Stablecoins – Fundamentals

What Is a Stablecoin – And What Is It For?

A stablecoin is a digital money token designed to closely track the value of a reference currency – typically euro or US dollar. The technical base is usually blockchain infrastructure. Stablecoins can be moved between wallets like digital cash: from companies to service providers, between group entities or to suppliers.

For companies the focus is not speculation but operational value in payments. Especially cross‑border transfers become faster and more predictable, fee structures become more transparent and payment logic can be embedded directly into ERP workflows. Fees typically consist of a network fee, a service provider charge and – where currency conversion is needed – a visible foreign‑exchange spread.

In practice this means invoices can be settled immediately after delivery, even across time zones and weekends. Approvals on goods receipt, milestone payments in projects or refunds can be triggered directly from the ERP. Stablecoins are not a parallel system but an additional payment method that can be integrated into existing processes much like bank transfers or card payments.

Key Terms at a Glance

• Electronic‑Money Token (EMT): a stablecoin that is linked 1:1 to a single fiat currency such as the euro. Holders have a redemption claim against the issuer, similar to e‑money balances.
• Asset‑Referenced Token (ART): a token whose value is linked to a basket of assets – for example several currencies or bonds. Accounting and risk analysis are more complex than for EMT.
• Algorithmic stablecoin: an attempt to keep the price stable via incentives and algorithms instead of reserves. Generally not suitable for conservative corporate EUR payments.
• Central Bank Digital Currency (CBDC): digital central bank money – for example a future digital euro. Legally and economically a different category from privately issued stablecoins.

How Stablecoins Have Evolved

Stablecoins emerged from combining two building blocks: blockchain networks that enable programmable value transfer, and legal frameworks for e‑money and payment services. From the mid‑2010s onwards, smart contracts on Ethereum became widely available. This allowed tokens not only to represent a scarce unit but also to encode redemption and reserve mechanics.

Early on, US dollar tokens such as Tether (USDT) were used primarily in crypto trading. Later, more regulation‑oriented variants like USD Coin (USDC) emerged. As the space matured, the focus shifted from pure trading towards payments, treasury solutions and – in Europe – euro‑denominated stablecoins under MiCAR (Markets in Crypto‑Assets Regulation).

How Does the Peg Stay Stable?

The price stability of a stablecoin is determined by the issuer’s model. For electronic‑money tokens (EMT), regulated reserves such as demand deposits or short‑term money market instruments back the token supply. Holders have a claim to redeem their tokens at par into bank money at any time.

For asset‑referenced tokens (ART), the value is based on a basket of assets – for example several currencies or bonds. The aim is to keep the token price within narrow bands. For corporates this means: the more complex the basket, the more demanding accounting, risk management and regulatory classification become.

Models that rely primarily on crypto collateral or algorithmic mechanisms have shown repeated instability in the past. They are therefore generally not suitable for conservative corporate euro payments. In practice the decisive factors are transparency reports, attestations and audit frequency plus a solid proof‑of‑reserves regime.

Value Stability in Day‑to‑Day Operations

From a corporate perspective the key is how value stability plays out in daily operations. Three questions matter: which assets back the tokens, how issuance and redemption are processed, and how these steps are recorded in accounting. Reserves may consist of cash, bank deposits and very short‑term securities; investment and risk policies define what is allowed.

On‑ and off‑ramp providers connect stablecoins to the banking world. Incoming payments from the corporate account create new tokens; payouts burn tokens and pay back euro. In between, transfers run on the chosen infrastructure – either on an open “permissionless” network or on a permissioned platform. The crucial point is that inflows and outflows align in time, accounting and documentation.

Where Does the Corporate Value Come From?

Benefits are clearest in cross‑border payments. Classic international transfers pass through multiple correspondent banks (Nostro/Vostro accounts) and time zones. Stablecoins reduce such intermediaries and can improve settlement timing, cost and traceability – in some setups down to same‑day finality (T+0).

A second dimension is process proximity: ERP events – such as goods receipt, acceptance protocols, milestone approvals or review flags – can be linked directly to payment releases. Payment thus becomes part of the control system rather than a disturbance to it. All‑in costs become easier to compare, as network fees, provider charges and FX spreads are visible and can be priced into contracts.

Selection Criteria for Euro Stablecoins (for Decision Makers)

Choosing a stablecoin setup is similar to selecting a new payment service provider. The following points serve as a structured checklist and can be translated directly into requirement catalogues and RfP processes:

• Legal framework and redemption: type of licence held by the issuer, classification as electronic‑money token, handling of client funds, insolvency scenarios and service levels for redemption.
• Reserve transparency: audit frequency, attestations and proof‑of‑reserves reports, disclosure of counterparties and asset buckets.
• Infrastructure: supported networks (open or permissioned), finality model, fee structure and limit logic.
• On/off‑ramps: speed and cost of pay‑in/pay‑out, cut‑off times, reporting formats and relation to IBAN accounts.
• Integration and operations: stability of APIs, webhooks, booking logic (accounts and tax), reconciliation and audit trail.

There are trade‑offs between openness (reach) and regulation (compliance simplicity). Key management and risk controls must match the chosen network and provider.

Assessing Risks and Limits Realistically

Corporates should treat stablecoins as external payment service providers and perform appropriate due diligence. Key focus areas are issuer and reserve risk, regulation and licensing, operational security (custody, roles, approvals, recovery) and process compliance – for example know‑your‑customer (KYC), anti‑money‑laundering (AML) and the Travel Rule.

Technically, network choice (fees, throughput, availability), ecosystem robustness and the ability to correct mistakes are important. These risks can be reduced significantly through careful provider selection, robust on/off‑ramps, role and limit concepts and clean audit trails.

Regulation in the EU and Germany – Key Points

MiCAR (Markets in Crypto‑Assets Regulation) essentially distinguishes between electronic‑money tokens (EMT) – typically euro stablecoins – and asset‑referenced tokens (ART). EMT may in principle only be issued by credit institutions or e‑money institutions and are subject to clear rules on redemption rights, reserves, governance and reporting.

In parallel, familiar KYC/AML rules and the Travel Rule apply to transfers between service providers. For corporates this means stablecoins operate within a clear legal framework – they require the same level of care as traditional payment service providers but sit squarely within established categories such as e‑money and payment services.

From Idea to Practice – How Companies Can Get Started

A pragmatic start is a clearly scoped use case. Typical candidates are recurring payments to the same foreign supplier, intercompany transfers between two entities or project‑related milestone payments. The goal is not to overhaul the entire payments landscape but to select a flow where benefits and risks can be measured cleanly.

The next step is choosing a suitable on/off‑ramp provider with an EU licence, ideally supporting SEPA Instant. In parallel you define a custody model: which payments run via a regulated custodian, where self‑custody makes sense, which limits apply and who approves. A key success factor is to design documentation and ERP reconciliation from the outset – for example with reference fields for invoice IDs and transaction hashes.

Why This Matters for CFOs

From a CFO perspective, stablecoins address three classic pain points: settlement timing, cost transparency and process control. Same‑day or very fast finality reduces float and improves cash forecasts. Visible all‑in costs – including FX spread – make it easier to compare bank and fintech offers. By encoding approvals, payments become part of the internal control system rather than a disturbance to month‑end closing.

Comparison: Payment Rails at a Glance

✅ Key Takeaways

• Stablecoins are primarily a payment tool – not another speculative asset.
• The greatest value lies in cross‑border flows and process‑integrated approvals.
• Issuer, reserves, regulation and custody are the key risk levers – manageable with a clean setup.
• MiCAR provides a clear framework – making euro stablecoins a tangible option for mid‑market corporates.