Following President Donald Trump's signing of the GENIUS Act, there is growing buzz in the financial services industry about the potential for stablecoins to transform payments across the globe.

The law seeks to establish consumer protections, reserve requirements and federal oversight for stablecoin issuers — and, perhaps most importantly, it adds a layer of credibility and industrywide acknowledgement of stablecoins’ potential as a reliable payments vehicle.

In theory, this form of digital currency — pegged to a fiat currency to minimize price volatility — offers an appealing solution to the friction, cost and delays that still characterize many international payment flows.

Yet, as much as the financial services industry appreciates innovation, reality has a way of tempering enthusiasm. The road to broad adoption of stablecoins for cross-border settlement is not likely to be without significant detours.

The current cross-border payment infrastructure has improved significantly, but can still be inconsistent and expensive. While correspondent banking and interbank networks like Swift have largely solved for the secure transfer of funds, there remains a wide variation in processing speeds at the domestic stage of a transaction among different countries.

Stablecoins are poised to address these issues. They could, for instance, be used to facilitate settlement between currency zones by riding on top of local real-time or instant payment systems. In this vision, stablecoins act as the bridge currency, reducing reliance on commercial bank balance sheets and possibly creating a faster, more transparent settlement experience.

In fact, the Bank for International Settlements (BIS) has acknowledged that stablecoins could support more efficient cross-border flows if backed by sound governance and regulatory oversight. Project Dunbar and Project Helvetia both explore multi central bank digital currency and tokenized settlement use cases that hint at future possibilities.

Practically speaking, however, the promise of stablecoins to solve existing issues quickly encounters a series of challenges. Chief among them is what we call the "last mile" problem.

Even if a stablecoin can serve as a frictionless intermediary for part of the payment journey, local recipients ultimately need to receive funds in their local currency, in their local bank account or digital wallet. That final conversion step is where much of the existing friction lies—and where stablecoins don’t currently offer a clear advantage.

Why? Because local currency conversion still requires integration with domestic banking systems, and in many countries, the infrastructure to support local clearing and settlement is already quite strong.

Instant payment schemes, like FedNow in the U.S., are operational in over 70 countries, with more on the way. These systems are built for speed, resilience, and accessibility. Adding stablecoins into the mix introduces complexity, not simplicity. This is especially true if the end user still depends on traditional banking and payment systems for access.

The lack of interoperability across stablecoins and blockchains poses yet another major obstacle. Cross-border payments involve moving money across various jurisdictions, regulatory frameworks, and technological standards. Until stablecoins can integrate seamlessly with one another and with legacy financial systems, they will struggle to move beyond niche use cases.