A new research paper from the Bank of Italy suggests that stablecoins may not offer the cost savings for international remittances that many proponents claim. The central bank's study points to exchange fees, foreign exchange spreads, and the reliance on traditional banking infrastructure as factors that can erode the potential benefits.
What the study found
The researchers analyzed the full cost chain of sending money using stablecoins. They found that converting fiat currency into a stablecoin, then back into the recipient's local currency, often incurs fees comparable to those of conventional remittance services. Foreign exchange spreads — the difference between the buy and sell price of a currency — also eat into the amount received. And because most stablecoin transactions still require bank accounts for on-ramping and off-ramping, the costs and delays of the banking system remain.
The paper does not name specific stablecoins, but the findings apply broadly to the major dollar-pegged tokens used in cross-border payments. The Bank of Italy's work adds a dose of reality to the narrative that stablecoins are a cheap alternative to services like Western Union or bank transfers.
Why the cost advantage fades
Stablecoins are often marketed as a way to bypass expensive intermediaries. In theory, sending a token directly from one digital wallet to another should cost next to nothing. But the study shows that the practical steps — buying the stablecoin, selling it, and moving money through the banking system — reintroduce many of the same costs that crypto is supposed to eliminate.
Exchange fees vary by platform but can be significant, especially for smaller amounts. Forex spreads are often wider than those offered by traditional money transfer operators. And the banking rails that connect crypto exchanges to the regular financial system add their own charges and processing times. The result, the researchers conclude, is that stablecoins are not necessarily cheaper for remittances, and in some cases may be more expensive.
The findings matter because remittances are a lifeline for millions of people in developing countries. The World Bank has long pushed for lower costs, and stablecoins were seen as a potential solution. The Bank of Italy's research suggests that the promise may be overstated, at least for now.
The study also raises questions for regulators. The European Union's Markets in Crypto-Assets regulation, known as MiCA, includes rules for stablecoin issuers. If stablecoins do not deliver on cost, policymakers may need to adjust their expectations or push for more transparency in fee structures.
What comes next
The Bank of Italy has not announced any policy changes based on the research. But the paper is likely to inform discussions at the European Central Bank and other institutions as they evaluate the role of digital currencies in the financial system. Whether stablecoin issuers can address the cost issues identified in the study will determine how much they reshape the remittance landscape.
