INNOVATION What is a stablecoin

Stablecoins are moving beyond the headlines, with growing interest in how they can make payments faster and more efficient - from cross-border transfers to helping businesses settle quickly and making it easier to send money person to person.

So what exactly is a stablecoin?

A stablecoin is a type of digital token that runs on a blockchain and is designed to maintain a stable value, with the goal of making digital payments work more efficiently. Most are linked - or pegged - to a traditional currency such as the euro or the US dollar.

To support that stability, regulated stablecoins are backed by reserves. These reserves typically consist of cash deposits and highly liquid, low‑risk assets, held so that each digital token is supported by underlying assets of equivalent value.

This is what distinguishes stablecoins from other forms of crypto, which can fluctuate in price. Stablecoins aim to remove that volatility, making them suitable for practical uses - like sending money to a friend, saving for the future, or paying for a supplier.

By combining the stability of the largest traditional fiat currencies with the speed and programmability of blockchain networks, stablecoins can help make digital payments faster, more accessible and available around the clock.

How do stablecoins work?

At a high level, paying with stablecoins means sending digital money over a blockchain network - similar in concept to how today’s payment rails move money across bank and card networks. 

Here are the key building blocks:

1. They use a public ledger: Blockchain networks use publicly available ledgers to record transactions. These ledgers track ownership and movement of payments and allow payments to be sent and received 24/7 - including weekends and holidays - often within seconds. 
2. They're backed by ‘stable’ assets: In Europe, stablecoins are subject to clear regulatory requirements under the EU’s Markets in Crypto‑Assets (MiCA) framework. These rules set guardrails around how stablecoins are issued, how reserves are managed, and how larger stablecoins are supervised - giving users greater confidence that the digital money they hold is designed to remain stable. 
3. You use a digital wallet: To store and use stablecoins, users need a digital wallet. A wallet is similar to a secure banking app: it allows people or businesses to hold stablecoins and send or receive payments at any time. 
4. You can convert back to traditional money anytime: In most cases, stablecoins can be exchanged back into euros or other traditional currencies through regulated providers. This process is often called an “off‑ramp” - a way of moving from digital money back into the traditional financial system. 

Why do stablecoins matter in Europe?

Stablecoins can help address these challenges by: 

• Supporting faster cross-border settlement across currencies 
• Improving liquidity management for businesses operating across multiple markets 
• Enabling new digital money use cases within clear regulatory guardrails 
• Complementing - rather than replacing - existing payment rails

Europe has taken a structured approach to regulation, with frameworks like MiCA providing greater clarity for issuers, banks and technology providers.

Because stablecoins can be used across markets, it’s important that approaches remain broadly aligned so they can work consistently and securely across different countries. 

How Visa is supporting stablecoins in Europe

Visa sees stablecoins as an extension of the payments ecosystem – not a replacement for it. 

Across Europe, we’re working with regulated partners to unlock stablecoins in practical ways:

1. Stablecoin-linked cards: Today, most merchants don’t accept stablecoins directly. Stablecoin‑linked cards bridge that gap by allowing consumers to spend from a digital stablecoin balance anywhere Visa is accepted. This is currently the most mature and widely understood stablecoin use case, helping bring digital money into everyday spending. 
2. Cross-border money movement: Our Visa Direct technology already enables payments between friends, businesses and customers via eligible cards, wallets and bank accounts. Integrating stablecoins into these flows can further support faster settlement, enhanced liquidity and cross border use cases for European businesses. Last year Visa Direct launched two stablecoin pilots, firstly to allow businesses to send payouts directly to recipients’ stablecoin wallets and secondly, enabling businesses to pre-fund Visa Direct payouts using stablecoins. 
3. Modernizing settlement infrastructure: We are also exploring how regulated stablecoins can be used within treasury and settlement processes - including pilots that allow clients to meet settlement obligations using stablecoins, where appropriate and compliant. 
4. Enabling programmable digital money: Beyond moving money faster, stablecoins can also make money more flexible. Because they run on digital networks, simple rules or logic can be attached to payments - for example, releasing funds only when certain conditions are met. This concept is often called “programmable money”. In practice, it could help financial institutions and their customers automate parts of today’s manual processes - such as reconciliation, settlement or corporate payments - reducing friction and improving efficiency.
5.  Stablecoins Advisory: Through Visa Consulting & Analytics, Visa has launched a dedicated Stablecoins Advisory Practice to provide banks, fintechs, merchants and businesses with practical, data‑driven guidance. This includes support on market fit, use‑case identification, strategy development and technology integration - helping clients evaluate where stablecoins make sense, and how they can be adopted responsibly within existing payments and treasury strategies.

Visa’s role is to provide the trusted payments infrastructure that helps our bank and fintech partners explore these capabilities in a compliant, regulated way - connecting new forms of digital money to the existing financial system.

Looking ahead