Airwallex CEO Questions Stablecoins' Utility in Cross-Border Payments

Airwallex Co-founder and CEO Jack Zhang recently expressed doubts about the practical utility of stablecoins in replacing traditional cross-border payment systems. In a post on X Platform, Zhang questioned how stablecoins could reduce foreign exchange costs, noting that the conversion cost from a stablecoin to the receiving currency is often higher than the interbank foreign exchange market. He also pointed out that the cryptocurrency space has not seen a practical use case in the past 15 years, indicating a lack of understanding and application in real-world scenarios.

Zhang's skepticism comes at a time when stablecoins have garnered significant attention as a potential solution for cross-border payments. Stablecoins are designed to maintain a stable value, often pegged to a fiat currency like the US dollar, making them an attractive option for international transactions due to their stability. However, Zhang highlighted several challenges that stablecoins face, including regulatory compliance, liquidity, and widespread adoption.

The regulatory landscape for stablecoins remains uncertain, with many countries yet to establish clear guidelines for their use and issuance. This lack of regulatory clarity creates a barrier to the widespread adoption of stablecoins. Additionally, the liquidity of stablecoins can be an issue, as they may not be readily available in all markets, making them less practical for certain transactions. Traditional payment systems, with their well-established networks and regulatory frameworks, pose significant competition for stablecoins. Banks and financial institutions have invested heavily in their cross-border payment infrastructure, making it difficult for new technologies to gain traction.

Despite these challenges, Zhang acknowledged that stablecoins could play a role in the future of cross-border payments. He suggested that as the regulatory environment becomes more clear and the technology matures, stablecoins could become a more viable option. However, he emphasized the need for collaboration between regulators, financial institutions, and technology providers to ensure that stablecoins can be integrated into the existing financial system. This collaboration is crucial for overcoming the significant hurdles that stablecoins face in competing with traditional payment methods.

In summary, while stablecoins offer the potential for faster and cheaper cross-border payments, they face substantial challenges in terms of regulatory compliance, liquidity, and competition from traditional payment systems. Jack Zhang's comments underscore the need for further development and collaboration to fully realize the potential of stablecoins in the global financial landscape. As the technology and regulatory environment evolve, stablecoins may become a more practical solution for cross-border payments, but significant work remains to be done.