SoFi Tie-up Shows Stablecoins Can Provide Alternative Blockchain Settlement Rail
Reported by Cointelegraph · AI-assisted summary by ChikoCorp AI News Desk
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Summary
SoFi has begun using its SoFiUSD stablecoin to settle debit and credit card transactions with Mastercard, marking a shift toward blockchain-based settlement rails for payments. The bank expects to migrate its entire card program, processing over $25 billion annually, to this system. This approach replaces traditional banking rails in settlement but maintains the involvement of existing intermediaries like Visa, Mastercard, and banks.
Why it matters
This development highlights how stablecoins can enable faster, 24/7 settlement behind existing card networks without changing consumers’ payment experiences. It signals that blockchain can complement rather than displace traditional payment rails. However, the source notes that the economic advantages of faster settlement do not automatically lead to cheaper payments due to other associated costs.
Key context
SoFi’s move follows similar blockchain settlement initiatives, such as Visa’s stablecoin settlement pilot which reached a $7 billion annualized run rate supporting nine blockchains. Federal Reserve researchers have commented that stablecoins might alter payment economics without removing banks from transactions. Experts emphasize that while stablecoins facilitate quicker value transfer across balance sheets, final payments especially in emerging markets still depend on local currency liquidity and banking access.
Key numbers and entities
SoFi, Mastercard, Visa, Gravity Team (Martins Benkitis), Truth Ventures (Varun Datta), Federal Reserve researchers, and stablecoins including SoFiUSD. SoFi expects $25 billion in annualized card volume on its stablecoin system. Visa’s stablecoin settlement pilot reached $7 billion annualized run rate.
What remains unclear
The source does not provide detailed cost comparisons to confirm when or if stablecoin-based settlement lowers end-to-end payment expenses. It also leaves open how scalable or widespread the adoption of onchain settlement rails will become beyond early pilots. The intricacies of integration, compliance, and stablecoin management remain to be demonstrated at scale.