Stablecoins are cheaper, but merchants don't care | Former PayPal crypto VP José discusses the curve of real adoption

In Episode 15 of Money Code, hosts Chuk Okpolugo and Raj Parekh invite José Fernández Da Ponte, President and Chief Growth Officer of the Stellar Development Foundation. They delve into why stablecoins are first transforming corporate treasury and capital markets rather than consumer payments; the core drivers of institutional adoption of stablecoins; and why non-USD stablecoins are crucial for global trade infrastructure.

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Chuk:
Welcome to Money Code. This is a show where we decode stablecoins and programmable money together. I’m your host Chuk Okpolugo, author of Stablecoin Blueprint. Joining me today is Raj Parekh, who is the Head of Stablecoins and Payments at MONAD. Today, we have José Fernández Da Ponte with us ------ he is the President and Chief Growth Officer of the Stellar Development Foundation. Before joining Stellar, he served as Senior Vice President of Crypto at PayPal, leading and driving the creation of the PYUSD stablecoin project.

Chuk:
José, it’s great to have you here.
José:
Thank you for the invitation, it’s an honor.

Chuk:
Today, we’re going to discuss ------ how traditional financial institutions are "going on-chain". After all, the vast majority of the world’s financial systems are still dominated by traditional institutions, and most people rely on banks and payment companies. If we want blockchain technology to truly cross the "adoption chasm", we must meet them where they are. Large institutions like JPMorgan, Citibank, and Bank of America have already begun launching their own on-chain products. However, this field is still in its early stages, with many gaps. Understanding these nuances can help builders turn challenges into opportunities.

Before we begin, a reminder: Money Code is produced by Stablecoin Media and supported by BVNK. The views of guests and hosts in the program are their own and do not represent their respective organizations. The content of this program does not constitute investment advice or any other form of advice. Alright, let’s get started.

Raj:
José, you were responsible for the launch of PYUSD at PayPal. Can you tell us about the background of this project?

José:
Of course. PayPal started its foray into digital currencies about six or seven years ago. The reason for entering this space was not because it was a "crypto company," but because it was a "payments company." When you are a payments company and a technology emerges that could fundamentally change the way money flows on new rails, you have to pay serious attention.

If we look back at the fintech innovations of the past thirty years, most innovations have focused on the user experience layer ------ like flashier interfaces, smoother mobile operations, and better fraud prevention mechanisms. But the underlying "pipes" for money transfer have hardly changed.

My first encounter with blockchain was about ten years ago. At that time, I was at another company, and we were doing cross-border transfers between Europe and Latin America. The money was transferred over the weekend, and it cost 26 times less than a bank transfer. When you can transfer funds at a cost that is 26 times cheaper than the existing cheapest method, "gravity" naturally comes into play. That’s why PayPal was attracted to this ------ it felt that this was too important for a payments company to ignore.

José:
PayPal's first step was in 2020 ------ launching features that allowed users to buy crypto assets (like Bitcoin, Ethereum, etc.). Then in 2021 or 2022, they opened up on-chain transfer capabilities. Finally, in 2023, they launched the stablecoin ------ PYUSD.

That was the "good times" ------ before the GENIUS Act and subsequent regulations came out. I must commend the leadership team at PayPal at that time ------ they were very courageous and willing to "dive in headfirst". Today, PYUSD has a market cap of about $4 billion, making it the sixth-largest stablecoin globally and one of the top three fiat-backed stablecoins issued in the United States.

There are many lessons learned. Some relate to "use cases," some to "organizational readiness," and others are experiences from "building products within large regulated institutions."

From a use case perspective ------ I have always believed this is a long game.
Some people get anxious when they see retail payment scenarios not gaining traction, but we must remember: this technology is only 15 years old. We are the first generation of truly "crypto-native" individuals. Retail daily spending, ordinary people using stablecoins to buy coffee or pay in stores ------ I think we are not at that stage yet. It takes time.

What we have learned in this process is where the "early opportunities" lie:

• Crypto capital markets;

• B2B payments;

• Treasury flows and cash management.

José:
Just last week, State Street announced plans to build on-chain cash management products based on Stellar, Solana, and Ethereum. And on the day we recorded this episode, JPMorgan just announced it would launch a Money Market Fund on Ethereum. I have to pause here ------ JPMorgan will operate a money market fund on an open blockchain. This in itself signifies a turning point in the attitude of the entire institution. I believe we are entering a phase where "blockchain-native institutions" are beginning to take shape. Over the past few years, we have seen some brave fintech companies (like PayPal) take the lead; and many crypto-native companies have emerged, such as Circle.

