"Coexistence First"...Stablecoins and SWIFT, How Did Their Uncomfortable Cohabitation Begin?

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Stablecoins are shaking up the outdated payment speeds of the international remittance market. However, an analysis suggests that coexistence is inevitable, as SWIFT (Society for Worldwide Interbank Financial Telecommunication) remains a core infrastructure of the global banking network.

According to crypto media outlet Cointelegraph on May 6 (local time), major global remittance companies are strengthening their digital asset strategies to find faster payment alternatives than traditional bank payment networks. Western Union has launched the Solana (SOL)-based stablecoin USDPT in the Philippines and Bolivia and plans to expand to additional markets by 2026.

Western Union CEO Devin McGranahan stated in the Q1 earnings announcement that the stablecoin would be used as an alternative payment layer to the decades-old SWIFT network. He explained that digital assets enable real-time on-chain movement and settlement between the company and its agents, and can reduce the problem of capital being tied up on weekends and holidays due to the traditional banking system only settling payments from Monday to Friday. Competitor MoneyGram also partnered with Kraken to announce a service allowing users to convert cryptocurrency to cash.

However, the prevailing view is that SWIFT is unlikely to disappear in the short term. Since its establishment in 1973, SWIFT has been deeply embedded in cross-border payment infrastructure used by over 200 countries and regional banks. SWIFT also announced a shared ledger initiative involving more than 30 financial institutions last September, embarking on experiments with blockchain-related infrastructure. Bernardo Bilotta, CEO of stablecoin infrastructure platform Stables, said, “SWIFT will not be replaced by a single announcement or a single stablecoin.”

The biggest advantage of stablecoins is their ability to reduce tied-up capital for remittance providers. Bilotta explained that companies like Western Union pre-fund correspondent bank accounts around the world, and these funds guarantee settlements when remittances occur. He pointed out that this capital generates no profit beyond its role in guaranteeing settlements 2-3 banking days later. He added that while stablecoins can reduce settlement times from days to minutes, they require reserves and real-time fund management, so the released capital is not immediately fully deployed into other profitable activities.

Sota Watanabe, CEO of Startale Group, stated that the time delays in traditional financial networks also serve as safeguards, such as batch processing of transactions, offsetting exposures, and liquidity management centered around banking hours. He said, “Stablecoins remove that delay. While powerful, this means that fund management systems must now operate continuously, not just during business hours.”

Concerns have also been raised that private stablecoins could create yet another closed payment network. Bilotta pointed out that private payment networks like Western Union's USDPT are advantageous for issuance, fund management, and counterparty control but could recreate the fragmentation that blockchain aimed to solve. Watanabe also warned that if each major payment company creates an isolated payment network, the silo structure of correspondent banking infrastructure could be replicated on the blockchain. Cointelegraph reported that even if stablecoin-based remittances offer 24/7 settlement and improved speed, they are more likely to work alongside SWIFT rather than replace the existing financial network.

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