The Last Mile Challenge: Understanding Stablecoin conversion to Fiat ("Real" Currency)

Nov 3

<Note: a version this article first appeared in Chinese with Chaintech.co, a specialist Asian consultancy and advisory firm focused on the intersection of web3 and traditional Fintech - and where I’m senior advising partner . >

Stablecoins hold the promise to revolutionize trade payments, business to business (B2B) payments, payouts to suppliers/contractors, and treasury functions. Stablecoins, in our opinion, will not disrupt consumer (B2C) based payment models in the same manner or pace. In this article, we focus on the more pragmatic aspects of using stablecoins for cross border (international) trade payments (including payouts), highlighting the stablecoin-to-fiat conversion challenges.

Stablecoins can zip around the globe in fractions of seconds, settling million-dollar B2B transactions with unprecedented speed, transparency and cost efficiency. The stablecoin transformation offers an unprecedented change in global trade, on par with the use of credit in Babylonian times, merchant banking in the Venetian era and the use of electronic banking systems such as SWIFT in more recent history.

Though the stablecoin “train” can get you almost all the way to your destination, it is the last steps in the fund movements process which are still challenging. Welcome to the “last mile problem”—the processes and infrastructure requirements converting stablecoin to fiat currencies..

Ironically, it seems the industry has solved the hard part—creating programmable money that moves instantly across borders without correspondent banking intermediaries. But we’re still stuck on getting those digital coins converted back to fiat currencies (USD, HKD, RMB, etc.) and deposited where businesses and individuals can actually use them to make payments to their suppliers, vendors and payroll.

The Problem and The Promise: Off-Ramps Are the New Bottleneck

First, let’s define what a stablecoin is and perhaps more importantly, IS NOT. Stablecoins are tokens representing a specific value of a fiat currency, such as a U.S. dollar, euro, etc. and backed (mostly 1:1) by an issuer - which today is typically a private company. Stablecoins have been primarily issued using the Tron TRC 20 standard and the Ethereum based ERC-20 standard, and thus have the attributes of all of blockchain based tokens (“programmable” money, immutable, etc). Stablecoins are NOT printed money, in the way the U.S. government can print U.S. dollar bills.

The stablecoin ecosystem has matured dramatically over the past two years. The “stablecoin sandwich” model (fiat → stablecoin → fiat) is powering real-time settlement across incompatible regional/national financial systems. But while the middle layer—stablecoin-to-stablecoin transfers—happens seamlessly on blockchain networks, the final conversion back to traditional currency remains stuck in a tangle of regulations related to anti-money laundering, KYC and KYB processes.

“Off-ramps” is a term used to describe converting crypto and stablecoins back into fiat currency and depositing it into a recipient’s bank account or issuing it as a spendable balance (i.e. in virtual credit card account). While seemingly straightforward, this exchange layer is a complex web of compliance, custody, payment networks, and user experience that can reintroduce the same delays and costs that stablecoins were supposed to eliminate.

The Promise of Stablecoin: Cost and Efficiency

Consider the economics: a $100,000 stablecoin payment can move from New York to Singapore in under 10 minutes for roughly $20 in network fees. But converting those stablecoins to Singapore dollars and depositing them in a local bank account? That process typically takes 1-3 business days and costs 0.5-2.5% ( $200-$2,500) in conversion fees and spreads—essentially reintroducing much of the inefficiencies that blockchain technology was designed to eliminate.

The problem becomes more acute in emerging markets where stablecoin demand is highest. Stablecoin usage in Argentina eclipsed Bitcoin in 2025, with stablecoins accounting for up to 60% of crypto transactions there—driven by high inflation and trust in dollar-pegged assets. But Argentinians holding USDC still face significant hurdles converting those digital dollars to Argentinian pesos they can spend at local merchants.

Why the Last Mile Remains Challenging

The off-ramp problem isn’t technical—it’s structural. Stablecoins operate on decentralized networks that run 24/7/365, but they ultimately need to interface with traditional banking systems that operate on business days, maintain fractional reserves, and navigate complex regulatory frameworks that vary by country and/or regional jurisdiction.