Now, we are entering the "institution building phase." This means that not only must the regulatory and compliance frameworks be established, but the foundational infrastructure for finance, operations, etc., must also be filled in. From a regulatory perspective, this is also a massive upgrade: moving from "money transmission licenses (MTL)" to "OCC bank charters." Many companies operating in this space will need to strengthen their operational capabilities to meet higher regulatory standards.

The third trend is the increasing complexity of products. So far, most stablecoins have been relatively "plain vanilla." But you will see more and more cash management products coming, especially in the next 1.5 to 2 years, we will see the emergence of non-USD denominated stablecoins. If you want global trade to happen on-chain, you must have both the starting and ending points of transactions in local currencies. Currently, the liquidity of non-USD stablecoins is still insufficient, but we are already seeing experiments happening ------ stablecoins pegged to the Mexican peso and other local currencies are emerging. This is extremely important for building the "fabric of global payments."

Raj:
Yes, there’s a lot of information here. PayPal, as the first large publicly traded fintech company to issue a stablecoin before the GENIUS Act, is indeed very pioneering. Kudos to you and your team.

I used to work at Visa, so I know how difficult it is to launch a new product within a large institution. If I were another company of similar scale (like PayPal or a large fintech), how should I determine ------ whether I should issue a stablecoin myself? Or should I introduce a stablecoin flow?

José:
That’s a very good question. Many companies are now thinking about what to do after the GENIUS Act was introduced. They often focus on one question: **self-issue or outsourced issuance? I think that is an important but *not the most important* dimension. To issue and operate a stablecoin, three main capabilities are required:

1. Mint/Burn operations: This involves key management on-chain, blockchain engineering, etc. ------ this is a completely unfamiliar skill for traditional financial institutions.

2. Custody: This is relatively easy; there are many mature service providers now.

3. Reserve Management: This is very close to traditional finance, and the core is how to manage collateral assets.

I often tell financial institutions or large fintech companies: don’t get too hung up on "who issues."
What really determines success or failure is not "who issues," but:

• Distribution: How do you get the stablecoin into the hands of consumers and merchants;

• Liquidity: Without liquidity, there will be slippage, and funds will get stuck;

• Risk Management: Compliance, anti-money laundering, transaction monitoring, law enforcement cooperation, etc.

Especially liquidity ------ many people treat "market cap" as a vanity metric, but it is actually a proxy for liquidity. Without sufficient liquidity, you cannot reduce slippage or smooth out inflows and outflows. So for large institutions, these three points are more critical than "whether to issue themselves."

Raj:
From a payments perspective, if a payment company wants to leverage stablecoin payments, what additional factors should they consider besides the "payment" itself? We all know that "wallet-to-wallet" transfers can be achieved quickly and at low cost, but that’s just "settlement." True payments go far beyond settlement, right? Can you elaborate on the additional layers that enterprises and financial institutions care about?

José:
Very good question ------ a transaction is not a payment. Moving funds from one wallet to another has been technically solved for a long time. But payments are not just about moving money; they also involve many additional layers.

You should be well aware from your time at Visa that payments involve:

• Merchant privacy requirements;

• How to securely store personally identifiable information (PII);

• How to implement tokenization;

• How to handle refunds and chargebacks;

• And regulatory requirements (KYC, freezing, compliance monitoring), etc.

In the on-chain world, "finality" means that once a transaction is completed, it cannot be reversed, so there is no such thing as a "chargeback"; refunds must initiate a new reverse transaction.

Therefore, to turn "wallet-to-wallet" into true "payments," a whole set of "wrapping layers" and "middleware" must be overlaid. Currently, this kind of infrastructure is emerging. For example:

• In the B2B space, there is BVNK building payment middleware;

• There are also companies like Mesh providing enterprise-level payment functionality interfaces.

These companies essentially add the necessary rules, interfaces, and compliance functions on top of "on-chain fund flows," only then can it be called "payments."

José:
In my years in the payments industry, I have never seen a merchant adopt a new payment method simply because it was "cheaper." We often go to merchants and say: "Enable stablecoin payments! It’s 26 times cheaper than ACH, has a lower fraud rate, and settles faster!" It sounds appealing, but merchants do not act on that.

CFOs care about "cost and efficiency," but people in business departments care more about "whether it can bring in new revenue." So you have to change your pitch ------ talk about "incremental revenue."

