Stablecoins will disrupt the $900 billion remittance market—sparking a battle between crypto firms and legacy brands like Western Union

Workers worldwide send roughly $900 billion annually to their families in home countries, and the market for facilitating those transfers is now wide open. The driver is the recent surge in stablecoins—digital assets that offer a simple way to move money across borders at a far lower cost than legacy transfer systems, whose fees can hit as high as 6%.

Stablecoins, which are backed by reserves designed to peg their value to a fiat currency like the dollar, were long used only by experienced crypto traders. Today, millions of ordinary people are also using them via digital wallets. This raises an intriguing business question: Which companies are best positioned to capitalize on the new stablecoin trend?

Will it be legacy remittance players, like [redacted] or [redacted]? Or will it be crypto-native firms, such as Kraken or [redacted], or instead PayPal or one of the growing number of fintechs entering the stablecoin space?

While the emerging stablecoin industry is ripe for the taking, experts say both legacy remittance providers and newer entrants have their own unique set of advantages and challenges. 

A broken remittances system 

Cross-border money transfers come with steep fees. The World Bank found in a report earlier this year that the average fee for sending remittances [text missing]. That cost can be grating over time—especially for low-income immigrants sending money back to developing countries. 

“People are spending extraordinary sums to send money abroad,” said Yesha Yadav, a law professor at Vanderbilt University who specializes in financial regulation. “This impacts how much the most cash-strapped and vulnerable people have in their pocket because some middle person is taking money for no good reason.”

This is where stablecoins could step in. Thanks to blockchain technology, these digital tokens can make international payments faster and cheaper. The International Monetary Fund recently published a [report missing] about how this digital currency could improve payments and global finance. 

Stablecoins have also become a priority in the financial world since President Donald Trump [action missing] in July. The legislation established a regulatory framework for the digital currency. Since then, major remittance players like [redacted] and [redacted] have developed their stablecoin offerings. 

The case for and against incumbents

For widespread adoption of stablecoins in remittances, traditional players like Western Union have the advantage of an existing global customer base. These companies already have established regulatory compliance in different countries—according to Nate Svensson, a senior equity research analyst at [firm missing], who notes that a company like Western Union has built international compliance over decades, if not centuries. 

“I think [Western Union] has a lot of built in advantages relative to these nascent crypto players,” he said. 

Another analyst, Brett Horn from Morningstar, likewise suggested traditional remittance brands may hold the edge in the race, citing their long history with clients. When asked about crypto startups that solely focus on remittances using stablecoins, he said: “A lot of times it sounds really good, but I think, frankly, [these startups] are waving away some real difficulties that they might have.”

On the other hand, crypto-native companies have an advantage in their familiarity with the technology and their ability to be nimble. Legacy firms like Western Union, by contrast, may struggle to move away from long-standing business practices that both the company and its customers know well. When they incorporate stablecoin transfers for remittances alongside their existing fiat system, they essentially have two parts of their business competing against each other. 

“They’re competing with themselves, and that’s just a natural disincentive for things to change,” said Jessica Wachter, a professor of finance at The Wharton School, about legacy remittance players. “A startup would be basically all in on [stablecoins], whereas I’m not sure a [Western Union] would be all in on it.”

Besides legacy financial institutions and crypto startups, another group is vying to win this fight: bigger crypto companies. Kraken, for example, has an app where users can send and receive funds across more than a hundred countries. 

Regulation for this digital currency is still relatively new—the Genius Act was only signed into law in July—and the technology is still in its early stages. Yesha Yadav, the Vanderbilt law professor, thinks stablecoins will become even more popular this year as their consumer protection rules get firmed up.

“I think stablecoins have an enormous runway to expand their footprint,” she said.