Uber’s recent stablecoin interest could be enough to trigger a domino effect
Stablecoin adoption has surged dramatically in recent years, with the global stablecoin market capitalization reaching USD 254 billion, nearly doubling in the last three years. This rapid adoption of stablecoins is due to their ability to increase payment efficiency and lower costs, add stability and reliability, technological advancements, and regulatory clarity and trust.
Yet, despite increased adoption, the use of stablecoins to transfer money across borders remains underutilized. However, with Dara Khosrowshahi expressing that Uber is looking toward stablecoins for cross-border payments, stablecoins may soon become mainstream.
According to Bilal Khaled, Director of Trading at D24 Fintech Group, “Stablecoins host a range of benefits, eliminating all intermediaries. Unlike volatile cryptocurrencies, stablecoins are pegged to assets like the US dollar, providing a stable store of value and a reliable medium of exchange. This stability has made them attractive for retail and institutional users, supporting their use in everyday transactions and as a haven during market turbulence. Improved blockchain interoperability has also allowed stablecoins to move across networks.
“Moreover, governments and regulators are setting clearer guidelines and frameworks for stablecoin issuance and use, increasing trust among businesses and consumers. Enhanced transparency in reserve management and compliance with anti-money laundering (AML) and know-your-customer (KYC) regulations have reassured users about the legitimacy and safety of stablecoins.”
Uber’s recent interest in stablecoin use has led many to ponder why the organization would want to use them in the first place and how they could benefit. It is widely believed that cross-border payments using stablecoins are remarkably cheaper compared to traditional means and that they improve working capital cycles.
Khaled continued, “Given that intermediaries are effectively removed, and the technology backing stablecoins is far superior to traditional means like wire transfers, the cost of settling cross-border payments can drop from $30 per transfer to less than a dollar per transaction.
“Payments can be settled almost instantly, and firms like Uber can benefit vastly given their extensive geographical footprint. Uber, which traditionally relies on banking partners for the repatriation of profits, can have cash available instantly with stablecoins. Furthermore, stablecoins can act as a treasury solution and a hedge against local currency depreciation. This would be particularly useful for a large, global entity like Uber, which operates in 70 countries.
“With the current paradigm rushing toward digitalization of finance, stablecoins offer a feasible alternative for global companies like Uber to streamline their payment operations. The low-cost, low-latency approach that stablecoins bring to cross-border payments makes them a reliable alternative to the clunky and often expensive traditional methods. Despite the positives, companies must be aware of the risks that may come with adopting stablecoins in their payment operations. Regulatory, forex, and liquidity risks are all crucial in determining the feasibility of the solution for an organization. In sum, new and streamlined solutions are paving the way for cross-border payments, and stablecoins may lead that race,” concluded Khaled.
