Stablecoin 'circulating supply' surges, but business-to-business payments remain minimal [Crypto Radar]

U.S. stablecoin adoption rate remains just above 5%
System integration and costs remain major hurdles
Likely to gain traction through existing financial networks, including credit cards

The issuance of stablecoins and payment infrastructure are expanding rapidly. However, adoption by mainstream businesses remains limited by unclear economic benefits compared with existing payment methods and the burden of integrating them into existing systems. Analysts say future market growth is likely to depend more on securing actual business demand than on expanding supply.

According to KOSCOM, a survey published in September this year by the Federal Reserve Bank of Cleveland found that, of 148 participating businesses, only one was currently using stablecoins and just seven said they planned to adopt them in the future. The survey covered a limited group and region, and its figures combine current use with future plans, so they cannot be generalized as the adoption rate among all U.S. businesses. Still, the findings can serve as a useful reference showing that expectations on the supply side do not automatically translate into business demand.

Businesses' hesitation to adopt stablecoins comes down to pricing and integration issues. Last month, U.S. payments publication PYMNTS said the stablecoin industry's key challenge was not a lack of supply but securing business demand. KOSCOM noted that businesses are holding back not because of technological barriers, but because of questions about economic benefits and the operational burden.

When evaluating a new payment method, businesses consider not only processing speed but also fees, the ability to recover funds, accounting treatment, internal controls, and whether counterparties will accept it. Even if stablecoins support 24-hour fund transfers and rapid settlement, incentives to adopt them will remain limited unless they demonstrate advantages in total costs or operational efficiency. In addition, linking payments with treasury management systems (TMS), enterprise resource planning systems (ERP), accounting, and regulatory compliance procedures can entail additional costs and operational burdens. How naturally stablecoins can be integrated into existing corporate financial operations is cited as the most important condition.

Insufficient demand from counterparties is also considered a structural factor limiting wider adoption. Business-to-business payments depend not only on the sending company but also on whether the recipient accepts stablecoins. If the recipient does not want stablecoins or needs to convert them into fiat currency immediately, additional conversion and redemption steps can reduce the expected efficiency.

KOSCOM stressed that market growth and business adoption rates should be assessed using different metrics. Outstanding issuance, on-chain transaction volume, and payment processing volume, which are commonly used to gauge growth potential, refer respectively to the scale of supply, the movement of funds on a blockchain, and payment activity classified according to specific criteria. It is difficult to interpret these three metrics as reflecting the same economic phenomenon. On-chain transaction volume may include transactions that do not involve purchases of goods or services, such as transfers between exchanges, transfers between a user's own wallets, and liquidity reallocation. High transaction volume does not necessarily mean that stablecoin use for business payments is increasing. Surveys of adoption intentions and payment activity statistics also measure different things. To assess the maturity of the market, it is necessary to consider together the number of businesses using stablecoins for payments, the share of recurring transactions, the value of business payments, and cost savings compared with existing payment methods.

There are also payment segments where stablecoin use is growing. Blockchain data company Allium said in its third-quarter report, released on October 15, that payment volume from January through September this year rose 45% from the same period last year to $482 billion. Payment volume in September reached $72 billion, a monthly record. Visa said it had more than 160 stablecoin-linked card programs and that transaction volume had increased by about 200% year over year. It also announced that corporate and commercial card programs accounted for about 17% of transaction volume on stablecoin-linked cards. However, this figure is based on Visa's stablecoin-linked card transactions and should not be interpreted as the penetration rate across the entire business payments market. KOSCOM said the examples of Allium and Visa suggest that demand may not be uniform across businesses and could be concentrated in specific payment settings, such as cross-border fund transfers, payments to overseas business partners, and transactions affected by the operating hours of existing financial networks.

Ultimately, wider business adoption is likely to depend on the degree to which stablecoins are integrated with the existing financial system. Business payments require multiple steps to be linked, including issuance, transfers, receipt of funds, conversion into fiat currency, accounting, and regulatory compliance. This is why existing financial institutions and payment service providers continue to play an important role. The burden of adoption would be reduced if businesses could benefit from stablecoin payments through existing financial services without having to build their own digital asset operating systems. The efforts of global payment providers such as Visa to connect stablecoins with existing payment networks are also related to business demand. The market is expected to develop by integrating with existing banking and payment infrastructure, rather than growing solely through independent blockchain payment networks.

KOSCOM said, "Sustainable growth in the stablecoin industry depends not on expanding issuance or technical infrastructure, but on whether businesses can secure clear economic incentives to replace existing payment methods," adding, "Financial institutions and payment service providers need to assess business viability by focusing on payment segments where actual demand exists."

This content was produced with the assistance of AI translation services.