9 Things The Stablecoin People Are Getting Wrong

Stablecoins are sweeping the hearts and minds of people everywhere. Faster, cheaper, safer, cooler, and always ready to move money. They’re simultaneously the future of money, the death of banks, the end of payments companies, and the slayer of TradFi forever.

And it’s a real neat story. But these stories can often crumble when you push on them. And listen, stablecoins are real. The tech works. And they will for sure grow. But the narratives I hear on them are often lazy, more often than not incomplete, and in a lot of cases flat-out wrong. The people in the industry are peddling half-truths that ignore how the existing system works the way it does.

These half truths can lead people to do some silly things with their hard earned money. Like invest in the Circle IPO when the stock ran up into the $200 range. Readers of Victaurs of course did not do such things and as I fairly simply outlined why the hype had far outpaced the reality of stablecoins. And that the stock was facing some serious financial gravity despite the onslaught of animal spirits. And ironically enough Circle IPO’d at a time when another hype fueled VC exit stock was also selling shares to retail, Chime (CHYM). If you’re curious about whether or not this one is a good spend of capital you should read the breakdown here (yes it’s behind a paywall): Chime: The $11.6 Billion Fintech Tollbooth

Simply put, Victaurs exists to cut through the noise of “the next hottest thing” and breaks down in simple human language the real story. I’ve been in finance for a decade and a half, I’ve digested more 10-Q’s than I want to admit, I’ve been in meetings with the big time banks & the so hot right now Fintechs and when this happens you learn a thing or two. I enjoy learning about companies, I enjoy investing, and I enjoy the interactions I have with the Victaurs community. But a lot of what I do is separating myth from reality.

So let’s do just that and separate myth from reality and really dig into stablecoins today. Not because I dislike the technology, quite the opposite. I think it’ll be transformative. But the hype machine is so ludicrous that some wisdom feels overdue. Here are the 10 things people are getting wrong about stablecoins.

Number 1: “Stablecoins will kill Visa and Mastercard.”

This is the easiest myth to sell. That coins settle instantly, cards take a day or two and charge you, and that faster and cheaper must equal better.

But payments adoption has never been only about speed. Adoption in the real world has been about habit, protection, and trust. People swipe their credit or debit cards through the terminals to buy things because they get rewards. We know we have to pay money for this cup of coffee, or lawn mower, or dinner tab but we also want to get those rewards points the card companies have facilitated. Those points add up. They become vacations or cash back. But remember too that people swipe because they know if fraud happens, they are not on the hook. Who hasn’t disupted a charge here? No one, right? With stablecoins there will be no disputes (more on this later). And people swipe because their card works everywhere from New York to Hong Kong. You know that when you land in a new city, you are fairly sure that you can buy the coffee anywhere in the world.

Visa and Mastercard are not just expensive pipes, they are trust networks, battle-tested across billions of transactions a day. Goldman research tells me that there are over 7.4 billion cards issued, accepted in 100 million locations globally. That is not a moat you erase by shaving a day off settlement.

Number 2: “People will use them because cross-border payments will be free.”

It’s the sexiest pitch in crypto, move money to Mexico, Vietnam, or Nigeria for pennies and fast. Oh so fast.

But here’s the problem: the money moving rail was never the real cost center. The big tolls in the cross border world are FX spreads, government capital controls, compliance with anti-money-laundering laws, as well as the cost of cash payout networks. A blockchain or stablecoin cannot erase those, which all need to happen.

Finance nerds will know that the average global remittance (cross border wire) still costs 6.6%, which feels like highway robbery. Compare that to the best digital corridors that can drop that below 1%. One of those, Wise in the UK has actually gotten this down to 50-60 bps which is nothing short of amazing, but only in highly digitized, liquid corridors like US to EU. So while they’ll take settlement down to “free” the bar for stablecoins is already lower than people think. And while they’ll help with settlement speed and weekend downtime, they’ll have a very hard time vaporizing government-imposed friction.

And here’s the reality most people don’t want to admit. Even in so-called “blockchain remittances,” you almost always reintroduce middlemen. The cousin in Manila or Lagos doesn’t want a USDC dollar token, they want local cash, they want their Philipine Peso. That means a licensed money transmitter or bank has to do the conversion and hand it over. Governments still require KYC and sanctions checks, which means a compliance intermediary still has to sit in the middle. And the dollar has to be exchanged into pesos or naira, which means someone takes the FX spread. The blockchain cuts settlement time, but it doesn’t erase those tolls for good. And trust me when I say that no government wants their people using another countries currency.

Number 3: “Deposits will flee banks into stablecoins.”

One of my favorites actually, because I grew up in banks and know how things work. Remember that deposits in the US are the most valuable backbone of any bank and that they work a little like gym memberships. The value is in consumers apathy. Banks and gyms count on people not paying attention to the fact that they’re not using the funds. So the stablecoin line here is simple, why leave money in a bank when you can move it into a stablecoin?

