The "Silent Wall" of the Stablecoin Revolution: Grand Narratives Collide with Real Resistance

Author: losingle Source: X, @losingle

I have read Teacher Rickawsb's "The 'Genius Act' and the New East India Company: How Dollar Stablecoins Will Challenge the Existing Fiat Currency System and National Forms." In the grand narrative about the 'Genius Act' and the 'New East India Company,' a future driven by dollar stablecoins that disrupts the global financial order is vividly depicted. It predicts a global 'currency tsunami' that will end the central banks of weak nations and deliver a dimensionality reduction blow to closed systems through an open financial network. Personally, I remain calm; when we shift our gaze from the exciting predictions back to the cold reality, we find that this revolutionary tide is crashing against a 'silent wall' built by vested interests, global regulations, and national sovereignty.

Act One: The Real Obstacles Encountered by Grand Narratives

Despite legislative breakthroughs like the "Genius Act" providing unprecedented legitimacy for stablecoins in the United States, leveraging network effects to accelerate global adoption remains fraught with challenges.

1. The Solid Fortress of Traditional Finance

The "old players" of the current global cross-border payment system—bank alliances centered around SWIFT and correspondent banking—are not passive victims. They are the staunchest defenders of their own system because their business model is precisely built on "inefficiency" and "friction."

Profit is friction: The high fees of traditional wire transfers, the opaque exchange rate spreads, and the interest income from funds in transit are the profit cornerstones of banks' cross-border business. A stablecoin system that operates 24/7 with nearly zero costs is akin to revolutionizing one's own existence.

Defensive Innovation: In the face of threats, established players choose "improvement" rather than "revolution." Whether it is SWIFT's GPI service aimed at enhancing efficiency or JPM Coin operating on JPMorgan's internal network, their essence is to absorb the advantages of new technologies to strengthen their own moats, keeping disruptive forces within a controllable "walled garden" rather than embracing a "permissionless" public network.

Trust and Compliance Barriers: The institutional trust built over decades, along with the costly global Anti-Money Laundering (AML) and Counter-Terrorism Financing (CFT) compliance systems, represent the strongest barriers of traditional finance. Any new player wishing to enter must overcome this high wall constructed of history and regulations.

2. The Labyrinth of Global Regulation and the "Last Mile" Dilemma

Stablecoin issuers hold the "license" issued by the United States, but they find that the world map is not a smooth path, but rather a complex maze composed of numerous independent jurisdictions.

Fragmentation of licenses: A license from the United States does not equal a global passport. To conduct business in Europe, Asia, and Africa, publishers must conquer dozens of different regulatory systems, such as the EU's MiCA regulations, the Monetary Authority of Singapore, and the Financial Services Agency of Japan, one by one, which is a long and costly journey.

The lifeline of the "last mile": The value of stablecoins ultimately depends on whether they can be freely exchanged with local fiat currency. However, the on-ramp/off-ramp channels for this "last mile" are firmly controlled by local banks in various countries. Due to risk aversion and regulatory pressure, local banks generally adopt a cautious attitude toward collaborating with cryptocurrency companies, making it difficult for stablecoins to truly penetrate the daily economic activities of the general public.

The gap between technology and the market: For the vast majority of ordinary people, understanding concepts such as private keys, Gas fees, and wallet security remains too high of a threshold. This has resulted in early adopters of stablecoins being limited to crypto-native users, specific groups seeking capital protection, and some small to medium-sized traders, and has yet to reach the broader mainstream market.

Three, Unshakeable Sovereignty Red Line

This is the most fundamental resistance. The prudence of regulators in various countries does not stem from a lack of understanding of the technology, but rather from an instinctive defense of the core power of the state.

Monetary sovereignty is the bottom line: allowing a foreign-backed digital currency to thrive in one's own country is tantamount to actively relinquishing the nation's seigniorage and independence in monetary policy, effectively handing over the lifeblood of the economy to others. This is unacceptable for any sovereign nation.

Financial stability is a red line: Regulators must prevent the risk of runs that stablecoin issuers may face, avoiding the ripple effects on their country's financial system. Therefore, the requirements for their reserves and audit transparency will only become more stringent.

Capital controls are a defense line: For many emerging markets, capital controls are an important defense line for maintaining economic stability. The almost perfect capital outflow capability of stablecoins is precisely the deepest fear of regulators, who will spare no effort to block related loopholes.

