Stablecoins: What are they and how can they be used?
In recent years, stablecoins have become one of the most practical tools in modern finance, enabling fast, frictionless transfers without the volatility usually associated with cryptocurrency. Behind the scenes, they move billions of dollars every day across borders, between businesses, and through payment platforms. But what exactly are they, and why are companies using them?
What is a stablecoin?
In simplest terms, a stablecoin is a digital asset that's pegged to the value of another asset or fiat currency, most commonly the US dollar. While stablecoins run on blockchain infrastructure (like any cryptocurrency), they are designed to maintain a consistent value, making them useful for actual transactions. They're often backed 1:1 by reserves held in bank accounts or short-term US Treasuries.
The most widely used examples today are USDC (issued by Circle) and USDT (from Tether), which can be thought of as 'programmable' dollars. They can move instantly, settle 24/7, and bypass traditional banking rails entirely.
Stablecoins can also be backed by commodities, such as Paxos Gold (PAXG), or by algorithms that maintain value through a smart contract mechanism.
Why are stablecoins useful?
More and more businesses are using stablecoins for international operations. There are four main reasons for this, namely:
- Stablecoin transfers settle in minutes, not days. You don't have to wait for bank hours or deal with weekend delays.
- Fewer intermediaries means lower fees and cheaper payments.
- Transactions are truly borderless, meaning you can send a USDC payment to Singapore, Nigeria or Brazil just as easily as you'd send it to someone in New York.
- Like all blockchain-based transactions, transfers are transparent and traceable on-chain.
Stablecoin regulation – are they safe to use?
Yes, and regulations are always improving. As adoption accelerates, regulators around the world are establishing clear frameworks to ensure stablecoins are issued and used responsibly. In the EU, the Markets in Crypto-Assets (MiCA) regulation sets strict standards for reserve management, licensing, and consumer protection, including regular audits and full asset backing. In the US, the proposed Stablecoin Transparency Act will require issuers to hold 1:1 fiat reserves and undergo routine audits, demonstrating the potential of stablecoins as a serious part of the financial system.
These stablecoins are:
- Fully backed by cash and short-term government bonds
- Audited monthly by third-party firms
- Issued by companies licensed under US state banking frameworks
Final thoughts – SettlementX
You don't need to be 'into crypto' to tap into the benefits of stablecoins. For many, they've become a practical alternative to wires and SWIFT – not because they're trendy, but because they work. They move fast, cost less, and make paying people across borders far less complicated. At SettlementX, we've taken those advantages and built a platform that brings them into the real world. Whether you're running a global payroll, juggling freelance invoices or purchasing real estate overseas, our goal is simple: to make stablecoin settlement feel as effortless as sending a bank transfer.
Reach out today to see how stablecoins can improve your workflow.