Because bank deposits do things coins cannot. They pay interest, they are insured, and if fraud happens, the consumer is reimbursed. That’s the systemic trust that the GENIUS Act tries to facilitate, but so far is lacking. Remember too that roughly 80% of US deposits are interest-bearing. Stablecoins, under US law, cannot pay interest. They can and will find way to pay “yield” in the form of crypto rewards or crypto cash back, but to the boomer generation and corporate non-interest bearing deposits these are functionally useless compared to yield on funds. And for what it’s worth remember they don’t carry FDIC insurance, which means a hacked wallet is just gone.

When rates were zero, maybe all this mattered less. But in a world where money market funds yield 4% or 5%, the idea that rational savers will move their core balances into non-interest, uninsured coins is pure fantasy. And remember that in the US at least, corporations, institutions, and retirees hold the bulk of the deposits in the system. They prize safety, yield, and insurance with their bank deposits.

Number 4: “US checkout payments will flip fast because rails are cheaper.”

Merchants and futurists alike love this story, cut the interchange, save money, boost margins. Boom.

But merchants don’t control payment adoption, the consumers do. And as I mentioned earlier American consumers are addicted to points. They swipe because half the merchant fee flows back into their pockets as rewards. Another third goes to their bank, funding the fraud protections they’ve come to expect.

Street research on the topic tells me that roughly 46% of card fees go back to consumers as rewards. Which is a big deal for business travelers, credit card shoppers, points hoarders, and everyone in between. That is the invisible glue holding the system together. Right now, stablecoins don’t offer rewards beyond crypto cash back, but I think for people to shift from their beloved points to faster settlement is a very high bar.

Merchants may want change, and I’m sure they will, but consumers won’t give up free perks and protection. And in the end merchants really just want you to spend more. Which is why things like Buy Now Pay Later (BNPL) has been adopted by merchants everywhere. BNPL facilitates you and me spending more money as a result of spreading my transaction out, which is more or less the opposite of a stablecoin payment all at once. Which all means that adoption at checkout will be glacial. We’ll end up having one more “pay with this option” button in addition to the slew we have already.

Number 5: “One global model will win and that’s stablecoins.”

This one is the easiest thing to dispel. People love to imagine a single global standard, an ubiquitous and all encompassing holy grail. One rail to unite them all and as Scott Bessent and the crew say, huge inflows to USDC and US stablecoins causing piles of new Treasury bond demand. But the reality is messier. The US is backing stablecoins and banning a CBDC or US digital dollar. Europe is building a digital euro to defend sovereignty. China is pushing the e-CNY and banning private coins and I can promise you absolutely hates USDC and stablecoins with a dying passion. And the UK and Japan are experimenting with tokenized deposits.

Together these blocs make up 78% of FX turnover across the globe. And each is building something different, something that is advantageous to their currency. This isn’t TCP/IP for money. It’s a multipolar system shaped by politics as much as technology.

The harder lesson is that money is sovereignty and control. Governments will not cede control of it to an agnostic & neutral rail. In what world would it make sense for a country to allow it’s citizens to take their own currency in their own country and seamlessly move it overseas for good? In what world would a country like China want it’s people promoting a US stablecoin over keeping that money within their system? And this means fragmentation is the future, and interoperability is going to be a decades-long headache, on purpose.

Number 6: “$28 trillion in stablecoin transfers means mainstream adoption.”

This one is a cute one, because futurists love saying it so much without knowing the real numbers behind it. First, the number is real. Stablecoins processed $28 trillion in 2024, which is bigger than Visa and Mastercard combined. But those trillions are not coffee shops or Amazon checkouts. They are crypto trading exchanges moving collateral and they are traders rotating between protocols. Far from normal use, these are traders within the crypto ecosystem moving from one coin to another parking money in the safety of the pegged stablecoin.

So the $28 trillion right now means stablecoins are the industrial plumbing of the digital asset ecosystem. Which is impressive in it’s own right, but it is misleading to confuse industrial use with consumer adoption. And stablecoin market caps which are roughly $200 something billion right now split between USDC (1/3 of the market) and USDT from Tether (2/3 of the market) have basically risen and fallen with the overall market cap of the crypto space. Read as: a lot of money has flowed into crypto. Stablecoins as have grown within it, not outside of it. And most of the real economy has yet to touch these rails.

Number 7: “Banks are sitting ducks and stablecoins are going do disrupt them.”

Every cycle, I hear the same line. The banks are dinosaurs, they’re about to be replaced, and on and on and on. Some new technology comes about and it’s supposed to mean the end of money, war, and world hunger.

History suggests otherwise, and the banking industry in general is more like a nuclear cockroach than a dinosaur. Banks individually go away sure. But banks as an industry adapt. They absorb new rails. They repackage them into products customers trust and that they can profit from.