Banking Partnership Dependencies

Every stablecoin off-ramp ultimately requires partnerships with traditional financial institutions. When you convert USDC to Hong Kong dollars in your bank account, that transaction flows through correspondent banking networks, automated clearing house (ACH) systems, or wire transfer protocols that haven’t fundamentally changed in decades.

Converting stablecoins to fiat through OTCs or liquidity providers adds extra fees, compliance steps, and funding delays. Each intermediary in the conversion process—cryptocurrency exchanges, payment processors, correspondent banks—adds their own fees, compliance requirements, and processing delays.

The result is a system where the final 1% of the transaction journey accounts for 80% of the time and 60% of the total cost. Imagine being on a jet airplane for 80% of your journey, then transitioning to a propeller driven biplane from the early 20th century for the rest of your flight!

Regulatory Compliance Friction

Off-ramps face regulatory requirements that on-chain stablecoin transfers avoid. Know Your Customer (KYC) verification, Anti-Money Laundering (AML) monitoring, and suspicious activity reporting all happen at the fiat conversion layer, not during stablecoin-to-stablecoin transfers.

These compliance requirements create operational bottlenecks that blockchain technology can’t solve. A stablecoin transaction might settle on-chain in seconds, but the compliance review for converting those funds to fiat can take hours or days, especially for larger amounts or recipients in higher-risk jurisdictions.

Geographic Infrastructure Gaps

The off-ramp infrastructure is unevenly distributed globally, with developed markets enjoying multiple competitive options while emerging markets—often where stablecoin demand is highest—face limited choices and higher costs.

In the United States and European Union, businesses can choose from dozens of institutional-grade off-ramp providers with competitive rates and next-day settlement. But a business in Nigeria, Kenya, or Vietnam might have access to only one or two off-ramp options, often with higher fees and longer processing times.

Managing Stablecoin Payments: Real-World Off-Ramp Friction

Industry feedback from finance teams over the past year reveals challenges with the gap between stablecoin marketing promises and off-ramp reality. The operational challenges go beyond simple cost and time metrics.

Treasury Management

Corporate treasurers who’ve adopted stablecoins for cross-border payments report that off-ramp planning has become a critical part of their cash flow management. Unlike traditional wire transfers where funds availability is predictable, stablecoin-to-fiat conversion timing can vary significantly based on bank processing schedules, compliance reviews, and local payment network operating hours.

A manufacturing company paying suppliers in Singapore might send stablecoins that arrive instantly, but the supplier’s ability to convert those stablecoins to SGD and access the funds can take 2-4 business days—not significantly faster than traditional international wire transfers.

Working Capital Impact

The off-ramp delays create working capital challenges that partially offset the efficiency gains from stablecoin payments. Businesses receiving stablecoin payments often need to maintain larger cash buffers to account for conversion timing uncertainty, essentially holding two sets of reserves: stablecoins waiting for conversion and fiat for immediate operational needs.

Small and medium-sized businesses face this challenge most acutely. A $10 million company might lack the treasury management sophistication to optimize stablecoin-to-fiat conversion timing, resulting in either cash shortages when conversions are delayed or excess cash holdings when conversions happen faster than expected.

Operational Complexity

Finance teams report that managing stablecoin off-ramps requires new operational procedures that many organizations aren’t prepared for. Unlike traditional bank transfers that can be monitored through established banking relationships, stablecoin conversions often involve multiple service providers: custody platforms, conversion services, and traditional banks.

The reconciliation process becomes significantly more complex when payments involve stablecoin-to-fiat conversion. Treasury teams need to track on-chain transactions, off-ramp processing status, and traditional banking settlement—often across different platforms and time zones.

The Next Chapter in Stablecoins: Smoothing Out the Off Ramp

Though the last mile problem represents a significant barrier to adoption, participants in the stablecoin ecosystem are focusing on various solutions to these challenges. We can break down the industry’s responses to overcoming the “last mile problem” in the following ways:

Technological and Business Model Solutions
Banking Partnerships and Integrations
Regulatory Evolution

Technological and Business Model Solutions

The first way in which the stablecoin ecosystem is responding to the challenges of the “off ramp” problem is by integrating into enterprise ERP and Finance platforms, and potentially creating a “stablecoin” network.