For example:

"There are thousands of users with stablecoin wallets wanting to spend;
Many of them do not have international credit cards;
If you enable stablecoin payments, you can reach them."

That is the effective sales story.

Moreover, making it extremely easy for merchants to onboard is crucial. For instance, like what PayPal did a few months ago with the "Pay with Crypto" feature ------ merchants can seamlessly accept crypto payments from different wallets and currencies, and if they want to settle in fiat, there’s no extra operation required.

The core principle is: "You don’t have to change your payment stack; you can choose to settle in stablecoins or fiat while also gaining new customers and incremental revenue." That is the real way to drive adoption. Stablecoin payments are indeed much cheaper than traditional payments, but I have yet to see a merchant prioritize adopting them simply because they are "cheaper."

Raj:
You mentioned that consumer experience remains a barrier. Can you elaborate on that?

José:
Absolutely. For the average consumer, on-chain payments are still somewhat "clunky." Think about the last major change in retail payment forms ------ that was mobile Tap-to-Pay (NFC). This technology took years to become widespread. A massive amount of market education and funding was invested behind it. Because consumers have become accustomed to pulling out plastic cards to swipe. That action is effortless for them. To change their behavior, you need to provide "significantly better value."

Therefore, stablecoin payments will first land in scenarios where traditional payments cannot do or are too expensive:

• Micro payments;

• High-risk verticals (high refund rates, high chargeback rates).

These are the breeding grounds for innovation, and only then will they enter the mainstream. We are currently probably in the 6th to 7th year of this curve, and this is a 10-year cycle of transformation.

The entire industry has a tendency ------ to exaggerate "transaction volume." For example, you often hear people say: "The total transaction volume of stablecoins is thousands of times higher than that of Visa and Mastercard combined." It sounds shocking, but that is not a true "apple to apple" comparison. Because the transaction volume of Visa and Mastercard is commerce volume, while most of the transaction volume of stablecoins comes from capital markets. If you compare stablecoin transaction volume with capital market cash flows, that would be more reasonable.

In the next two to three years, most stablecoin transactions will still come from:

• Enterprise fund transfers;

• Crypto capital market activities;

• Institutional treasury operations.

So the industry should not overhype "stablecoins have become mainstream in consumer payments." Otherwise, it could lead to market disappointment.

Raj:
Banks like US Bank have already announced plans to test stablecoins on Stellar. What do you think this means? Why did they choose Stellar?

José:
This is significant for the industry. US Bank is one of the top five banks in the United States. They have publicly announced plans to test "custom stablecoin issuance and settlement" and have chosen to do so on Stellar.

For me, the priorities are very clear:

1. First, I hope large institutions deploy on Stellar (open chain);

2. If they don’t use Stellar, I hope they use other open-source, permissionless chains;

3. The least desirable outcome is for them to go to closed corporate private chains.

I am not against the existence of enterprise chains ------ they have value in the ecosystem. But I want users to have choices.

For example, think of email: you can use Gmail, or you can use Thunderbird, ProtonMail,
or set up your own client. The key is ------ you must have the right to choose freely. That is the true meaning of "open blockchain."

Raj:
When traditional financial institutions (like US Bank or European banks) evaluate chains, what do they primarily look at?

José:
Overall, they will assess the following:

1. Technical primitives

• Can it support my use case?

• Payment types typically require at least 1000 TPS, close to instant settlement.

• If it’s on-chain derivatives or cash management, they will also look at latency, throughput, etc.

1. Reliability and maturity

• How long has this chain existed?

• Has it experienced long periods of stable operation (e.g., 99.9% uptime for 10 years)?

1. Compliance readiness

   The ability to freeze and seize is not a philosophical issue but a legal requirement.
   If you want to issue compliant stablecoins in the U.S., you must have these capabilities.

• Does it support freezing/unfreezing, blacklisting, transaction monitoring?

• Is it easy to implement the Travel Rule, counter-terrorism financing, anti-money laundering?

• Can "regulatable privacy transactions" be easily achieved?

1. Ecosystem

• Is there a sufficient developer base?

• Are there consulting firms and system integrators that can provide support?

• Is there mature infrastructure and auditing capabilities?

When banks decide to deploy on-chain products, they will not spend years "retraining internal engineers." They want to be able to integrate as quickly as traditional software, so this ecosystem support is very critical.

Raj:
You mentioned that "privacy" will become a key focus in the future, which is interesting.

