Harnessing stablecoins in corporate treasury

Stablecoins have evolved from an experimental technology to a tool with the potential to transform corporate treasury – removing many of the barriers to fast and cost-efficient cross-border payments. So what do Treasurers need to do to take advantage? PayPal’s Sharyn Tan and SAP Taulia’s Charles Brough share their takeaways from a recent Treasurers’ Club event.

Stablecoins and digital payments have a vital role to play in reshaping corporate treasury operations. The energy around this topic is palpable – but questions remain around how companies can use stablecoins to enhance liquidity management, improve cash visibility, and streamline cross-border transactions.

To shed light on this topic, Sharyn Tan, Head of Product Liquidity and New Products for Treasury at PayPal, joined a recent Treasurers’ Club event hosted by SAP Taulia’s Charles Brough. During the session, Sharyn shared her views on the role stablecoins can play in transforming treasury and how treasurers can future-proof their working capital strategies.

In this blog, Sharyn and Charles reflect on their key takeaways from the discussion. If you missed the session, or if you’d like a reminder of the main topics covered during the event, read on.

The big picture

A fundamental shift is underway in the world of payments. The way in which companies manage money is evolving fast – and while traditional payments aren’t going away, stablecoins are emerging as a significant force with the potential to reshape corporate payments.

As we heard during the Treasurers’ Club discussion, what’s driving this evolution is a desire for speed, transparency, and efficiency, particularly in the area of cross-border payments.

But in order to adopt new technologies, companies will first need to adapt their operational models and risk management strategies.

Stablecoins: from experimental technology to corporate tool

As we heard during the session, not all stablecoins are created equal – so it’s important for treasurers to have a clear understanding of this developing landscape.

Various stablecoins are now available, each with its own backing mechanism and regulatory status. PayPal USD (PYUSD), which is issued by Paxos Trust Company, a New York Department of Financial Services chartered limited purpose trust company, is a regulated stablecoin with one-to-one backing in US dollars and highly liquid short-term US government securities. Other examples of US dollar backed stablecoins include USDT and USDC.

We also discussed the maturing regulatory environment. Governments and regulatory bodies are moving away from outright rejection of stablecoins and are increasingly developing frameworks that enhance consumer protection, adding legitimacy for corporate adoption.

With use cases expanding beyond crypto trading, we are now seeing leading enterprises exploring how they can harness stablecoins to transform their corporate treasury operations – for example, in transactions such as large cross-border dividend payments and intercompany funding as well as paying vendor invoices.

For banks, meanwhile, stablecoins present both challenges and opportunities. On the one hand, stablecoins may play a role in reducing reliance on traditional correspondent banking – but at the same time, banks are looking at ways to integrate stablecoin capabilities and develop interoperability with digital assets.

Key learnings from the frontier

During the discussion, we talked about some of the ways that corporate treasurers can benefit from stablecoins:

• Stablecoins offer significant efficiencies: For example, they can drastically reduce settlement times from days to hours. They can also help treasurers free up working capital that’s stuck in transit – and their 24/7 transaction capabilities can overcome traditional banking cut-off times.

• Programmability features: The blockchain technology underpinning stablecoins allows for smart contracts and automation. For treasurers, this can enable precise, just-in-time liquidity management and automated payment workflows.

• On-ramping and off-ramping considerations: On-ramping and off-ramping – in other words, converting fiat currency to stablecoins and back again – are activities that rely on trusted financial partners, and are a significant source of friction.

• US dollar dominance continues…for now: On-chain volumes are overwhelmingly denominated in USD, due to the currency’s liquidity, stability, and established utility. However, other currencies and regional hubs are actively working to establish their own stablecoin ecosystems.

• The ‘wallets’ concept: During the session, we heard about a potential future in which digital wallets – rather than traditional bank accounts – become the primary means of holding and transacting digital assets, including stablecoins.

• Corporates balance sheet treatment of stablecoins is meaningful: Depending on its terms, stablecoins may meet the definition of a financial asset and be subject to different accounting frameworks. PayPal’s policy classifies PYUSD as a cash equivalent, which provides clarity over cashflow and reporting implications to use and hold it.

Taking action

So how can corporate treasury teams best leverage stablecoins? And how can they get started? We believe the following steps are key to making the most of these emerging opportunities:

1. Do your research: Before adopting stablecoins, investigate the backing, regulatory status, and specific features of any stablecoins you’re considering. As part of your due diligence, make sure you understand the accounting standards for holding stablecoins in your jurisdiction.

2. Engage with diverse stakeholders: It’s not enough to rely on your banks for information. Talk to a variety of industry players, fintechs, and other treasurers to gain a comprehensive understanding of the stablecoin landscape.

3. Educate and align your internal teams: You need to bring the relevant teams with you on this journey, so make sure you build internal knowledge across treasury, finance, legal, and compliance. This should include an understanding of what stablecoins are, how they are regulated, and their potential impact.

4. Think about usability: Solutions like SAP’s Digital Currency Hub bridge the gap between the core ERP and blockchain-based payment rails, so Treasury teams don’t have to leave their existing payments ecosystem to start using Stablecoin. This not only simplifies use but also reduces risk and helps manage compliance.
   
5. Start small with pilot programs: Identify specific high-friction or high-cost use cases – such as urgent payouts or cross-border intercompany funding – and start by running small-scale pilots. Then document the outcomes, tweak your processes as needed, and start scaling up.

6. Experiment with user experience: If possible, consider experimenting yourself with buying and selling stablecoins through available apps or platforms. This will give you a clearer understanding of the user journey and what’s needed for a positive experience.

7. Provide feedback to the industry: Once you’ve made some progress, take the time to share your experiences and pain points with banks and payment providers. Your feedback can help shape the development of stablecoin infrastructure and services.

Conclusion

The future of payments is being shaped by the developments we’re seeing today. To learn more about how your corporate treasury function can prepare for next-generation payments, check out the latest report in our CFO Perspectives series, which you can download here.