Stablecoins: One locomotive on the rails of modern money

Stablecoins are moving. They are powering remittances, showing up in wallets, earning yield, and now even being issued by forward-thinking credit unions. Stablecoins are not the entire train, just one of many locomotives running on the DeFi rails, but they are already tugging at (and threatening) the business models of payments providers, merchants, and yes, traditional financial institutions just like yours. If you think this is still a niche experiment, you may need to start paying better attention.

Let’s start with the obvious: stablecoin adoption is way past the theoretical use-case phase. Major global brands are putting real products in front of hundreds of millions of people. (And, last I checked, ‘hundreds of millions’ might be a ‘little bit more’ than the number of members you have at your local FI.)

MoneyGram is rolling out a USDC wallet in Colombia so people can receive remittances without lining up for cash. This is not just about convenience. The Colombian peso has lost more than 12 percent of its value this year. Families receiving dollars from abroad can now keep those remittances in a stable asset instead of watching them evaporate in local currency (which, for those of you who have followed Paypal for any length of time, you’ll know this was the one of the original goals of the payment monolith). This matters even more today as global remittance flows topped over $900 billion in 2024 and the average cost of sending those remittances was 6.5%. If stablecoins can shave even a couple of points off those fees (and they can), that is billions of dollars back in the hands of households.

PayPal is going further. Starting this summer, balances of its PYUSD stablecoin in PayPal and Venmo will earn 3.7 percent. That is daily accrual, monthly payout, right inside the apps millions of people already use. The pitch is simple: why leave money in a non-interest-bearing checking account when you can earn yield on a dollar-pegged token that also spends like cash? Especially when many credit union share or certificate rates hover closer to 3 percent, and even the best high-yield savings accounts only top out around 5 percent.

Square, or Block if you prefer, is enabling Bitcoin payments for its merchant base. Four million sellers will be able to accept Bitcoin via the Lightning Network by 2026. Merchants can keep the Bitcoin if they want exposure, or convert immediately to fiat. Either way, Square has quietly built crypto payments into its point-of-sale stack. For context, U.S. merchants today pay between 1.5 and 3.5 percent on every credit card sale, with interchange alone averaging 1.8 percent and making up as much as 90 percent of total processing costs. If Lightning or stablecoin rails offer cheaper settlement, merchants will pay attention.

On the credit union side, Metallicus and DaLand CUSO have teamed up to build infrastructure that lets credit unions issue and integrate their own stablecoins. This is not a flashy overlay app. It is core-integrated plumbing that connects digital assets to existing core systems, with compliance, KYC, and settlement included.

And St. Cloud Financial Credit Union is actually doing it. They announced plans to launch the first U.S. credit union-issued stablecoin, the Cloud Dollar (CLDUSD), by the end of 2025. It will run on this DaLand-Metallicus stack and be fully embedded in their core. The vision is member-to-member payments, merchant acceptance, and institution-to-institution transfers without money leaking out through third-party networks.

If you are a retailer or merchant, this is not background noise. Stablecoins and crypto rails are becoming a path to faster settlement and lower costs. A remittance that clears in seconds and lands as USDC is worth more than one that takes days and loses value to inflation or fees. A merchant payment that arrives via Lightning or as CLDUSD could bypass interchange entirely.

Square’s Lightning rollout alone puts pressure on card networks. If even a fraction of sellers shift volume to crypto rails, fee compression follows. PayPal is openly paying users to hold balances in their ecosystem. That is money that used to sit in deposit accounts, moving seamlessly into a tokenized wallet. Merchants do not have to love crypto ideology to appreciate the math of faster, cheaper, and in some cases incentivized transactions.

Stablecoins do not just skim transactions off the top. They redirect deposits. If members can hold digital dollars in a wallet that pays yield or connects directly to merchant networks, why would they keep idle cash in a share draft account? That erosion is already happening in the form of deposits drifting to exchanges, fintechs, or digital wallets.

For credit unions, the threat is obvious. Fewer deposits means less lending capacity. Lower interchange means one less non-interest income stream. But the opportunity is just as clear. Credit unions are in a unique position to issue institution-branded stablecoins, integrated with their core, and backed by the trust members already extend to their CU. Done well, this keeps deposits on platform while extending utility to members who increasingly expect digital asset functionality.

St. Cloud is showing it can be done. They are not pretending to be a fintech startup. They are building Cloud Dollar with compliance and infrastructure in mind. It is designed for member use, institution oversight, and long-term viability. Credit unions watching from the sidelines will have to decide how long they want to sit out while others take the lead.

Here is where some caution is needed. Stablecoins are powerful, but they are not the whole system. They sit on rails that require real infrastructure: compliance, custody, identity, liquidity, and integration. Launching a token without those rails is a gimmick.

The real work is in building tracks that can handle scale. That means designing with regulatory frameworks in mind, embedding risk controls, providing seamless user experiences, and maintaining transparent reserves. Without those fundamentals, a stablecoin launch is just another shiny object destined to derail.

And let’s not forget, stablecoins are only one locomotive. Bitcoin has integration with Lightning rails. Tokenized treasuries are rolling out on FedNow and other non-traditional networks. Hundreds of other digital asset locomotives will continue follow. The point is not to pick the prettiest train. The point is to invest in the rails so multiple engines can run safely and members, and the economy at large, can actually benefit from the new network.

For institutions serious about exploring this, here are a few areas on which to focus:

Stablecoins aren’t hypothetical; MoneyGram, PayPal, Square, and even credit unions are rolling them out. They will impact deposits, interchange, and member expectations. They are one locomotive on the crypto rails, but one with enough momentum to pull parts of the financial industry forward whether we are ready or not.

Credit union leaders, will you wait to hop on board tomorrow? There are risks there, and we can appreciate that. But what might be worse . . . will you ignore the train entirely and continue to allow the deposits and transactions to continue to bleed away? Digital assets are here. Stablecoins are here. The rails have been laid. The question is whether you want to own part of the track or keep paying tolls to ride someone else’s.

Let’s talk.