From Stablecoin Sandwich to Seamless On-Chain FX: The Next Evolution in Cross-Border Payments
By Emilio Rivero Coello. Product Payments Lead at Aptos Labs
Stablecoins already settle hundreds of billions of dollars across borders every month, but most flows still hop through the “stablecoin sandwich”: USD to USD-stablecoin to local fiat currency, or vice versa. The next phase turns “foreign exchange” into a smart-contract function. Think stablecoin-to-stablecoin FX executed atomically on-chain, then paid out locally in seconds either in a wallet, or a local fiat bank account. That shift will redraw the landscape for cross-border payments, and it’s closer than many expect. When that switch flips, a currency conversion will feel no different from a normal transfer, and decades of FX plumbing will look extremely antiquated.
Total stablecoin market cap sits above $250 billion today, and on-chain transaction volume speaks even louder, approaching trillions per month. Regulatory clarity is arriving in parallel. Frameworks are now live, or nearly so, in the United States, Europe, and multiple G20 markets, giving issuers and institutions a clear rulebook to follow. In short, stablecoins are starting to officially graduate from crypto curiosity to critical payment infrastructure.
The growth of legal certainty has drawn payment companies, money transmitters, and neobanks into the game, even though the day-to-day operations remain awkward. Today’s stablecoin orchestrators still rely on a clunky double hop: on-ramp, move on-chain, off-ramp through another regulated partner, then disburse locally. The model works, but with a lot of friction, duplicated KYC checks, treasury rebalancing, working capital needs, routing incompatibility, and double fees. Yet despite those hurdles, it continues to grow worldwide because the savings and efficiency compared to legacy systems are too large to ignore. Stablecoins are becoming the de facto rails even before dedicated infrastructure fully bridges them to local real-time payment systems.
The logical end-state of cross border payments with stablecoins is clear: to keep value native on-chain end-to-end, touching fiat only when the beneficiary demands cash. That vision is quickly moving from pitch deck to reality as local-currency stablecoins gain traction and reach real depth. Mexico, Brazil, Turkey, the Philippines, Europe, Japan, Singapore, Nigeria, Hong Kong, and many others already have stablecoins live or in pilot, issued under e-money, payment-institution, or sui generis frameworks that plug straight into their domestic RTP rails. Each new non-USD stablecoin sidelines correspondent banks and turns cross-border settlement into a 24/7 operating market. This is the upgrade global commerce has been waiting for on-chain FX.
As these stablecoins continue to merge and blur the lines with national real-time payment systems, merchants and consumers will treat them like digital cash. On-chain FX will allow for a single transaction to originate, swap, and settle to a wallet or bank account in a matter of milliseconds, with extremely low fees.
Under this model, it's obvious that risks will remain and new ones will emerge. It’s hard to outline them all, but some of the obvious ones: thin liquidity across dozens of stablecoin pairs and fragmentation across multiple blockchains. Yet both are solvable. Interoperability will improve, and routing algorithms will aggregate dispersed liquidity, just as DEX aggregators do today. Trust and oracle dependencies when pricing cross-currency pairs.
Compliance and money-laundering concerns will continue to be a pressing matter. Will major institutions feel comfortable swapping in permissioned DEXs where counterparties are unknown? Probably not at first. We can expect the emergence of segregated environments: fully permissionless markets for retail-size volume, and KYC-gated permissioned DEXs where institutions market-make to each other. As on-chain identity matures and catches up with crypto innovation, permissioned and permissionless FX will be able to coexist more easily. These aren’t physics problems, they’re policy and product challenges familiar to any payments team. As regulation and technological innovation continues to move forward these problems will disappear and become a thing of the past.
When the end-to-end flow stays on-chain, FX becomes an atomic state change on a blockchain; a single, indivisible transaction with no delays and no settlement risk. On-chain FX isn’t a moon-shot, it’s the next step in a market already racing towards using stable, tokenized, programmable money. The stablecoin sandwich is serving its purpose, but it won’t be long lived. The appetite is finding a faster, composable, and leaner technological solution.
The biggest winners will be the builders: local stablecoin issuers with compliant distribution, global LPs for on-chain FX, identity and compliance layers that unlock institutional flows, and smart DEXs that route and stitch fragmented liquidity into seamless execution.
