Are you wondering how digital assets can make sending money across borders cheaper and quicker? This article explains what stablecoins and tokenized deposits are, how they work in international payments, and what you should consider before relying on them.
What stablecoins and tokenized deposits actually are
A stablecoin is a type of cryptocurrency whose value is pegged to a stable asset, usually a fiat currency such as the US dollar, euro, or Singapore dollar. The peg is maintained through reserves, algorithmic mechanisms, or a combination of both, so the coin’s price stays close to its reference value.
A tokenized deposit takes a traditional bank deposit and represents it on a blockchain as a digital token. The token carries the same legal claim as the underlying deposit, but it can be transferred instantly on a distributed ledger.
Both concepts share two key features that make them attractive for cross‑border payments:
- Speed: Transactions settle on the blockchain within minutes, bypassing the days‑long clearing cycles of legacy correspondent banking.
- Cost efficiency: By eliminating multiple intermediary banks, fees are reduced to a fraction of traditional wire‑transfer costs.
In practice, a bank or fintech can hold a reserve of stablecoins or tokenized deposits, send the digital token to a counterpart in another country, and the recipient can redeem it for local fiat instantly.
How the technology works for international transfers
When a sender wants to move money abroad, the process typically follows these steps:
- Conversion to a digital token: The sender’s bank converts the local currency into a stablecoin or tokenized deposit that is accepted by the network.
- On‑chain transfer: The token is moved on a public or permissioned blockchain to the recipient’s financial institution. Because the ledger is shared, both parties can verify the transfer instantly.
- Redemption: The recipient’s bank converts the token back into the local currency and credits the beneficiary’s account.
Smart contracts can automate parts of this flow, enforcing limits, compliance checks, or settlement conditions without human intervention. This automation is especially useful for high‑volume corporate cash management and trade‑finance use cases.
Real‑world illustration: the BLOOM initiative
In October 2026, the Monetary Authority of Singapore (MAS) announced that Bank Negara Malaysia and the Bank of Thailand had joined its BLOOM initiative. BLOOM—short for Borderless, Liquid, Open, Online, Multi‑currency—is a public‑private collaboration designed to help financial institutions coordinate the cross‑border use of stablecoins and tokenized deposits.
MAS launched BLOOM in October 2025, building on an earlier research project called Project Orchid. The initiative brings together major players such as Airwallex, Mastercard, Ripple, Visa, and the World Bank Group. Its goal is to cut costs and speed up market entry by reducing the need for each institution to negotiate separate agreements with every counterparty.
Through BLOOM, participating banks can test ringgit‑denominated stablecoins and tokenized deposits for both domestic and cross‑border wholesale payments. The pilot demonstrates how a coordinated framework can make digital tokens a practical bridge between different national payment systems.
What this means for you, the everyday earn‑er
If you earn income in one country and need to pay for services or send money to family in another, stablecoins can offer a lower‑cost alternative to traditional remittance services. The reduced fees can translate into more of your earnings staying in your pocket.
For freelancers or small businesses that invoice international clients, accepting payment in a stablecoin can eliminate currency‑conversion headaches. You receive a digital token that holds its value, and you can convert it to your local currency when the exchange rate is favorable.
However, the ecosystem is still evolving. Not every bank or payment provider supports stablecoin deposits, and regulatory treatment varies by jurisdiction. Before you rely on a digital token for regular income, make sure the necessary infrastructure is in place for both sending and receiving ends.
How to evaluate a stablecoin or tokenized‑deposit solution
- Regulatory compliance: Verify that the issuer is licensed or authorized by the relevant financial authority. Look for clear disclosures about reserve holdings or backing assets.
- Liquidity and market depth: A stablecoin that trades on multiple reputable exchanges or is backed by a major bank is easier to convert without slippage.
- Counterparty support: Check whether your bank, or the bank of your intended recipient, can hold and redeem the token. Participation in initiatives like BLOOM is a good sign of broader acceptance.
- Security track record: Review any past incidents, audits, or third‑party security assessments. A well‑audited smart‑contract codebase reduces the risk of loss.
- Cost structure: Compare transaction fees, conversion spreads, and any custody charges against traditional wire‑transfer fees.
FAQ
Do stablecoins replace traditional banks?
No. Stablecoins complement existing banking services by providing a faster, digital bridge for moving value. Banks still handle fiat on‑ramps, off‑ramps, and regulatory compliance.
Are stablecoins safe to hold for long periods?
Safety depends on the issuer’s reserve management and audit transparency. Tokens backed by highly regulated banks or sovereign reserves generally carry lower risk than those with opaque backing.
Can I use a stablecoin for everyday purchases?
Some merchants accept stablecoins directly, but most consumers convert them to local fiat before spending. As adoption grows, more point‑of‑sale solutions may accept stablecoins directly.
What happens if the peg breaks?
If a stablecoin loses its peg, its value can deviate from the reference currency. In such cases, holders may experience losses or gains, similar to holding a foreign currency that fluctuates.
This article references reporting from cointelegraph.com.
