Local-currency stablecoin launches have increased demand for 24/7 foreign exchange liquidity as more than 70% of conversions into dollar stablecoins begin in another currency.
Summary
- TransFi CEO Raj Kamal expects local-currency stablecoins to move more foreign exchange activity onchain.
- Round-the-clock settlement could produce thinner liquidity and higher conversion costs outside normal trading hours.
- Fragmentation across currencies, issuers, and blockchains may leave businesses relying on dollar stablecoins as intermediary assets.
- Banks will need redemption, FX, and network connections to turn token issuance into regular commercial use.
Raj Kamal, founder and CEO of payments company TransFi, told crypto.news that issuing euro, sterling, yen, and other local-currency stablecoins would bring more foreign exchange activity directly into payment transactions.
More than 70% of flows from fiat currencies into dollar stablecoins already originate outside the U.S. dollar, according to data cited by Kamal. Each flow requires a currency conversion somewhere in the process, even when the token used for payment is denominated in dollars.
The Bank for International Settlements reported in its 2026 Annual Economic Report that 99.4% of fiat-backed stablecoins by market value were pegged to the dollar. Kamal expects the mix to change as regulated issuers add tokens tied to currencies used by companies for payroll, supplier payments and treasury operations.
“For a corporate treasury, the value will come from being able to move between those currencies at a reliable price, with enough depth to execute larger payments whenever they need to.”
Stablecoin payments require 24/7 FX liquidity
Blockchain settlement can remain available during nights, weekends, and holidays, but Kamal said continuous token transfers do not guarantee continuous access to deep currency markets.
A company may want to move money late on Friday or during Asian trading hours when the underlying currency pair has limited activity. Although the stablecoin payment could still settle, a liquidity provider would have to price and hold the resulting exposure until it could hedge the position efficiently.
For large transactions, Kamal said the process becomes a balance-sheet decision. Market makers must determine how much currency inventory they can carry, how much exposure they will accept outside the most active FX hours, and what fee would compensate them for taking the risk.
Spreads and available transaction sizes could therefore change depending on when a business requests a conversion. According to Kamal, moving a token may take seconds, while securing the pricing and depth normally available during the working week could remain difficult at certain times.
“A payment rail that is always open has limited value if a large conversion becomes materially more expensive at the weekend.”
Corporate treasury teams would focus on execution certainty as well as settlement speed, Kamal added. Companies processing payroll, supplier invoices, or treasury transfers need to know how much currency they can convert and what price they will receive before committing funds.
The existing foreign exchange market provides substantial capacity, with the BIS reporting average daily turnover of $9.6 trillion in April 2025, up 28% from $7.5 trillion in 2022. However, much of its liquidity remains connected to trading sessions, bank balance sheets and separate regional markets, while stablecoin networks operate continuously.
Kamal expects providers serving several currencies and time zones to gain an advantage because they may be able to offset customer flows internally before entering the external FX market. In his view, access to capital and the ability to manage currency inventory will become important competitive factors as stablecoins gain use in cross-border business payments.
Dollar stablecoins may remain key conversion routes
While local-currency tokens could let companies settle in currencies they already use, Kamal expects liquidity to remain concentrated in a limited number of trading pairs during the first stage of adoption.
The dollar may retain an intermediary role even when neither side of a payment uses it as its domestic currency. A transfer between two local-currency stablecoins could still pass through a dollar token if the dollar pair offers deeper liquidity, tighter spreads and better execution.
Dollar dominance is already visible in conventional FX markets. The BIS found that the U.S. dollar appeared on one side of 89% of all foreign exchange trades recorded in April 2025, while the euro and Japanese yen ranked behind it.
Kamal said businesses would judge onchain currencies by the amounts they can convert, the spreads available, and the consistency of execution across markets and time zones. Token supply alone would not establish whether a payment route can support corporate-scale transactions.
