Bank of Italy research suggests stablecoins aren't necessarily cheaper for remittances
A mystery-shopping experiment found that exchange fees, foreign exchange spreads and banking rails mean stablecoin remittances are often no cheaper than traditional transfer means.
For years, stablecoins have been advertised as the crypto industry's solution for cross-border payments, touting near-instant transfers at a fraction of traditional remittance fees. However, a recent Bank of Italy research challenges this narrative, revealing that stablecoin-based transfers are not necessarily cheaper than conventional money transfer services once all costs are considered.
The study examined 10 international remittance channels, finding that the total cost of sending 200 USDC from Italy varied widely, from 0.3% to nearly 9% of the transferred value, depending on the route and service providers. Settlement times also differed significantly, ranging from around 20 minutes with domestic instant payment systems to up to two business days via conventional bank transfers.
While network gas fees contributed minimally to the overall expense, the bulk of the costs stemmed from converting euros to USDC, withdrawing funds into local currency, foreign exchange spreads, and fees charged by exchanges and domestic banking networks. The research highlights a significant blind spot in the market's focus on blockchain transaction costs.
Rather than merely transferring tokens within the crypto ecosystem, recipients ultimately need local currency for everyday expenses. Every conversion between fiat and stablecoins introduces additional intermediaries, such as centralized exchanges or brokers, which add fees and foreign exchange markups. The study suggests that stablecoins may offer cost reductions in specific corridors but do not consistently provide cheaper remittances when the entire payment chain is accounted for.
As regulatory frameworks evolve and instant payment systems integrate with digital assets, competitive pressure may drive down conversion fees. However, foreign exchange spreads are expected to remain a persistent aspect of cross-border payments. Ultimately, stablecoins have successfully addressed the challenge of moving value across blockchains, but the more substantial and costly issue of converting that value into spendable local currency remains unresolved.
Written by urgent.news from CoinDesk's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