José:
Absolutely. Privacy is the next frontier. The key question is: **what level of privacy is acceptable? Our approach at Stellar is ------ not to hard-code privacy logic into the underlying consensus, but to parameterize it at the *application layer*.
This way, users can choose the privacy model that best fits their scenario.

Raj:
We’ve talked a lot about USD stablecoins (like USDC, PYUSD, etc.), but you previously mentioned that "non-USD stablecoins" are crucial for global trade. Can you elaborate on that? And how does Stellar view the multi-currency stablecoin ecosystem?

José:
Of course. This can actually be viewed from two angles: scale and geography.

First, from the scale perspective. Stablecoins have network effects, so they only truly work when liquidity is sufficient. This is also one of the core reasons why USDT and USDC have grown large. However, I do not believe stablecoins will form a "natural monopoly." There will not only be 1-2 types of USD stablecoins left in the market, but there also won’t be 300 types that are all important. I expect:

• The number of stablecoins will be in the double digits;

• Each coin just needs to maintain $3-5 billion or more in liquidity to support use cases.

• These are "general-purpose stablecoins";

• At the same time, there will also be "use-case specific" stablecoins, such as internal settlement coins for enterprises, micro-payment coins for content creators, etc.

Now looking at the geographical aspect.
If you want global trade to occur on-chain, then both ends of each transaction need stablecoins denominated in local currencies.

For example: suppose a U.S. company wants to pay a supplier in Mexico. The U.S. CFO uses a USD stablecoin (like USDC); but the other CFO wants to receive a Mexican peso stablecoin (MXN stablecoin) and manage cash and revenue in pesos. In this case, having only USD stablecoins is not enough.

We have already seen some exciting trends:

• In Europe, Circle has launched EUROC (Euro stablecoin);

• There are also plans from the European Banking Union to issue Euro-backed stablecoins + Euro money market funds;

• In Mexico, a company in the Stellar ecosystem, Etherfuse, has launched an MXN stablecoin and tokenized Mexican government bonds;

• Southeast Asian countries (especially Singapore) are also promoting local currency stablecoin projects to match local trade financing and export needs.

All of this indicates: non-USD stablecoins = the "local settlement layer" for global trade.

José:
In the U.S., the policy narrative often is that "stablecoins help maintain the dollar's global dominance." I agree with this. But to keep the dollar dominant globally, the key is not to "force others to use dollars," but to "make it easier for global users to switch between dollars and local currencies." In other words: to keep the dollar strong, we must make it easier for people to enter and exit dollars. And this requires that "the local currency on the other end" also has a stablecoin version. Otherwise, the liquidity of the dollar gets stuck.

When cross-border corporate CFOs can:

• Receive USD stablecoins;

• Quickly convert to local currency stablecoins;

• And directly account, invest, or pay,
  that is when we truly have "on-chain global trade."

Raj:
In the past few months, several crypto companies in the U.S. have received OCC bank charters. What does this mean for the entire industry?

José:
This is a seismic shift. First, for institutions that already have bank licenses (like US Bank, State Street, JP Morgan, etc.) ------ they can finally legally incorporate stablecoins and tokenized assets into their main business flows. That’s why you have seen these names frequently appearing in blockchain news in recent months.

Secondly, for crypto-native companies ------ this is a "waking moment." I have worked in regulated finance for a long time and know that "operating under a money transmission license (MTL)" and "operating under a bank charter" are completely different things.

Holding an OCC bank charter means:

• Higher regulatory intensity;

• Stricter capital and liquidity requirements;

• More complex auditing and risk control systems.

This also means ------ in the coming months, compliance and risk management talent will become a hot and scarce resource in the crypto industry. But in the long run, this is good for the industry. Regulatory clarity and institutional normalization will allow more traditional funds and corporate clients to enter this ecosystem.

Raj:
What do you think are the most promising adoption scenarios in the short term?

José:
I believe there are mainly three:

(1) Cross-border payments and corporate treasury

Cross-border fund transfers are the easiest scenario to implement. For any multinational CFO, "where the funds are and whether they can arrive over the weekend" is a daily pain point. Every Friday at 3 PM, countless treasury departments around the world are busy ensuring: "Funds must be in the right account over the weekend." Stablecoins can greatly enhance efficiency in such scenarios. I believe the scale of cross-border trade and treasury flows will soon grow from hundreds of billions to trillions of dollars. CFOs are "rational buyers," and they directly feel the efficiency dividends. This sales scenario is the easiest for blockchain companies to articulate and close.

