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Stablecoins as cross-border payment rails: the mechanism behind dollar-pegged token transfers

7/31/2026

The cross-border payment case for stablecoins rests on a three-step mechanism that differs from a bank wire at every stage.

A stablecoin is a cryptocurrency designed to hold a fixed value against a reference currency, with the U.S.

Understanding what each step does, and where the friction lives, is the starting point for any practical evaluation of these rails. How the transfer flows A sender converts local currency into a stablecoin.

The token then travels to the recipient's blockchain address via a blockchain network. The recipient takes delivery on the other end. Each stage carries its own conditions.

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