Fiat Bottlenecks Negate Stablecoin Remittance Edge, Bank of Italy Study Finds

Cross-border Stablecoin transfers do not systematically outpace or undercut traditional remittance channels, according to a study conducted by the Bank of Italy. Researchers found that while blockchain processing itself is swift and inexpensive, the friction, delays, and fees associated with moving money between fiat currency and digital assets absorb most of the theoretical efficiency gains.

The central bank evaluated 200 transactions involving USDC across 10 bidirectional corridors connecting Italy with Argentina, Brazil, Japan, South Africa, and the United Arab Emirates. Across these routes, total transaction costs fluctuated from 0.3% to nearly 9%, primarily driven by exchange commissions and local currency conversion fees rather than underlying blockchain transaction fees.

Although stablecoin transactions performed favorably when evaluated against the World Bank reported global average remittance cost of 6.65%, their advantages narrowed significantly when compared against modern fintech services. Stablecoin remittances were less expensive than transfers through Wise in only three of seven comparable payment corridors.

Settlement speed was similarly dictated by existing domestic banking infrastructure rather than the distributed ledger itself. In corridors backed by real-time domestic payment networks, transfers finalized in under 20 minutes. However, where instant domestic clearing rails were absent, complete end-to-end settlement stretched to one or two business days as fiat on-ramps and off-ramps processed the money.

High cross-border payment costs have long been a challenge for international financial systems. Traditional money transfers rely on correspondent banking networks that impose multiple intermediary charges and compliance checkpoints. While distributed ledgers eliminate central intermediaries on-chain, converted stablecoin remittances shift these friction points to fiat conversion gateways and local cryptocurrency exchanges.

Bank of Italy researchers noted that stablecoins could yield their biggest efficiency gains if digital asset ecosystems expand to the point where recipients no longer need to convert stablecoins back into fiat currency for daily transactions.

The study also highlighted how regulatory frameworks shape transfer efficiency. Prohibitionist regulatory regimes failed to fully suppress consumer demand for stablecoins, instead pushing users toward offshore platforms and unregulated channels. Conversely, overly restrictive rules increased operational complexity for retail users.

The findings arrive as global regulatory frameworks take shape. The European Union has implemented its Markets in Crypto-Assets (MiCA) framework to govern digital assets, while the United States has enacted the GENIUS Act for payment stablecoins. Amid these regulatory shifts, the global stablecoin market capitalization has expanded to roughly $307 billion, marking a 16% increase over the past year according to DefiLlama data.