Stablecoins
What is a stablecoin — and why does it matter for business?
A short, factual explainer for businesses considering stablecoins for payments and settlement.
By James Hickson · Updated 3 July 2026
Key takeaways
- A stablecoin is a cryptocurrency designed to hold a steady value by being pegged to a reference asset — usually a fiat currency such as the US dollar. For businesses, stablecoins make it possible to move and settle value digitally, across borders and in minutes, without the price volatility of other crypto assets.
- Category. Fiat-referenced cryptocurrency (a digital bearer token designed to hold a fixed value)
- Pegged to. A reference asset, most often the US dollar or euro, at roughly 1:1
- Typical business use. Cross-border settlement, supplier and payroll payouts, and treasury movement between markets
- Who issues them. Private issuers who hold reserves against the tokens in circulation; the largest are USD-referenced
- How Xchange360 uses them. As settlement rails only — we convert to and from fiat so clients never hold the token or its risk
General information, not legal advice.
How does a stablecoin stay pegged to a currency?
A stablecoin holds its value because the issuer promises that each token can be redeemed for one unit of the reference asset, and backs that promise with reserves. When a business buys a dollar-referenced token, the issuer is expected to hold roughly a dollar of cash or short-dated government debt for it. Redemption is the anchor: if a token can always be exchanged for a real dollar, few holders will sell it for less.
The peg is maintained in practice by arbitrage. If a token trades slightly below its reference value on an exchange, buyers step in to purchase it cheaply and redeem it at par, which pushes the price back up. If it trades above par, the reverse happens. This mechanism works only when redemption is genuine and reserves are sufficient, which is why the quality of the issuer matters far more than the label on the token.
That distinction is the whole point for a treasury team. A well-run, fully reserved stablecoin behaves like a dollar that moves on a blockchain. A thinly backed one behaves like a promise that can break under pressure. We treat the two very differently, and we never expose a client to the peg risk directly — funds are converted to fiat on receipt, so a wobble in a token's price is our concern to manage, not yours.
What do businesses actually use stablecoins for?
The honest answer is speed and reach, not speculation. Traditional cross-border payments pass through a chain of correspondent banks, each adding a day and a fee, and each able to stall a transfer for review. A stablecoin transfer settles in minutes on a shared ledger, at any hour, without waiting for two banking calendars to overlap. For a business paying suppliers or staff across borders, that difference is measured in working capital freed and reconciliation avoided.
The common uses cluster around movement of money rather than holding of assets. Companies use stablecoins to settle invoices with overseas counterparties, to fund payouts to contractors and marketplaces in regions where local banking is slow or unreliable, and to reposition treasury balances between entities without a multi-day wire. In each case the token is a rail, not a destination. Value enters as fiat and leaves as fiat; the blockchain simply carries it in between.
This is how our licensed entities structure the service. A client instructs a payment in ordinary currency terms, we handle the conversion and the on-chain settlement under our regulatory permissions, and the recipient is paid in the currency they expect. The business gets the settlement speed of a stablecoin with none of the operational burden of custody, exchange accounts, or price exposure.
What are the types of stablecoin, and why do fiat-backed ones dominate business use?
There are three broad designs. Fiat-backed tokens hold cash and cash-equivalent reserves against every token issued, so a dollar token is meant to be matched by roughly a dollar in a bank or in short-term government paper. Crypto-collateralised tokens are backed instead by other cryptocurrencies, held in excess to absorb price swings. Algorithmic tokens hold little or no backing and try to hold their peg through supply rules and market incentives alone.
For business payments, fiat-backed tokens are the only serious category, and the reason is risk. A payment rail must hold its value between the moment funds arrive and the moment they leave, which may be minutes or hours. Fiat reserves make that value predictable and, with a credible issuer, auditable. Crypto-collateralised designs add a layer of volatility that treasurers have no reason to accept, and algorithmic designs have failed abruptly and publicly, wiping out holders when confidence turned.