Conclusion: From "Tsunami" to "Penetration", a Long Tug-of-War

The realistic resistance determines the global adoption of stablecoins; it will not be a devastating "tsunami," but rather a long and winding "penetration war." Its path is not a comprehensive disruption in grand narratives, but rather more pragmatic and circuitous:

Starting from the gray area: In fields where regulation is ambiguous and traditional financial services are inadequate (such as P2P trading and trade settlement in high-risk areas), stablecoins will take root and sprout first with their efficiency advantages.

B2B takes precedence over B2C: Compared to changing the payment habits of billions of consumers, addressing the pain points of cross-border settlements between businesses (especially small and medium-sized enterprises) is a more direct breakthrough with less regulatory resistance.

Waiting for the emergence of variables: The future breaking point may stem from a sudden economic crisis (forcing the public to choose stablecoins for hedging), or from a tech giant with a massive user base (such as Apple or Meta) forcibly integrating compliant stablecoins into its ecosystem, thereby compelling global regulators to adapt to the new landscape.

This is a global tug-of-war about interests, power, and trust. The grand narrative points us in the right direction, but the road to the future is far more rugged and lengthy than we imagine.

Act II: The Short-term Conspiracy of Joining SWIFT

Since it is impossible to break through the city walls from the outside, the wisest strategy is to be invited into the city. For players like Circle, the optimal strategy in the short term is not to challenge SWIFT, but to deeply integrate with it. This is a clever "overt strategy," a win-win beginning.

Yield of Stablecoins: By seamlessly integrating USDC into the bank-familiar SWIFT messaging (such as based on ISO 20022 standards), Circle instantly gains: the world's largest distribution network (11,000+ financial institutions). The highest level of trust endorsement. A solution for "last mile" fiat currency exchange. This equates to finding a "VIP channel" for stablecoins to enter the mainstream financial world, addressing the issues of survival and development.

The benefits of SWIFT: In the face of challenges from blockchain, SWIFT also faces pressure to innovate. By incorporating stablecoins, a highly efficient digital asset, into its system, SWIFT can not only enhance the service capabilities of its network (such as providing near-instant settlement options) but also transform potential disruptors into collaborators within its ecosystem, solidifying its core position as a global financial information hub.

At this stage, the relationship is symbiotic. Stablecoins reach globally through the SWIFT network, while SWIFT leverages the technology of stablecoins to maintain its advancement.

Act Three: The Long-Term Vision of "Replacing SWIFT"

However, "joining" is merely a means, not an end. In the minds of the stablecoin giants, the long-term vision of "replacing" SWIFT has never waned. The essence of this game lies in utilizing the resources gained in the first phase to build a parallel universe that can ultimately surpass the old system.

The dynamic evolution of the game will unfold as follows:

Establishing native advantages: While providing traditional financial services through the SWIFT channel, Circle will vigorously develop its native, blockchain-based protocols (such as CPN). This native network will focus on showcasing its unique advantages over SWIFT: extremely high programmability (smart contracts), seamless integration with the DeFi ecosystem, and native support for emerging digital assets (RWA).

Dual-track operation, differentiated market: The market will present a dual-track parallel situation.

SWIFT Track: Serves traditional, standardized interbank large-value clearing. It is stable and compliant but lacks flexibility.

Native public chain track: Serving innovative, programmable, 24/7 uninterrupted digital financial applications. It is flexible, efficient, and represents the future.

The Transfer of Gravity: As the native public chain ecosystem continues to thrive—developers flocking in, innovative applications emerging one after another, and user experiences constantly optimizing—the market's gravitational pull will gradually shift from the SWIFT rails, which serve as a "bridge," to the native public chain rails, which serve as a "destination." When enterprises find that conducting trade financing and supply chain management through the native rails can save more costs and create more value, they will naturally migrate over.

The key to this game lies in whether stablecoin issuers can successfully convert the customers, capital, and reputation gained through "joining SWIFT" into the nutrients that nourish the growth of their native networks.

Why is "Joining SWIFT" the Optimal Solution in the Short Term?

If Circle's CPN (Cross-Chain Transfer Protocol) or a similar protocol could integrate with the SWIFT system, for example, allowing SWIFT's MT103 (single customer credit transfer) message to trigger an on-chain transfer of USDC, this would instantly solve several core pain points facing the industry:

