Stablecoin remittances cost anywhere from 0.3% to nearly 9% depending on the payment corridor, according to a Bank of Italy study that tested 200 USDC transfers across 10 bidirectional routes. The blockchain transaction fee? A rounding error in most cases. The real expense came from getting money into and out of the crypto system.
The researchers sent stablecoins between Italy and five countries: Brazil, Argentina, Japan, the United Arab Emirates, and South Africa. Each corridor ran both directions, creating 10 distinct routes. What they found challenges a core assumption in the stablecoin pitch deck: that moving value on a blockchain is inherently cheaper than legacy rails.
Where the Money Actually Goes
Exchange fees and currency conversion ate most of the cost in every corridor the researchers tested. Blockchain transaction fees, the thing crypto advocates typically highlight when comparing costs to SWIFT or Western Union, made up only a small share of total expenses.
Think of it like shipping a package. The actual postage might be $5, but customs processing, insurance, and last-mile delivery push the total to $50. Stablecoin remittances work the same way. Moving USDC from one wallet to another costs pennies. Converting euros to USDC at the origin, then USDC back to Brazilian reais at the destination, costs real money.
The study used the World Bank’s reported global average remittance cost of 6.65% as a benchmark. Stablecoin transfers came in cheaper than that average in most corridors examined. But when the researchers compared stablecoins directly to Wise, the fintech that has aggressively undercut traditional remittance pricing, the picture shifted. Stablecoins beat Wise in only three of seven comparable corridors.
That three-out-of-seven result matters. Wise represents the current competitive frontier for retail cross-border payments. If stablecoins can’t consistently beat Wise on cost, the value proposition narrows to specific use cases rather than a universal replacement for existing rails.
Settlement Speed Depends on Local Infrastructure
Transfers settled in under 20 minutes when both ends of the corridor had instant payment systems available. Where they didn’t, settlement stretched to one or two business days.
This finding inverts another common assumption. The blockchain itself settles in seconds to minutes depending on the network. But a remittance isn’t complete when USDC lands in a wallet. It’s complete when the recipient can pay rent, buy groceries, or cover school fees. That requires converting stablecoins back to local currency and moving funds into a bank account or mobile money wallet.
Japan’s instant payment infrastructure meant Japan-bound transfers settled quickly once the USDC hit the recipient’s exchange account. Brazil’s more fragmented banking landscape created delays. The blockchain was never the bottleneck.
The Bank of Italy researchers argued that domestic investment in instant payment infrastructure could improve stablecoin competitiveness more than any protocol upgrade. A country that builds better on-ramps and off-ramps gets faster, cheaper stablecoin remittances regardless of which blockchain the tokens travel on.
The Regulatory Arbitrage Problem
Prohibitionist regulatory regimes didn’t suppress stablecoin demand, the study found. They just pushed users toward offshore platforms and unregulated channels. Overly restrictive frameworks increased operational complexity for retail users without meaningfully reducing stablecoin adoption.
This pattern should sound familiar to anyone who watched India’s crypto saga unfold. Bans drove trading to VPNs and overseas exchanges. When India reversed course and imposed a 30% tax instead, trading came back onshore but volumes dropped. Neither approach eliminated demand.
Brazil offers a live example of how regulatory friction shapes these markets. The country’s central bank issued Resolution 561 earlier this year, barring fintechs from settling international remittances with crypto starting in October. The Bank of Italy study suggests this type of prohibition may not reduce stablecoin use so much as redirect it through less visible channels.
The findings arrive as two major regulatory frameworks have taken effect. The European Union implemented its Markets in Crypto-Assets (MiCA) framework, which establishes licensing requirements for stablecoin issuers operating in Europe. The United States enacted the GENIUS Act, creating a federal framework for payment stablecoins with reserve and disclosure requirements.
What Direct Spending Would Change
The researchers identified one scenario where stablecoin economics would shift dramatically: direct spending. If recipients could pay for goods, services, rent, or school fees directly in stablecoins without converting back to local currency, the cost advantage would be “substantially higher,” the study concluded.
This isn’t a hypothetical. El Salvador made Bitcoin legal tender in 2021, theoretically enabling direct BTC spending. Adoption has been limited, but the infrastructure exists. A handful of merchants in Dubai accept USDC. Some Latin American landlords take USDT.
