Stablecoins in Treasury Management

Stablecoins: The future of corporate treasury management

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Stablecoins have quickly become an integral part of the digital asset ecosystem with a market cap of $222.16billion (Forbes ). Stablecoins have the potential to revolutionize corporate treasury operations, offering transformative solutions to long-standing problems with liquidity management, cross-border payments, and operational efficiency.

Corporate treasury teams often have pre-funded foreign currency accounts or multi-currency accounts to facilitate cross-border payments. These accounts hold balances by a company’s bank in another country to ensure local currency is on hand for payouts.  

These balances are frequently rebalanced. Treasury teams monitor payment flows and top up or draw down foreign currency accounts as needed to keep sufficient funds available. This has been an essential process for corporations to meet customer expectations, however, itis labor-intensive and hindered by cutoff times and forecasting inaccuracies.

Corporate treasury teams deal with several significant issues managing liquidity and facilitating cross-border payments:

1. Trapped liquidity: industry estimates suggest that ~$4 trillion is locked up in prefunded foreign currency balances globally. This is a huge opportunity cost for businesses.
2. Complex multi-bank relationship management: treasurers struggle with managing multiple bank relationships across time zones, which results in operational inefficiencies. If a foreign currency account runs low late in the day, treasury teams might not be able to top it up until the next business day due to banking hours.
3. Lack of payment transparency: cross-border payment flows traditionally have opaque fee structures and uncertain settlement times. Each cross-border transfer to rebalance or settle payments involves intermediaries, adding fees, delays, and points of failure.
4. Slow settlement: traditional cross border payments have relied on international transfer sent via SWIFT which can take 2-5 days to settle. This creates inefficient cash management cycles.

Additionally, the less common the currency pair, the more correspondent banks are required to make the payment, increasing fees and delays throughout.

At each bank in the payment flow, the following happens:

1. Fees: Fees are taken for processing and foreign exchange
2. Payment messages: The payment messages have to pass local financial crime requirements
3. Account rebalancing: Each bank will have to accurately update the balances in the accounts of the incoming and outgoing payees

In order for the funds to move from one account to the other, the domestic payment systems for each must be accessed during normal business hours. The sender’s bank will need to hold enough cash to cover these unknown costs until the payment is complete.

Stablecoins as a liquidity game-changer

Stablecoins can offer a streamlined approach to address these challenges:

1. Real-time liquidity management: Stablecoins enable 24/7 365 fund transfers, enabling treasurers to optimize cash positions instantly.
   1. This real-time capability can minimize the need for pre-funding accounts and provide greater flexibility in reacting to liquidity needs or market conditions.
2. Cost reduction: Stablecoins make transactions “more cost effective” by removing the need for intermediaries and traditional international wire transfers and going directly into the receiver’s digital wallet.
3. Working capital efficiency: Faster settlement times improve cash flow forecasting and reduce counterparty risk.
4. Enhanced transparency: Blockchain-based transactions offer end-to-end visibility as both senders and receivers can track transactions on-chain.

The challenges that need to be overcome

For stablecoin funds to move instantaneously from a digital wallet to a local bank account, they must be processed through regional instant payment rails. While over 80 such systems currently operate or are under development globally - including SEPA (Europe), Faster Payments (UK), PIX (Brazil), and UPI (India) - their reach remains limited compared to the traditional SWIFT network, which provides connectivity across more than 200 countries and territories.

These instant payment infrastructures, though growing in adoption, have yet to achieve the comprehensive global coverage that characterizes the more established SWIFT system.

Regulatory clarity across markets

As stablecoin adoption continues to grow, regulators are developing frameworks to ensure stability and consumer protections. This is not global yet which is a challenge that needs to be overcome.

In the US, the “GENIUS Act of 2025” aims to implement a regulatory framework for “payment stablecoins,” allowing issuance by permitted entities under federal or state supervision. The UK is moving towards regulating stablecoins under existing e-money regulations, with the Financial Conduct Authority (FCA) as the leading regulatory body.  The EU’s Markets in Crypto-Assets (MiCA) framework establishes guidelines for stablecoin payments, requiring issuers to partner with licensed financial institutions.

Future outlook

Further adoption and innovation around stablecoins with emerging technologies are creating exciting opportunities. Businesses are exploring and developing programmable money concepts for automating treasury functions, supply chain finance, and international trade settlements.

Stablecoins represent a paradigm shift in corporate treasury management, offering solutions to age-old challenges in liquidity management, cross-border payments, and operational complexity. As the regulatory landscape continues to evolve, treasury management teams with a forward-thinking approach have the opportunity to utilize stablecoins to drive significant operational efficiencies and improve their companies’ financial performance and strategic agility.