The issue has become more relevant as financial institutions add new currencies to blockchain networks. Revolut began rolling out EURR to selected customers in Denmark, Poland and Portugal on Aug. 26. Issued by Stripe-owned Bridge Building, the Ethereum-based token is designed to maintain a value of €1, with availability across other European Economic Area markets planned later in 2026.
In Hong Kong, Standard Chartered became the first bank distributor of Anchorpoint Financial’s regulated HKDAP stablecoin in August. The bank initially offered access to eligible institutional clients and partners, while controlled beta use focused on institutions and professional investors.
According to Standard Chartered, planned uses include treasury management, cross-border trade payments and tokenized fund settlement. The bank also plans to introduce money market fund subscription and settlement services using HKDAP in the fourth quarter of 2026.
More stablecoins could divide liquidity
An increase in bank and local-currency tokens would give companies more settlement choices, but Kamal warned that it could also distribute liquidity across additional issuers, currencies, venues and blockchain networks.
A cross-border payment may begin with a euro token issued by one bank, move to a different blockchain, convert into another currency, and finally enter the recipient’s bank account. Each stage may require a separate market, technical connection, and pool of available funds.
For market makers, supporting numerous tokens would require placing capital across different currencies and venues. Kamal said fragmented transaction volume could make it expensive to hold enough inventory for large conversions without moving market prices.
“I expect liquidity concentration to matter much more than the headline number of stablecoins in circulation,” he said.
Corporate users would probably favor tokens and payment routes that support large transfers at predictable prices, according to Kamal. Such behavior could concentrate activity among a limited group of liquid stablecoins, even if the total number of issuers continues to increase.
Shared issuance could reduce some of the fragmentation. Bank of America, Citi, Goldman Sachs and 18 other institutions committed to create a joint stablecoin company during the second half of 2026, subject to closing conditions.
The group plans to introduce a U.S. dollar stablecoin in the first half of 2027 and may later issue tokens tied to other G7 currencies, starting with the euro. Proposed uses include wholesale, institutional, and retail payments as well as settlement for digital asset transactions.
Several U.S. institutions participating in the project give the liquidity question direct relevance for American companies and banks. The consortium said its planned venture would seek to comply with applicable requirements under the U.S. GENIUS Act and the European Union’s Markets in Crypto-Assets framework before starting operations.
Kamal cited the 21-member project as an early example of institutions pooling distribution and liquidity through shared infrastructure instead of asking markets to support an isolated token for each bank.
Banks need connections after stablecoin issuance
Issuing a token gives a bank an onchain form of its currency, but Kamal said commercial adoption depends on the services available after customers receive it.
A company operating in several countries is unlikely to maintain a different treasury process for every token. Corporate users would need to move between bank-issued stablecoins, tokenized deposits, conventional bank balances and foreign currencies through a connected operation.
Banks will therefore need reliable redemption systems, FX liquidity, links to other financial institutions, and access to multiple blockchain networks, according to Kamal. Settlement arrangements must also allow funds to leave the issuing bank’s customer base and reach counterparties using another form of money.
Stablecoins are not the only bank-backed assets entering blockchain payment systems. In July, Swift launched the first phase of a shared ledger with 17 banks preparing to test cross-border payments using tokenized deposits.
Participants include Citi, Wells Fargo, HSBC, Standard Chartered, BNP Paribas, UBS, and MUFG. Swift said the system would support overnight and weekend transactions while retaining the compliance, credit, risk, and control standards used by banks.
Stablecoins and tokenized deposits carry different legal and balance-sheet structures. Stablecoins represent claims against an issuer and its reserve assets, while tokenized deposits remain claims on the bank holding the underlying account. Kamal expects banks to support one or both forms as digital money systems develop.
Corporate clients would eventually expect the different systems to interact, he said. A treasury team may want to fund a transfer from a conventional deposit, route the payment through tokenized infrastructure, and deliver the recipient’s preferred currency without creating separate liquidity arrangements for every network.
“I think that will influence where banks invest after the first wave of issuance,” Kamal said. “Distribution, liquidity and connectivity become critical once these products move beyond pilots.”