Consider the scale, global bank deposits top $100 trillion or so. Stablecoins are a $271 billion market. To put that in perspective, deposits dwarf stablecoins nearly 400 to 1. Which is of course an opportunity for stablecoins, but keep in mind banks are already issuing deposit tokens, partnering with crypto firms, and building shared settlement ledgers. Banks have known about this stablecoin technology for some time now and have already adopted them. They’ve already processed tens of billions in transactions on tokenized deposit rails. And these tokenized deposits are basically “like stablecoins, but safer” because they are FDIC insured. Citi, Bank of America, BBVA, Societe Generale if you’re a major bank you have probably already been using some form of digital tokenized deposit to help your clients in Brazil send money to their account in Vietnam. Banks are probably further out the innovation curve than stablecoin futurists want to even fathom.

Number 8: “B2B payments will be completely disrupted by stablecoins”

It sounds logical. B2B is a creaky system. It uses checks, ACH, faxed invoices, the stuff looks frozen in amber. Drop in a stablecoin, and trillions of dollars in payments modernize overnight. But history says otherwise because corporate inertia is a monster. Companies don’t rip up back-office systems because a rail is marginally better. The cost of switching ERP integrations, retraining staff, and renegotiating supplier flows is huge. Just think about the fact that Real Time Payments (RTP) has been live since 2017 and only moves $250 billion a year, a rounding error in an $85 trillion market. Faster rails don’t automatically mean mass adoption.

What stablecoins and deposit tokens do offer is a credible wedge: always-on settlement, direct ERP integration, and reduced float. That’s real money back in a CFO’s pocket. They also bring programmability, which matters because invoice fraud is rampant in B2B. You can embed conditions into the payment itself, flipping fraud prevention from detective work into preventive code.

And the cross-border piece makes it even stickier. Much of B2B trade finance drags in FX conversion, capital controls, and compliance. Stablecoins can speed the plumbing, but they can’t bulldoze policy tolls. On top of that, payments are network businesses. A single company adopting a new rail doesn’t matter if its suppliers still demand checks or ACH. Until the whole ecosystem tips, inertia wins.

Number 9: “Fraud disappears on immutable rails.”

Perhaps the most dangerous myth of all. Immutable and “on chain” doesn’t mean safe, it means unforgiving. Mistype an address and the money is gone, forever. Get phished and your balance is drained and no one is there to help you get it back. Get hacked and there’s no one to call. Every human error that happens in money movement today, wrong account, fake invoice, social engineering, still happens on-chain, only now there is no recourse. That my friends is the devil in the details and that is a huge hurdle for the non-crypto natives.

Remember too that traditional networks don’t eliminate fraud either. But they do absorb it. Banks and card issuers write off losses, networks fund chargebacks, and consumers are indemnified. Global card networks collectively eat $30 to 40 billion in fraud losses every year, so end-users don’t have to. These are funded in part by those interchange fees that stablecoins are cutting out. That’s not a bug, it’s a subsidy, an invisible insurance policy that makes people feel safe enough to swipe, click, and tap without fear.

On blockchain rails, that subsidy doesn’t exist and the liability shifts squarely to you. Fraud detection tools and dispute resolution aren’t yet scaled, and reversibility doesn’t exist by design. So fraud hasn’t been eliminated, it’s just been reassigned, from the balance sheet of trillion-dollar networks to the shoulders of the individual. And when the average consumer realizes that one mistake or scam means permanent loss, most won’t accept that trade. Or at least they will think twice.

Stablecoins do bring speed. And they do bring programmability. But the fall down on the fraud insurance policy that traditional rails provide.

The future is now …

Money has never just been about moving bits of value from A to B. It has always been about trust. The invisible subsidies, fraud indemnification, insurance, dispute rights, are why people feel safe enough to spend and store. Stablecoins add something powerful in speed and programmability, but until they rebuild those trust layers, they won’t displace the rails that already carry the world.

That doesn’t make them trivial, it makes them part of a longer arc. Every hype cycle tells you the old system is dead, that a revolution is at hand. The truth is usually quieter. Stablecoins will not topple Visa or empty banks. They will be absorbed, layer by layer, into the system that already works. And the winners won’t be the loudest futurists, they’ll be the banks, processors, and networks that quietly integrate this new rail into trusted infrastructure. Or improve on it like with tokenized deposits.

History reminds me of eras like the 1800s and the great US rail boom. A new technology was created in the locomotive and tracks were laid across continents. Each one of them promised paths to new places, new frontiers, and new sources of wealth. But not every rail line paid off for investors. Some routes thrived, others went bankrupt, many were consolidated into the lines we know today. The technology transformed the world, but the value flowed to those who understood which rails mattered and which would fizzle.

Stablecoins are this generation’s new track. They will open new paths, speed commerce, and reshape flows. But not every stablecoin will payoff and not every market will be disrupted. The real opportunity is not in chasing the hype of every shiny new line, but in seeing where the rails of tomorrow will actually carry the trains of trust, scale, and human behavior. And that is where the lasting fortunes will be built.

The best is ahead,

Victaurs