Enterprise-Grade Off-Ramp Solutions

Solution providers building institutional-grade off-ramp infrastructure that integrate with existing treasury management systems represent some of the most attractive opportunities in the stablecoin ecosystem.

The key is building solutions that don’t just convert stablecoins to fiat, but integrate that conversion seamlessly into existing business processes. Treasury teams need APIs that work with their ERP systems, predictable conversion timing, and the ability to schedule conversions to optimize cash flow management.

Integrations for KYC + KYB

Stablecoin solution providers such as BVNK are providing more seamless approaches to conducting KYC and KYB on behalf of their customers and partners. Customers for example who need to do payouts such as a global outsourcing HR platform, can use APIs to help facilitate the collection and processing of necessary compliance information from end recipients, reducing friction for stablecoin

Scheduled Conversion Strategies

Rather than immediate conversion, successful stablecoin adoption might involve batch processing strategies where businesses accumulate stablecoin payments and convert to fiat on optimized schedules. This approach treats off-ramp conversion as a treasury management function rather than a transaction processing requirement.

Companies could maintain stablecoin operating balances for day-to-day international payments while converting to fiat on weekly or monthly cycles when compliance processing and bank settlement timing can be optimized for cost and predictability.

Closed-Loop Solutions

Closed-Loop solutions represent one of the most promising approaches to dealing with the last mile solution. In effect, the closed loop solution is a stablecoin “network”, and settlement to fiat is minimized. In this model, stablecoin recipients can use stablecoins directly rather than converting to fiat. Corporate payments between businesses that both maintain stablecoin treasury capabilities can avoid off-ramp friction entirely.

Supply chain finance applications that keep funds in stablecoin form throughout the transaction lifecycle—from purchase order financing through final payment—eliminate conversion friction while maintaining the efficiency benefits of blockchain settlement.

Banking Industry Response

Traditional banks aren’t ignoring stablecoin adoption—they’re actively developing their own solutions. A number of major banks and payment brands have signed partnerships to adopt stablecoins into cross-border focused offerings in recent months.

As banks develop native stablecoin capabilities, they may eliminate the off-ramp problem for their existing commercial customers by providing seamless conversion within established banking relationships. This could reduce the market opportunity for independent off-ramp providers while making stablecoin adoption more accessible to mainstream businesses.

Technology Integration Cycles

The timeline for off-ramp infrastructure improvement depends on integration cycles within traditional banking systems that operate on multi-year upgrade schedules. Even when technical solutions are available, implementation requires coordination with legacy banking infrastructure that changes slowly.

The most successful off-ramp solutions may be those that can integrate with existing banking technology rather than requiring banks to adopt entirely new systems. This suggests that near-term opportunities favor companies that can work within current banking infrastructure constraints rather than those building entirely new paradigms.

Corporate customers want stablecoin efficiency without abandoning their existing banking relationships. The winning approaches will offer stablecoin-to-fiat conversion through familiar banking interfaces, maintaining the relationship management and credit facilities that come with traditional commercial banking while adding the efficiency of blockchain settlement.

Regulatory Evolution

The regulatory framework for stablecoins, and by definition the governance of conversion is evolving rapidly. The main objective of the recent regulatory frameworks is providing clarity to the definition of: stablecoins as a participant in the financial system, who or what can be a stablecoin provider, and ensuring liquidity (reserve) requirements of stablecoins.

Recent examples of significant regulatory evolution and clarity:

U.S. The GENIUS Act provided regulatory clarity for stablecoin issuance, but off-ramp regulation remains fragmented across jurisdictions and financial service categories. Changes to money transmission requirements, foreign exchange regulations, or banking partnership rules could significantly impact the economics of off-ramp infrastructure.

E.U. The EU’s Markets in Crypto-Assets (MiCA) regulation is one of the most comprehensive frameworks globally. It was designed to create a unified and predictable legal environment for all 27 member states.

