is becoming clearer and more structured, which benefits established financial players while also encouraging innovation.”
Regulatory certainty reduces risk for institutions considering blockchain integration. It also helps separate credible projects from unregulated or opaque operators, fostering long-term trust in the ecosystem.
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Challenges in a Fragmented Ecosystem
Despite rapid progress, challenges remain. The blockchain landscape is highly fragmented, with multiple chains, standards, and interoperability hurdles. Enterprises want to move quickly but must carefully evaluate provider reliability and counterparty risks—especially when dealing with startups lacking proven track records.
Hurwitz raised a critical question:
“Can a small startup really support enterprise-grade operations while building and scaling the services they need?”
This highlights the importance of robust infrastructure providers who can deliver enterprise-level performance, uptime, and security—capabilities that Alchemy is actively building into its platform.
The Future: Seamless Crosschain Interoperability
Looking ahead, Hurwitz predicts that most financial institutions will deploy their own blockchains—particularly Layer 2 networks—to gain greater control over scalability, cost, and monetization.
These private or semi-private ecosystems won’t operate in isolation. Instead, they’ll interconnect through advanced crosschain protocols, enabling seamless asset transfers and data sharing across networks.
The ultimate goal? A unified financial system where stablecoins act as universal rails—connecting banks, fintechs, DeFi platforms, and global users in real time.
Hurwitz envisions infrastructure improvements driving “seamless crosschain interoperability,” creating a more connected and efficient financial architecture built on stablecoins.
Addressing Skepticism: The BIS Report
Not everyone shares this optimistic outlook. A 2025 report from the Bank for International Settlements (BIS) challenges the idea that stablecoins can function as true money within modern economies.
The BIS Annual Economic Report argues that stablecoins fail three core monetary functions:
- Singleness – Lack of universal acceptance as a unit of account
- Elasticity – Inability to expand or contract supply in response to economic demand
- Integrity – Reliance on private issuers rather than public institutions
The report classifies stablecoins as “digital bearer instruments” more akin to financial assets than sovereign currency.
While valid, these concerns reflect a traditional view of money. Proponents argue that stablecoins don’t need to replace central bank money—they simply offer an alternative layer optimized for digital transactions.
Frequently Asked Questions (FAQ)
Q: What makes stablecoins different from regular cryptocurrencies like Bitcoin?
A: Unlike volatile cryptocurrencies, stablecoins are pegged to stable assets like the U.S. dollar. This makes them ideal for payments, remittances, and storing value without exposure to price swings.
Q: Are stablecoins regulated?
A: Regulation varies by jurisdiction. However, with recent legislation like the GENIUS Act in the U.S., federal oversight is increasing—requiring transparency, reserve audits, and consumer safeguards.
Q: How do stablecoins maintain their value?
A: Most are backed 1:1 by reserves such as cash or short-term government bonds (like U.S. Treasurys). Issuers like Tether and Circle publish regular attestation reports to verify backing.
Q: Can individuals use stablecoins for everyday transactions?
A: Yes. Many digital wallets and payment apps now support stablecoins for peer-to-peer transfers, online purchases, and cross-border remittances—with lower fees and faster processing than traditional methods.
Q: What risks are associated with stablecoins?
A: Key risks include reserve transparency, regulatory changes, smart contract vulnerabilities, and issuer solvency. Choosing well-audited, regulated stablecoins minimizes these risks.
Q: Will stablecoins replace traditional banking systems?
A: Not entirely—but they will complement them. Stablecoins enhance efficiency in payments and settlements, especially in global finance, while coexisting with existing banking infrastructure.
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Final Thoughts
Stablecoins are no longer just a crypto experiment—they’re becoming essential infrastructure for the digital economy. From powering cross-border payments to enabling tokenized deposits and institutional-grade settlements, they offer tangible improvements over legacy systems.
With growing adoption by major financial players, clearer regulations on the horizon, and continuous technical innovation, stablecoins are poised to redefine how value flows across the internet.
The future of finance isn’t just digital—it’s onchain. And stablecoins are leading the way.