• Instantly access the world's largest distribution network: SWIFT connects over 11,000 financial institutions in more than 200 countries and regions worldwide. Through integration, USDC no longer needs to negotiate with individual banks for cooperation, but instead instantly connects to this unparalleled global network. This addresses the previously discussed issue of "new players cannot push."
• Instantly gain the highest level of trust endorsement: For mainstream financial institutions worldwide, SWIFT is the "bible" of cross-border payments. Any solution that is compatible with SWIFT standards will automatically be labeled as "compliant," "secure," and "trustworthy." This will greatly alleviate traditional finance's doubts and fears regarding crypto assets.
• Seamlessly solving the "last mile" problem: Banks are the final gatekeepers of fiat currency inflows and outflows. If the circulation of USDC is integrated into the SWIFT workflow that banks are familiar with, they will no longer need to develop entirely new, uncertain cryptocurrency integration systems. They can handle digital dollars within the existing framework, just like they handle euros or yen. This significantly lowers the adoption threshold.
• Become a definitor of the new standard: By collaborating with SWIFT, especially within the framework of the next-generation payment standard ISO 20022, Circle can deeply participate in defining the industry standards for "how digital assets circulate through traditional financial channels." Being a standard setter means having the power to define the future rules of the game.

For the blockchain industry, this means:

• A vast amount of funds pouring in: Institutional funds will have a compliant and convenient channel to enter the on-chain world.
• Application scenarios will explode: Enterprise-level applications based on compliant stablecoins for trade financing, supply chain finance, and RWA (real-world asset) transactions will emerge in large numbers.
• Regulatory attitude softens: When cryptocurrency technology is proven to empower the existing system rather than merely disrupt it, global regulatory agencies may shift from confrontation to cooperation.

"The Long-term Vision and Short-term Dilemma of Challenging SWIFT"

The ultimate goal of CPN is undoubtedly to become a next-generation value transfer network superior to SWIFT. Its advantages are fundamental:

• 24/7 uninterrupted operation
• Nearly instant settlement
• Extremely low transaction costs
• Programmability

However, to independently build this network, we face all the obstacles we discussed earlier: applying for licenses country by country, establishing banking partnerships, educating the market, and overcoming technical bottlenecks. This is a long process that requires years or even decades, and costs astronomical amounts of capital.

Strategic Choice: The Evolution from "Plugin" to "Platform"

Therefore, the wisest strategic path is not a choice between two options, but rather a gradual evolutionary process:

Phase One: Become the Most Powerful "Plugin" in the SWIFT Ecosystem

Objective: Deep integration and seamless connection. Make USDC a new type of "digital asset" circulating within the SWIFT network.

Action: Collaborate with SWIFT to develop an interface based on the ISO 20022 standard, allowing banks to mint, burn, or transfer USDC by sending a SWIFT message.

Revenue: Gain a massive number of users, funds, and trust, completing the original accumulation of capital and market. First, survive, then seek development.

Phase Two: Establish a parallel "Native Network" and demonstrate superiority

Objective: While obtaining the market through SWIFT, vigorously develop native protocols such as CPN.

Action: Demonstrate the superiority of the native network for scenarios that SWIFT cannot meet—such as highly programmable smart contract payments, DeFi applications, and small-scale high-frequency IoT payments.

Strategy: Tell the market: "For traditional interbank remittances, you can continue to use SWIFT to call USDC; but if you want to achieve more complex, automated, and cost-effective financial logic, please connect directly to our native network."

Stage Three: The Transition from "Bridge" to "Destination"

Goal: Make the native network a mainstream choice.

Path: When the ecosystem of the native network is prosperous enough, with enough developers and applications, and a good user experience, the market's focus will naturally shift from the SWIFT channel, which acts as a "bridge", to the CPN native network, which serves as a "destination". At that time, the SWIFT channel may still exist, but it will no longer be the core.

Conclusion:

In the short term, "joining" or "integrating" into the SWIFT system is the fastest path for the blockchain industry, especially for leading players like Circle, to achieve explosive growth and gain mainstream recognition. This is not a betrayal of the ideal of decentralization, but a pragmatic strategy in the real world.

In the final stage of this century's game, SWIFT may not disappear, but its role may downgrade from being the only "highway" to one of the many "national roads" among several choices. The real value flow and financial innovation will occur in the new generation of value internet based on public chains.

The public chain has also found its precise positioning in this process. It does not aim to replace all centralized systems but serves as the ultimate arbitrator and cornerstone of trust in this game. It is that silent, reliable yet indispensable "global notary office," providing an immutable guarantee of trust for the asset circulation and final settlement between the old and new worlds.

The future of stablecoins and SWIFT is a dynamic game of competition evolving from integration. The short-term "handshake" is a pragmatic move for both sides to maximize their interests, but it precisely allows the stablecoin giants to accumulate enough strength to initiate a grander and more profound long-term competition. The outcome of this competition will redefine the underlying logic of global finance, and numerous public chains will be the most solid cornerstone of this new order.