(2) Domestic retail and consumer scenarios (long-term layout)

In the short term, B2C is still in its infancy.
But the industry is paving the way:

• Visa/Mastercard cards that can be recharged with stablecoins;

• PayPal, Visa, Mastercard directly settling with stablecoins;

• Wallet Tap-to-Pay, etc.

The truly revolutionary change will occur when:

"People use stablecoin wallets to directly Tap-to-Pay offline,
and deduct from their stablecoin balances."

This may still take 10-15 years, but it will fundamentally reshape retail payments.

(3) Capital markets and asset tokenization

The third direction is capital markets. Currently, stablecoins are mainly used in crypto capital markets. But traditional capital markets are also rapidly converging. Exchanges like Kraken have already ventured into traditional assets; giants like BlackRock, Franklin Templeton, and State Street are moving money market funds, bonds, private credit onto the chain. The DTCC (Depository Trust & Clearing Corporation) recently received regulatory approval to settle securities on-chain. This means: we are moving from "T+2/T+1 settlement" to "T+0 real-time settlement." This is a significant leap in financial infrastructure.

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Raj:
Indeed, the significance of the DTCC event may not have been sufficiently recognized.

José:
I completely agree. If an institution as large as the DTCC can settle securities on-chain, it places extremely high demands on the throughput and stability of the underlying blockchain. Once real-time settlement (T+0) is achieved, it will be a milestone event in the digitization of capital markets.

Raj:
Looking ahead five years, what does success look like for Stellar?

José:
Very clear. We are focusing on three directions:

1. Attracting large institutions into the ecosystem

• Continuing to have giants like PayPal, Monogram, US Bank, State Street, Franklin Templeton build on Stellar;

• Our goal is to have at least 15 referentiable institutional builders.

1. Driving on-chain growth

• Currently, the asset scale on the Stellar chain has reached hundreds of billions;

• We want to continue enhancing network value, wallet activity, and developer numbers;

• Especially through the Soroban smart contract platform, promoting the development of DeFi and RWA tokenization ecosystems.

1. Strengthening infrastructure

• Improving throughput and confirmation speeds;

• Advancing "compliant privacy transaction" capabilities;

• This will be our focus in 2026.

Raj:
Lastly, a few light questions: can you recommend a few books that you think would help in understanding blockchain or innovation?

José:
Of course.

📘 "Introduction to Complexity" by Mitchell. A very good introductory book on complex systems. It helps you understand "determinism vs. probability" ------ which is fundamental to understanding the evolution of blockchain systems.

📘 "The Design of Everyday Things" by Don Norman. Although it doesn’t discuss crypto, it is very enlightening for building complex products. It teaches you how to establish users' "mental models" and how to provide familiarity and interaction cues.

🎥 Tim Roughgarden's "Foundations of Blockchains" course (85 episodes on YouTube)
The mathematical proofs are in-depth yet accessible. It’s great for those looking to build foundational understanding and cultivate critical judgment.

Raj:
You’ve been an entrepreneur within institutions like PayPal and Stellar. Can you share some experiences for those looking to drive innovation in large companies?

José:
Certainly.
First, be mentally prepared: everything takes longer. Driving innovation in large institutions is much slower than in startups. But if you choose the right direction, its impact can be "disproportionately amplified." So you must focus ruthlessly on what truly matters. I love a saying from our CMO Jason Carr: "The worst thing is not failure, but succeeding in unimportant things."

Secondly, learn coalition building.
In large companies, you will never have all the resources. You must learn to negotiate, coordinate, and seek safety, priorities, and consensus. But once you succeed in driving change ------ the impact is enormous. Institutions like PayPal, Visa, and BlackRock, when they act, the entire market shifts. Driving change within these systems is incredibly meaningful work.

Chuk:
Well said. Indeed, it takes "champions" within these institutions to push them forward. Thank you very much for your insights today. This episode is packed with information.

José:
Thank you for the invitation. Everyone is welcome to visit sdf.org. Stellar is an open-source chain designed for financial services, running for many years, stable and reliable, and the ecosystem is growing rapidly. I look forward to its development in the coming years.

Raj:
You can also find me on X: @rparekh or visit monad.xyz.

Chuk:
I’m at blueprint.comx_xyz and on LinkedIn. José, thank you again for your time.

José:
Thank you, I’m very happy.

Chuk:
Thank you all for listening to Money Code. This episode was very informative, and I learned a lot myself. If you enjoyed this episode, please share it with friends or give us a five-star rating on Apple / Spotify. See you next time.