This is why we work only with established fiat-referenced tokens from issuers that publish reserve attestations, and why we convert client funds to and from fiat around each transfer. The token is chosen for the reliability of its backing, not its yield or its brand. A business should never have to form a view on stablecoin design theory to make a cross-border payment, and with our model it does not.
How is a stablecoin different from other crypto and from money in a bank?
A stablecoin differs from Bitcoin or Ether in one decisive way: it is built to not move in price. Most cryptocurrencies float freely and can swing by double digits in a day, which makes them investments or speculations rather than units of account. A stablecoin is engineered to sit still at its peg, which is precisely what lets it function as a means of payment. It borrows the settlement speed of crypto without the price behaviour.
The difference from a bank balance is subtler and matters for how businesses should think about risk. Money in a regulated bank is a claim on that bank, protected in many jurisdictions by deposit guarantees and supervision. A stablecoin is a claim on a private issuer and its reserves, without deposit insurance. It can settle faster and reach further than a bank transfer, but it does not carry the same safety net, which is one reason regulated intermediation matters.
That is the gap our model is designed to close. By operating under licences in Switzerland, Canada and Costa Rica, and by converting to fiat rather than leaving clients holding tokens, we place regulated process around a fast settlement rail. The client experiences bank-style predictability and accountability, while the payment itself moves with the speed a stablecoin allows.
What should a business look for in a stablecoin for payments?
Three things decide whether a stablecoin is fit for business payments. First, the quality and transparency of reserves — is every token backed by cash or safe short-term assets, and does the issuer publish independent attestations rather than assurances. Second, the reliability of redemption — can tokens be exchanged for real currency promptly and at par, even during market stress. Third, the regulatory standing of everyone in the chain, including the party handling your funds.
Most businesses should not have to assess any of this alone, and that is the case for working through a regulated provider. We carry out the diligence on issuers, hold the relevant permissions, and take on the price and conversion risk so the client deals only in familiar currency terms. The stablecoin becomes an implementation detail of a compliant payment, rather than an asset the business has to understand, hold or defend to an auditor.
The practical test is simple. If using a stablecoin means your finance team must open exchange accounts, manage wallets and watch a token price, the arrangement has pushed risk onto you. If it means you instruct a payment in your own currency and money arrives correctly at the other end, the rail is doing its job quietly in the background. The second is what a business should expect, and what we set out to provide.
FAQ
Common questions
Is a stablecoin the same as a cryptocurrency?
It is a type of cryptocurrency, but a distinct one. It runs on the same blockchain technology, yet it is designed to hold a steady value against a reference currency rather than float freely, which is what makes it usable for payments rather than speculation.
What is a stablecoin pegged to?
Usually a single fiat currency, most often the US dollar and sometimes the euro, at roughly one token to one unit. Some are pegged to other assets, but currency-referenced tokens are the ones used in business settlement.
Are stablecoins safe for business payments?
A fully reserved token from a credible issuer, used as a short-lived settlement rail, carries limited risk. The safety depends on the issuer's reserves and on regulated handling. In our model we convert to fiat around each transfer, so clients are not left holding the token.
Do I have to hold cryptocurrency to use a stablecoin for payments?
Not when you work through us. Clients instruct payments in ordinary currency and receive settlement in fiat. We handle the conversion and the on-chain movement under our licences, so the business never holds a token or its price risk.
How is a stablecoin different from money in my bank account?
A bank balance is an insured, supervised claim on a regulated bank. A stablecoin is a claim on a private issuer's reserves, with no deposit guarantee. It settles faster and reaches further, but the protections differ, which is why regulated intermediation matters.
Why do most business stablecoins use the US dollar?
The dollar is the dominant currency in international trade and the deepest, most liquid market for reserves. Dollar-referenced tokens have the widest acceptance and the most established issuers, which makes them the practical default for cross-border settlement.