Japan. Through its Payment Services Act Amendments, Japan has established itself as a leader in creating a clear regulatory framework for stablecoins, positioning itself as a hub for digital innovation while prioritizing consumer protection. Amendments to the Payment Services Act clarify requirements for issuing stablecoins and maintenance of reserves.

United Arab Emirates (UAE). As a global financial hub, the UAE has developed a specialized framework for digital assets, including stablecoins. The central bank’s approach is designed to maintain monetary sovereignty while promoting innovation. Specifically the UAE’s Payment Token Services Regulation provides clear guidelines on who can issue and use stablecoins. It aims to ensure consumer protection and financial stability by requiring strict oversight

As more and more regulatory agencies in various countries evolve their response to stablecoin use cases, we can expect greater acceleration and adoption on a global scale.

What We Expect in the Next 24 Months

Banking Integration Deepens

Traditional banks will increasingly offer native stablecoin services to commercial customers, reducing off-ramp friction for businesses that maintain established banking relationships. However, this integration may come with relationship requirements and minimum balance thresholds that limit access for smaller businesses. In essence banks may have their own “closed loop” network.

The result could be a two-tiered system where large corporations with strong banking relationships enjoy seamless stablecoin-to-fiat conversion, while smaller businesses continue to rely on independent off-ramp providers with higher costs and longer processing times.

Operational Standardization

Off-ramp processes will become more standardized and predictable, enabling better treasury management planning. While conversion may not become instant, businesses will gain better visibility into timing and costs, allowing for more effective cash flow management.

API integration between off-ramp providers and enterprise treasury management systems will improve, reducing the operational complexity that currently limits stablecoin adoption among businesses that lack sophisticated finance teams.

Geographic Expansion

Off-ramp infrastructure will expand to serve more markets, with particularly strong growth in Latin America, Southeast Asia, and parts of Africa where stablecoin demand is highest. However, the quality and cost of off-ramp services will continue to vary significantly by jurisdiction.

Developed markets will achieve near-parity between stablecoin transfer speed and fiat conversion timing, but emerging markets may continue to face 1-3 day conversion delays and higher fees that limit the full efficiency benefits of stablecoin payments.

European businesses in 2025 have multiple options to off-ramp USDT, USDC, and DAI, with providers like FinchTrade, Binance, Bitstamp, and BCB Group. Likewise, the U.S. has a number of options for stablecoin users.

But businesses in Latin America, Southeast Asia, and Africa seemingly encounter more limited options. Stablecoin solution providers that can navigate the regulatory complexities and banking relationships required to provide reliable off-ramp services in these markets could capture significant market share as stablecoin adoption accelerates.

Improving Unit Economics and Transparency from Crypto-Exchanges / Wallets

As in the early days of many Fintech innovations, costs are initially high and processes are not transparent. Solution platforms have yet to achieve significant scale and choices for users may be limited. We expect that as stablecoin payments become more widespread, we will see declining costs for “conversion” FX and more enterprise / business oriented commercial pricing.

The Bottom Line: Managing Around the Constraint

The last mile problem isn’t going away—it’s a permanent feature of the interface between decentralized and traditional finance. But rather than preventing stablecoin adoption, it’s creating opportunities for businesses that can design their operations around the constraint while capturing the efficiency benefits where they’re most compelling.

The most successful stablecoin applications over the next several years will be those that maximize on-chain efficiency while minimizing off-ramp dependency. This means focusing on use cases where recipients can either use stablecoins directly or where batch conversion strategies can optimize the fiat conversion process..

What to Watch For

Banking integration announcements from major commercial banks, regulatory guidance on off-ramp compliance requirements, and whether closed-loop business networks can achieve sufficient scale to reduce off-ramp dependency.

The revolution in international payments is real, but it ends at your local bank branch. And that’s exactly why smart businesses are learning to work with that constraint rather than waiting for it to disappear.

Are you experiencing off-ramp challenges in your business operations? Have you found effective workarounds for the last mile problem, or do you think infrastructure improvements will solve this faster than we anticipate? Reply and tell us what you have learned!

Sources:

banking partnerships stablecoin off-ramp fees delays 2025

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