Bank of Italy Research Reveals Infrastructure, Not Blockchain, Drives Stablecoin Remittance Costs
Bank of Italy study finds stablecoins lack inherent cost advantages over traditional remittance services, with fiat conversion friction and payment infrastructure emerging as primary cost drivers.
Infrastructure Friction Dominates Stablecoin Remittance Costs
Research conducted by the Bank of Italy has challenged assumptions about stablecoin efficiency in cross-border payments. The study found that stablecoin-based remittances do not systematically outperform traditional payment channels in cost or speed. Rather than blockchain transaction fees accounting for the bulk of expenses, fiat on- and off-ramp frictions—currency conversion costs and payment infrastructure limitations—emerged as the primary cost drivers across all tested corridors.
Testing Reveals Competitive but Inconsistent Results
Researchers conducted 200 USDC remittances across 10 bidirectional payment corridors connecting Italy with Brazil, Argentina, Japan, the United Arab Emirates, and South Africa. Total costs for these transfers ranged from 0.3% to nearly 9% depending on the specific corridor examined. In corridors equipped with instant payment systems, settlements completed in under 20 minutes; those lacking such infrastructure experienced one to two business day settlement periods.
When benchmarked against the World Bank’s reported global average remittance cost of 6.65%, stablecoin transfers proved cheaper across most corridors studied. However, comparisons with specialized remittance providers like Wise told a different story—stablecoins achieved lower costs in only three of seven directly comparable corridors. The research underscored that blockchain fees represented a minor component of overall costs, with exchange rates and currency conversion dominating expense structures.
Regulation and Payment Infrastructure Shape Success
According to the Bank of Italy’s analysis, domestic instant payment system quality directly determines settlement speed, revealing that blockchain’s inherent transaction velocity advantage becomes negligible when fiat conversion bottlenecks exist. The researchers concluded that targeted investment in instant payment infrastructure across countries would substantially improve stablecoin competitiveness for international transfers.
Regulatory frameworks also significantly influence remittance efficiency. The Bank of Italy found that strict prohibitionist approaches failed to eliminate stablecoin adoption; instead, restrictive policies redirected users toward unregulated offshore platforms. Conversely, overly complicated regulatory frameworks increased operational burdens on retail users. These findings emerge as the European Union implements its Markets in Crypto-Assets framework and the United States enacts the GENIUS Act—two major regulatory regimes reshaping the cryptoasset landscape.
The stablecoin market continues its upward trajectory despite these findings, reaching approximately $307 billion in total capitalization and recording roughly 16% growth over the preceding year, according to blockchain data platform DefiLlama. The Bank of Italy’s research suggests that realizing the full potential of blockchain-based remittances depends less on technological innovation and more on improving the traditional financial infrastructure that connects fiat and digital currencies.
Source: Bank of Italy, via Cointelegraph. Not financial advice.