Why Stablecoins and SWIFT May Have to Coexist

Some of the world’s largest remittance providers are accelerating their digital asset strategies as they look for faster settlement alternatives to traditional banking rails.

Western Union’s new stablecoin USDPT is the latest example of the growing overlap between traditional payments firms and crypto infrastructure. The money transfer company launched its Solana-based stablecoin on Monday in the Philippines and Bolivia, with plans to expand into additional markets throughout 2026.

Western Union CEO Devin McGranahan said in the company’s Q1 earnings call that the stablecoin will be used as an alternative settlement layer to the decades-old SWIFT network.

Digital assets allow transfers “to begin moving and settling between us and our agents onchain in real time at much faster speeds and again over weekends and holidays where we have capital tied up because the traditional banking system only settles Monday through Friday,” he said.

Western Union’s stablecoin follows the launch of its Digital Asset Network. Source: Western Union

Western Union is not the only remittance provider trying to move cross-border settlement away from the incumbent banking system’s weekday-only rails.

Rival MoneyGram on Tuesday announced a partnership with Kraken that allows users to convert crypto into cash for pickup, adding to a broader push among remittance firms to integrate blockchain-based payment rails.

SWIFT isn’t disappearing anytime soon

From its early years, crypto was often framed as an alternative to centralized financial systems and intermediaries. 

Though Satoshi Nakamoto did not explicitly call for replacing banks in the original Bitcoin whitepaper, the network’s genesis block included the newspaper headline: “Chancellor on brink of second bailout for banks.”

As Bitcoin launched after the collapse of institutions like Lehman Brothers, the message has been interpreted as a political statement against centralized finance and bank bailouts.

Bitcoin’s first block was mined on Jan. 3, 2009, during the Global Financial Crisis. Source: Bitaps

Related: DeFi can freeze stolen funds, but not everyone agrees it should

But today, many of those same financial institutions are embracing blockchain-based settlement systems themselves.

“It is no longer a question of if Western Union will be active in digital assets, it is now how fast can we scale,” McGranahan said.

Western Union exploring alternatives to SWIFT does not mean crypto has replaced the finance messaging network founded in 1973. SWIFT is still deeply embedded in the cross-border settlement infrastructure used by banks in more than 200 countries and territories.

In fact, SWIFT itself has also been experimenting with blockchain-related infrastructure. Last September, the organization announced work on a shared ledger initiative involving more than 30 financial institutions.

“SWIFT isn’t going to be replaced by a single announcement or a single stablecoin,” Bernardo Bilotta, CEO of stablecoin infrastructure platform Stables, told Cointelegraph. 

“It’s deeply entrenched, and for many types of institutional transfers, it works well enough that the switching costs outweigh the benefits of moving to something new.”

Stablecoins unlock “dead” remittance capital

Faster remittance settlement has obvious benefits for end-users, who no longer have to be constrained to business days.

On the backend, it unlocks “dead capital” for the remittance provider and its local partners.

“A company like Western Union has capital parked across hundreds of correspondent banking relationships globally, pre-funding accounts so that when a transfer hits, the money is already sitting there waiting,” Bilotta said.

He added:

It earns nothing, it does nothing except guarantee that a payment can settle two or three days from now on a banking schedule designed in the 1970s.”

Moving settlement onto blockchain-based assets such as stablecoins compresses the payment timeline from days to minutes.

However, Bilotta argued that not all that liquidity will start flowing into useful earnings, as stablecoins also need locked reserves and partake in real-time treasury management. So in practice, not all the “dead capital” unlocked by stablecoins is expected to be immediately deployed elsewhere. 

Stablecoin issuers also keep large amounts of capital locked in reserves. Source: Circle

Related: Why yen stablecoins are key to Japan’s crypto ambitions

Sota Watanabe, CEO of Startale Group, is building the JPYSC stablecoin in Japan. He said that the extra time in traditional rails also creates safeguards and buffers. Institutions batch transactions, net exposure and manage liquidity around banking hours.

“Stablecoins remove that delay. Powerful, but it means treasury systems must now operate continuously, not only during business hours,” Watanabe told Cointelegraph.

Private stablecoins risk creating new silos

While stablecoins promise faster and more efficient settlement, not all blockchain-based payment systems are built equally.

Bilotta argued that private settlement networks such as Western Union’s USDPT offer institutions tighter control over issuance, treasury management and counterparties, but risk recreating the same fragmentation blockchain originally aimed to solve.

“Every company that launches its own stablecoin creates another walled garden that the rest of the ecosystem has to bridge to or ignore,” he said.

Unlike private stablecoins operating inside closed ecosystems, public stablecoins such as Tether’s USDt (USDT) benefit from shared liquidity pools and interoperability across exchanges, wallets and payment platforms.

“A dollar moved through USDT in Thailand is the same dollar that arrives in Australia,” Bilotta said. “No bridging, no translation, no bilateral agreements between private networks.”

Watanabe shared similar concerns, warning that if every major payment company launches its own isolated settlement network, the industry could simply recreate the siloed infrastructure of correspondent banking on blockchain rails.

“Private settlement networks are efficient inside a closed ecosystem,” Watanabe said. “Their weakness is interoperability.”

He argued that the long-term advantage of public blockchain rails is not just faster settlement, but shared infrastructure where liquidity can move more naturally between applications, exchanges and financial systems.

For all the promises of faster settlement and 24/7 payments, blockchain-based remittances still risk rebuilding the same fragmented infrastructure they were meant to replace.

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