What Is a Stablecoin Sandwich? The Future of Cross-Border Payments

A stablecoin sandwich is a cross-border payment method that leverages blockchain technology to create faster, cheaper, and more transparent international transactions. This process uses stablecoins as a middle layer for fiat-to-fiat cross-border transactions, streamlining international transfers by eliminating the slow and expensive parts of the correspondent banking system.

The stablecoin sandwich process involves three core steps that transform traditional banking inefficiencies. The process begins by converting the sender's fiat currency into a stablecoin, then transferring that stablecoin instantly to the receiving country, where it's converted back to local fiat currency.

Step 1: Fiat On-Ramp
The sender converts their local currency (such as EUR) into a stablecoin like USDC. This benefits from high local liquidity, ensuring competitive exchange rates while avoiding international banking fees.

Step 2: Blockchain Transfer
The blockchain eliminates inefficiencies of traditional banking systems, speeding up the process to mere minutes. Unlike traditional transfers, which can take several days, this step occurs almost instantaneously.

Step 3: Local Off-Ramp
The stablecoins are converted to the recipient's local currency using local liquidity providers, ensuring competitive rates without traditional correspondent banking delays.

Unlike traditional transfers, which can take several days due to bank processing times and intermediaries, stablecoin transactions are nearly instantaneous and can be completed within minutes. The World Bank reports an average cost of about 6.2-6.3% for sending $200 in 2023, far above the 3% Sustainable Development Goal, while stablecoin sandwiches typically cost a fraction of that amount.

Traditional wire transfers can take days while stablecoins settle in under an hour, reducing reliance on correspondent banks and minimizing fees and FX spreads. For businesses operating globally, this represents significant savings on international transactions.

The blockchain foundation provides unprecedented transparency in cross-border payments. Transactions are recorded immutably on-chain, allowing for real-time tracking and automated reconciliation, giving businesses complete visibility into their payment flows.

The Full Sandwich flow automates fiat-to-stablecoin conversion, ensuring seamless money movement with no manual steps while embedding compliance measures such as Travel Rule requirements and AML/Sanctions. Recipients may never know stablecoins were involved, maintaining the familiar fiat-to-fiat experience.

The Open Stablecoin Sandwich takes a different approach by eliminating automatic off-ramping, with funds remaining as stablecoins and giving recipients control over how and when to use or convert them. This model provides additional flexibility for users who want to maintain digital assets.

Cross-border payment companies are leveraging stablecoin sandwiches to expand rapidly into new markets. Companies can enter markets immediately, skip years of banking partnerships and regulatory hurdles, and start serving customers in new countries by spinning out wallets in any non-sanctioned geography.

The stablecoin integration space continues evolving as businesses recognize these efficiency gains. In Latin America, importers use stablecoins to pay Asian suppliers, with payments that used to take days now settling in minutes, reducing storage costs and customs delays.

The Federal Reserve notes increased industry focus on the stablecoin sandwich model, which has the potential to reduce the complexity of correspondent banking networks while improving transparency, cost, and timeliness. With proper regulatory frameworks emerging globally, stablecoin sandwiches represent the evolution toward truly seamless UX in international payments.

As businesses seek alternatives to expensive traditional banking rails, stablecoin sandwiches offer a practical bridge between today's fiat-dominated world and tomorrow's digital-first financial infrastructure. This innovation enables companies to access stablecoin liquidity while maintaining compliance and operational efficiency.