Why Does Sending Money Internationally Still Feel Like It’s 1997?
Hey there, welcome back to Proof of Life.
You’ve sent money before. Maybe to a family member in another country, maybe to a freelancer abroad, maybe to yourself across accounts in different currencies.
And if you have, you know the routine. You initiate the transfer. You watch fees slice off the top 3%, sometimes 5%. And then you wait. One day. Two days. Sometimes three. By the time the money arrives, the exchange rate has shifted, and the recipient gets less than the amount you sent.
Technology has been evolving fast enough to let you video-call someone on the other side of the planet for free. But moving money? Still feels like passing a note through five middlemen.
That’s the problem stablecoins were built to solve.
What exactly is a stablecoin?
A stablecoin is a type of cryptocurrency that doesn’t fluctuate in price the way Bitcoin or Ethereum does. While those assets can swing 10–20% in a single day, a stablecoin is designed to hold a stable value — usually pegged 1:1 to the US dollar.
One USDC (USD Coin) is targeted to stay at $1. One USDT (Tether) aims for the same. While the goal is a 1:1 peg, market events have shown it’s a target, not a guarantee.
Bitcoin is like holding gold; its value shifts based on what people believe it’s worth. A stablecoin is more like holding a digital dollar in your pocket. The denomination doesn’t change.
How does a stablecoin keep its price stable?
Most stablecoins work by backing every token with an equivalent amount of real assets held in reserve. If an issuer creates 1 million USDC tokens, there should be $1 million sitting somewhere in a bank account or US Treasury bonds as collateral.
When you buy $100 worth of USDC, the issuer takes your $100, puts it in reserve, and issues you 100 tokens. When you want your money back, you redeem your tokens and the issuer releases the equivalent from reserves.
There are other models. Algorithmic stablecoins tried to maintain their peg through code and economic incentives rather than real reserves. In 2022, Terra’s UST algorithmic stablecoin collapsed overnight, wiping out billions and taking an entire ecosystem down with it. That event became the clearest case study in why “trust the math” only works as long as the math is backed by something real.
Today, the dominant stablecoins — USDC and USDT — are asset-backed, and increasingly subject to government regulation.
Why is everyone suddenly talking about stablecoins right now?
Two things happened in 2026 that changed the conversation.
Two things happened that changed the conversation. First, the GENIUS Act was signed into law in July 2025, creating the first federal framework for banks and non-banks to issue regulated stablecoins. This signals that stablecoins are no longer a fringe crypto product. Governments are building rules around them because they’re real infrastructure now.
Second, stablecoin transaction volume hit $28 trillion in 2025 — dwarfing early projections and proving they are no longer just a crypto niche. For context, Visa processed about $17 trillion in total volume in fiscal year 2025.
Stablecoins aren’t just closing the gap; they’re breathing down Visa’s neck, and they’re doing it without branch offices, SWIFT codes, or three-day settlement windows.
What can you actually do with a stablecoin?
The clearest use case right now is cross-border payments.
If you’re a freelancer in Lagos getting paid by a client in Berlin, you can receive USDC directly into a crypto wallet. No bank in the middle. No SWIFT fees. No 3–5% foreign exchange cut. The transaction settles in minutes, not days, and the value received matches the value sent.
Get Proof Of Life’s stories in your inbox
Join Medium for free to get updates from this writer.
Beyond payments, stablecoins are also used for:
- Use in DeFi protocols to access global liquidity (Note: Under the GENIUS Act, regulated issuers can’t pay you yield directly, but you can still earn it via third-party DeFi pools).
- Collateral for onchain borrowing without selling your crypto holdings
- A safe harbour during volatile markets, traders convert to stablecoins rather than cashing out entirely when prices drop
What’s the risk?
The main risk is counterparty trust. If the issuer holding your reserves has less than claimed — or has lent those reserves out, or holds assets that lose value — the peg can break.
Tether (USDT) has faced years of scrutiny over whether its reserves are fully backed. The company publishes attestations but has never completed a full independent audit. This hasn’t stopped USDT from becoming the world’s most used stablecoin, but it’s a live risk worth knowing.
Regulatory risk is also real. As the GENIUS Act and similar legislation in other countries develop, some stablecoins may be required to hold specific reserve types or meet new reporting standards. For now, the safest exposure is sticking with regulated, audited options — USDC, issued by Circle, is the most compliant with US financial regulations.
So what does this mean for you?
Stablecoins are where two worlds are colliding.
The legacy financial system — slow, expensive, intermediary-heavy — is meeting an infrastructure that settles instantly, crosses borders without friction, and operates 24/7.
Banks are already building their own stablecoin versions, and governments are writing the rules. So, stablecoins are fast becoming part of mainstream finance. But, how fast will the old system adapt?
See you in the next issue.
Content Lead, Proof of Life
Stablecoin FAQs — Explained Simply
Q: What is the difference between a stablecoin and regular cryptocurrency?
