David Hope is Director of AI-powered Observability Solutions at Elastic, where he merges his passion for AI with deep expertise in monitoring complex systems. Originally from the UK, he’s journeyed from site reliability engineering in finance to leading technical sales at AppDynamics and Confluent—before landing at the intersection of AI and observability at Elastic.
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Spurred by enactment of the GENIUS Act in the United States and a business case that is too compelling for many finance and banking organizations to ignore, the digital currency known as stablecoin is having a breakthrough moment.
In the span of just a few months this summer, Tether, the world’s largest player in digital assets, announced it intends to introduce a U.S.-regulated, dollar-backed stablecoin and PayPal launched a global platform to link the world's largest digital payment systems and wallets, along with a new peer-to-peer platform for payments, with by stablecoin among their accepted forms of payment. Meanwhile, on the credit card front, Mastercard was unveiling major new stablecoin-based settlement options for merchants and acquirers in Eastern Europe, the Middle East, and Africa, and Visa was announcing support for and integrations with more stablecoins and associated blockchains.
“We believe that when stablecoins are trusted, scalable and interoperable, they can fundamentally transform how money moves around the world,” said Visa’s Rubail Birwadker.
Even JPMorganChase Chairman Jamie Dimon, a purported crypto skeptic, vowed during the company’s recent earnings call that “we're going to be involved in…stablecoins to understand it, [and] to be good at it.”
Organizations across the finance and banking landscape are rushing to embrace this blockchain-based form of tokenized cash, recognizing it can open doors to new business models and customers as an alternative to cash and traditional payment rails. With the GENIUS Act establishing liquidity/reserve requirements, anti-money-laundering protections, and other regulatory guardrails in the U.S., and as similar regulations take hold elsewhere, the case for using stablecoin, a digital currency tied 1:1 to currencies like the U.S. dollar and the Euro and backed by auditable reserves, has never been stronger for regulated and unregulated entities alike. That’s assuming they have the supporting digital infrastructure and capabilities in place — more on that in a moment.
For those that are prepared, highly impactful use cases that leverage the strengths of stablecoin — speed, cost-efficiency, versatility, and transparency — are well within reach, among them:
- Treasury and cash management. Stablecoin can serve as a rail for multinational companies to optimize foreign exchange and internal money movement.
- Cross-border flows. B2B and retail payments and remittances can be made almost instantaneously, with no banking-hour limitations and lower costs. Likewise, stablecoin can be used for cross-border bank-to-bank flows, and for cross-border credit card settlements.
- Merchant settlement and retail remittances. Visa and Mastercard are increasingly accommodating payment and remittance by stablecoin.
- Business-to-business payments. Stablecoin can simplify and expedite settlement with vendors, contractors and subcontractors, etc.
- Everyday digital commerce. More companies and marketplaces are embracing stablecoin as an acceptable form of payment.
- Serving the unbanked. In places where consumers can’t access reliable banking services, or where the local currency is exceedingly volatile, stablecoin can be a viable option.
Building a Stable Foundation for Stablecoin
As promising as use cases like this are, they depend largely on having the necessary infrastructure in place to fulfill obligations to customers and in some cases, regulators, and to support digital asset markets that operate 24/7/365, with enormous volumes of data. Those vital building blocks include:
1. Scalability. As fast as stablecoin is catching on — circulation has doubled over the past 18 months, according to McKinsey — the ability to manage the huge data workloads associated with wallet services, blockchains, trades and other transactions is a must for organizations involved in stablecoin. Digital asset platforms should be able to handle billions of events per day, along with the enormous amount of data from every user click, blockchain event, and trade execution. As the stablecoin user base and transaction count grow, whatever observability platform a company uses must be able to scale to maintain compliance with applicable data-retention requirements and to maintain observability across the entire stablecoin operation. This future-proofs an organization if the use of stablecoin increases by orders of magnitude, as many expect it will.
2. An always-on digital environment. Digital currency takes no holidays or maintenance breaks, so the on-chain and off-chain systems that support a stablecoin operation have to run 24/7/365, with no downtime, outages, performance glitches or lags. Not only can user trust evaporate with any incident, anomaly or slowdown, a hiccup in a system can affect market stability if, for example, a digital wallet service crashes.
3. Real-time monitoring and visibility. The ability to monitor infrastructure and application performance in real time, on the blockchain as well as off, is key to a high-performing, always-on stablecoin operation. Among the functions and systems that need monitoring: the blockchain nodes that record transactions; web services (including APIs and dashboards); databases (containing user and reserve tracking information); and integrations (such as with banks or payment networks). Most importantly, an organization needs a consolidated, up-to-date view of conditions and metrics across its entire stablecoin operation so they can make correlations, identify anomalies and troubleshoot accordingly, without having to jump between different tools. It’s also helpful to have a system that can automatically generate alerts that call attention to potential issues (such as an unexpectedly sharp drop in transaction rate) before they escalate. Having this level of observability is critical to a smooth-running stablecoin operation.
4. Integrated analytics. With artificial intelligence- and machine learning-driven analytics and search embedded into their systems, companies can proactively analyze on-chain metrics to identify, for example, a potential liquidity crunch. Intelligent analytics also can enable stablecoin teams to identify trends or issues and optimize accordingly, such as by scaling up database capabilities to better manage transaction peaks, or to fix a glitchy wallet integration. Here’s another area where real-time alerts from the system can flag issues before they escalate. Over time, this leads to fewer errors, faster root cause analysis and response times, lower costs, and stronger customer trust.
5. Security monitoring. Security is another non-negotiable for a stablecoin operation. The engineers overseeing that operation need the ability to continuously monitor systems and transactions to detect anomalies, like if an address associated with ransomware appears in a blockchain transaction log, for example. It’s also critical that they be able to screen wallet addresses against sanctions lists and to identify risks to their underlying systems for signs of intrusion or misuse (such as unauthorized access attempts or suspicious spikes in network traffic), and do so in real-time.
6. Compliance auditability. Documenting compliance with laws like the GENIUS Act and Europe’s MiCA (Markets in Crypto Assets Regulation) puts a premium on high-quality reporting and audit-response capabilities. Transparency, accuracy and traceability are paramount. Companies involved in stablecoin must be able to gather, verify and format data in accordance with applicable regulations, and provide the information required by internal and external audits to show compliance with anti-money-laundering rules, for example. This all feeds into the public accountability that stablecoin operations must have to sustain trust in the company, the currency itself, and the systems that support it.
Stablecoin is indeed making a decisive move into the mainstream. In just the last 12 months, adjusted stablecoin transaction volume has increased 58%, with a 35% increase in transaction count, according to Visa. Business-to-business stablecoin payments alone are projected to increase 30-fold from 2023 to 2025, according to figures cited by BCG. And there’s plenty of data to suggest this form of digital currency soon may overtake ACH in the transfer mix. Clearly, for organizations involved in the payments value chain, the time to lay the groundwork for stablecoin is now.