The problem is circular. Merchants won’t accept stablecoins widely until customers hold and want to spend them. Customers won’t hold stablecoins for spending until merchants accept them. Remittance recipients, even if they receive USDC, need to convert to local currency because their landlord, grocery store, and utility company don’t take crypto.
Breaking this cycle requires either government mandate (El Salvador’s approach, with mixed results) or gradual merchant adoption driven by lower payment processing fees compared to card networks. Neither path is fast.
The stablecoin market has grown to approximately $307 billion in total supply, up roughly 16% over the past year according to DefiLlama data. That growth has been driven primarily by trading collateral, DeFi usage, and dollar-denominated savings in countries with unstable local currencies, not by direct spending. The remittance use case remains a work in progress.
How This Connects to the Wise Pivot
Wise, the UK-based payments company that served as the benchmark in this study, recently announced plans to refile its US national trust bank application under the GENIUS Act framework. The OCC had rejected Wise’s initial charter application over AML compliance concerns.
This matters because Wise and stablecoins are converging on the same problem. Both attempt to route around correspondent banking fees and settlement delays. If Wise operates under a stablecoin-friendly regulatory framework, the company could potentially integrate stablecoin rails into its existing infrastructure, cherry-picking corridors where blockchain settlement offers genuine advantages.
The Bank of Italy data suggests those advantages are corridor-specific. A corridor where both endpoints have strong instant payment infrastructure may not benefit much from stablecoin rails. A corridor where one endpoint lacks banking access but has mobile money integration might see significant gains.
For stablecoin advocates, the strategic question is which corridors to prioritize. The answer from this study: corridors where local payment infrastructure is weakest and where regulatory frameworks permit compliant on-ramps and off-ramps.
What the Numbers Mean for Circle and Tether
Circle, the issuer of USDC, has positioned remittances as a core use case for its stablecoin. The company’s pitch emphasizes near-zero blockchain fees and instant global settlement. This study complicates that narrative without refuting it.
The 0.3% low end of the cost range the researchers found represents a genuinely cheap remittance. The 6.65% global average means many traditional providers charge more than even the worst stablecoin corridors in the study. But the 9% high end shows that stablecoins aren’t automatically cheap. Corridor-specific factors, particularly exchange liquidity and fiat conversion costs, dominate outcomes.
Tether’s USDT remains the dominant stablecoin by market cap, but the Bank of Italy study used USDC. This likely reflects regulatory considerations. USDC operates under a more transparent reserve structure and has obtained regulatory approvals in multiple jurisdictions. For a central bank study, USDC presented fewer methodological complications.
Whether the findings would differ materially for USDT is unclear. Both tokens use similar blockchains (Ethereum, Tron, Solana, and others). Both require the same fiat on-ramp and off-ramp infrastructure. The conversion costs that dominate the expense breakdown would likely be similar.
The stablecoin market’s 16% annual growth suggests users are finding value despite the friction the study documents. Traders use stablecoins to move between exchanges without touching fiat. DeFi protocols use them as base pairs and collateral. Holders in Argentina and Turkey use them as dollar-denominated savings accounts. Remittances represent one use case among several, and perhaps not the strongest one given the fiat conversion overhead.
Investment Implications Beyond the Headlines
The study’s most actionable finding for market observers isn’t about stablecoins at all. It’s about payment infrastructure companies. The researchers concluded that domestic instant payment infrastructure investment could improve stablecoin competitiveness more than blockchain-level changes.
This suggests that companies building fiat-to-crypto bridges, particularly in emerging markets with weak domestic payment rails, occupy a strategic position. The on-ramp and off-ramp layer captures most of the value in stablecoin remittances because that’s where most of the friction lives.
Mastercard’s recent moves into stablecoin infrastructure, paying roughly double market rates for acquisitions, make more sense in this context. The card network isn’t trying to compete with blockchains. It’s trying to own the conversion layer where the actual money gets made.
For regulators, the study offers a nuanced message. Outright bans don’t work but neither does a completely hands-off approach. The MiCA and GENIUS Act frameworks attempt to find middle ground: permitting stablecoin activity while imposing reserve, licensing, and disclosure requirements. Whether that balance actually improves remittance efficiency won’t be clear until the frameworks have operated for several years.
The Bank of Italy will continue monitoring stablecoin payment flows as MiCA implementation proceeds. Future studies may examine whether regulatory clarity in Europe improves corridor economics for Italy-linked remittances specifically. For now, the data shows that stablecoins offer genuine but inconsistent advantages, and that the blockchain itself is rarely the constraint.