A: Regular cryptocurrencies like Bitcoin and Ethereum fluctuate in value based on market demand — they can gain or lose 20% of their value in a single day. A stablecoin is specifically engineered to hold a fixed value, almost always $1. Think of it as the difference between investing in a company’s stock (which moves up and down) and holding cash (which stays at face value). Stablecoins give you the speed and borderless nature of crypto without the price volatility.
Q: Is USDC the same as USDT? What’s the difference?
A: Both USDC and USDT are dollar-pegged stablecoins worth $1 each, but they are issued by different companies with different levels of transparency. USDC is issued by Circle, a US-regulated financial company that publishes monthly audited reserve reports and complies fully with US financial regulations. USDT is issued by Tether, which has a longer history and higher circulation but has faced persistent questions about its reserve composition and has never completed a full independent audit. For most people, USDC is considered the safer, more transparent option. USDT is more widely available on exchanges and more commonly used in trading.
Q: Can a stablecoin lose its peg and drop below $1?
A: Yes — and it has happened. The most catastrophic example was Terra’s UST in May 2022, which lost its peg entirely and collapsed to near zero in days, wiping out approximately $40 billion in value. Even asset-backed stablecoins can experience brief depegging during periods of market stress — USDC briefly dropped to $0.87 in March 2023 when its issuer Circle disclosed it had $3.3 billion in reserves held at the failed Silicon Valley Bank. The peg was restored within days, but the event demonstrated that even the most reputable stablecoins carry real risk. The type of stablecoin and the quality of its reserves are what determine how likely a depeg is and how severe it would be.
Q: What is the GENIUS Act and why does it matter?
A: The GENIUS Act is proposed US federal legislation that would create the first formal legal framework for payment stablecoins — stablecoins specifically designed to be used for transactions rather than investment. It would require stablecoin issuers to hold 1:1 reserves in high-quality liquid assets like US Treasury bills, submit to regular audits, and comply with anti-money laundering regulations. The significance is that it moves stablecoins from a regulatory grey area into a clearly defined category of financial product. When the US government writes rules for something, it signals to banks, corporations, and international regulators that the asset class is here to stay.
Q: How do I actually get and use a stablecoin?
A: The most common way is through a cryptocurrency exchange like Coinbase, Binance, or Kraken. You deposit dollars, buy USDC or USDT, and the stablecoin is credited to your account or wallet. From there, you can send it to anyone with a compatible wallet address instantly, use it in DeFi protocols to earn yield, or hold it as a dollar-equivalent without needing a bank account. Some payment apps like PayPal now also support USDC directly, making the entry point even lower for people who don’t want to use a crypto exchange.
Q: Are stablecoins legal?
A: In most countries, yes — holding and using stablecoins is legal. The regulatory status varies by jurisdiction. In the US, stablecoins currently operate under existing financial regulations and are subject to FinCEN anti-money laundering rules. The GENIUS Act would add a more specific framework. In the EU, the MiCA regulation that came into full effect in 2024 provides a clear legal framework for stablecoin issuers. In some countries stablecoins sit in a grey area where they are neither explicitly permitted nor prohibited. The general direction globally is toward more regulation rather than bans, as governments recognise the infrastructure value of programmable money.
Q: Can I earn interest on stablecoins?
A: Yes, and this is one of the most practical use cases. In DeFi protocols like Aave and Compound, you can deposit USDC and earn interest paid by borrowers using that pool. Rates vary based on borrowing demand but have historically ranged from 3% to 8% annually — significantly higher than most traditional savings accounts. Some centralised platforms also offer yield on stablecoin deposits, though these carry additional counterparty risk from the platform itself. Earning yield on stablecoins is essentially the onchain equivalent of a high-yield savings account, with the added risk that there is no deposit insurance if the protocol is exploited.
Q: If stablecoins are always worth $1, why would anyone hold them instead of just holding dollars?
A: Three reasons. Speed — a stablecoin transfer settles in minutes anywhere in the world, whereas a bank wire can take days. Programmability — stablecoins can be used directly in smart contracts and DeFi protocols in ways that bank-held dollars cannot. Access — anyone with a smartphone and internet connection can hold USDC regardless of whether they have a bank account or live in a country with access to dollar-denominated savings instruments. For someone in a country with high inflation and currency controls, holding USDC is one of the few practical ways to hold dollars outside the traditional banking system.
Q: What happens to my stablecoin if the issuing company goes bankrupt?
A: This depends on how the reserves are held and the legal structure of the issuer. For USDC, Circle holds reserves in segregated accounts separate from company operating funds, which means in theory the reserves would be protected from Circle’s creditors if the company failed. In practice, this has never been tested through a full bankruptcy. For USDT, the reserve structure is less transparent. The safest assumption is that stablecoins are not insured the way bank deposits are — there is no equivalent of the FDIC guaranteeing your stablecoin holdings. Treat them as you would cash held outside a bank: useful, but not risk-free.
