The evolution of crypto payments and what lies ahead

Opinion by: Arthur Azizov, CEO of B2BinPay

Much has changed in the crypto world and, therefore, crypto payments in the past five years. In the past, crypto’s reputation was often marred by the behavior of bad actors, but the ecosystem has progressed. Nowadays, crypto is more accepted, and the perception of it is increasingly positive. 

This evolution has changed how users and businesses interact with digital currencies. People increasingly recognize how practical and convenient they are for everyday transactions. Even the mayor of Cannes shared that the city plans to provide local merchants access to cryptocurrency payment systems.

As a result of all this progress, the use of crypto and stablecoins, particularly Tether’s USDt (USDT) and Circle’s USD Coin (USDC), is increasing quickly. For example, stablecoins hit a record $187.5 billion in total supply, with transaction and trading volumes surging by 30%-40% in 2024. We still, however, have a long way to go.

Then and now

In 2017, crypto payments were a niche but growing area, and transactions often relied on Bitcoin and Ethereum. Interestingly, some may remember that USDT was initially issued on the Bitcoin blockchain. That made transactions slow and inconvenient, and as a result, Ethereum became a more practical alternative for many users. 

Even though stablecoin transactions became more convenient later, concerns about centralization and the issuer’s ability to freeze wallets remained. That is why many users went toward decentralized assets like Bitcoin (BTC) and Ether (ETH) for peer-to-peer transfers since they could not be blocked.

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Fast-forward to today, and the payment landscape has diversified significantly. Payments have migrated to stablecoins from coins because they are faster and cheaper. With this paradigm shift, we have seen the emergence of new stablecoins, some of which are regulated. 

Ethereum’s scalability challenges led to the rise of alternatives like Tron and Solana. With its low transaction costs, Tron now processes over half of all stablecoin transactions. At the same time, Solana’s high-speed, low-cost network has become a favorite for merchants, businesses, decentralized finance and decentralized exchanges. More recently, TON also emerged as a major player, with millions of users leveraging USDT on the blockchain.

Regulation: catalyst or roadblock?

Over the last five years, we have seen increasing regulatory scrutiny. The journey? Quite confusing. It shows the resilience and, at the same time, adaptability of the crypto sector in the face of regulatory uncertainty. Let’s see how. 

In Europe, Markets in Crypto-Assets (MiCA) represents a landmark attempt to create a unified regulatory framework. While its provisions for stablecoins officially took effect in mid-2024, implementation has been slow. Prominent exchanges such as Kraken have yet to fully adapt to these new requirements. 

On the one hand, regulations have encouraged the entry of new players and businesses willing to operate within clear rules. On the other hand, the reluctance of central banks to allow traditional banks to work with crypto companies has stifled broader adoption. 

For example, despite the existence of virtual asset service providers (VASPs) in Europe since 2018, central banks have hesitated to grant licenses to financial institutions for servicing crypto firms. This gap has forced most crypto companies to rely on e-money institutions and payment agents rather than traditional banking services.

The approach has been more nuanced in regions like the United Arab Emirates and the United States. The UAE’s central bank recently approved a local stablecoin, showing a willingness to embrace innovation. Meanwhile, the US remains a leader in transaction volumes despite lacking comprehensive federal crypto regulations. 

The future of crypto payments

Stablecoins will continue to play a fundamental role in crypto payments. With the growing adoption of blockchain technology, we can expect stablecoins pegged to local currencies to emerge in more regions. Even if some recent experiences have not succeeded — such as with stablecoins pegged to the euro — as the number of users worldwide grows, the need for a peg to a local currency will also increase.

Many companies have taken note of the success of Tether and Circle. Their model is simple: Deposit dollars — say $120 billion — into US Treasury repurchase agreements, earning around 5% annually. For example, $100 billion at 5% generates $5 billion in revenue. This has, of course, sparked interest from others and will continue to attract more new players.

Central bank digital currencies (CBDCs) will also influence the market. They share characteristics similar to stablecoins and could drive the adoption of digital payment systems. Their centralized nature may lead users to favor decentralized stablecoins for privacy and autonomy. At the same time, some people might like them. There’s a reason Ripple is so well known, right?

Another trend to watch is the growing integration of crypto payments into traditional payment networks. We have already seen companies like Visa and Mastercard begin collaborating with crypto firms. These partnerships aim to provide users with crypto-backed cards, making spending digital assets in everyday transactions much more straightforward.

Nowadays, more and more people see why we need crypto. Governments and giant institutions openly recognize it and are boosting its adoption. As we move forward, the industry will continue to adapt, offering faster, cheaper, more secure payment options. In this landscape, stablecoins will remain at the forefront and provide a foundation for new applications and integrations.

Opinion by: Arthur Azizov, CEO of B2BinPay

This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.