Stablecoin sandwich trust layer gap slows institutional payment adoption
PYMNTS says stablecoin cross-border payments can move value fast, but compliance and governance controls still lag settlement speed.
By Rafael Ortiz · Fintech Correspondent
· 3 min read
The stablecoin sandwich trust layer problem is becoming a constraint on institutional use of digital currencies for cross-border payments, according to PYMNTS. PYMNTS Intelligence data from its 2026 Certainty Project found that 13% of middle-market companies use stablecoins, while 5% use other cryptocurrencies, underscoring continued caution among corporate finance teams.
The stablecoin sandwich describes a payment structure in which fiat money enters through the regulated financial system, is converted into a stablecoin, moves across a blockchain network, and is exchanged back into local currency at the destination. In that model, banks and local fiat systems form the outer layers, while stablecoins provide the settlement layer between them.
PYMNTS said the model can reduce friction in the movement of funds, but does not resolve the full set of obligations attached to regulated payments. Institutions still need to know who initiated a transfer, who received it, whether both parties were permitted to transact, and whether the payment’s purpose is lawful in each jurisdiction involved.
Why does the stablecoin sandwich need a trust layer?
A blockchain can confirm that a transaction has taken place, but PYMNTS said it does not establish whether the transaction should have been allowed. A trust layer refers to the governance, identity, compliance and information-sharing mechanisms that allow participants to rely on each other’s checks across the full payment chain.
That distinction becomes more significant as stablecoin use shifts from crypto-native activity toward institutional finance. A payment may settle on-chain while banks, payment firms and corporate users still face open questions about who screened the sender, who verified the recipient, which standards were applied and whether another party’s controls can be relied upon.
PYMNTS said stablecoin-based cross-border payments can divide responsibilities among banks, stablecoin issuers, exchanges, payment processors, wallet providers, liquidity partners and local payout firms. In a transaction between a company in one jurisdiction and a supplier in another, one regulated provider may handle onboarding and conversion into stablecoins, while another manages conversion into local currency and payout.
Even where each firm conducts customer due diligence, the chain may still lack a shared view of beneficial ownership checks, sanctions screening, transaction monitoring and changes to customer information after onboarding. PYMNTS said suspicious activity may also be harder to assess if warning signs are visible only when both sides of a payment are considered together.
What industry executives say about stablecoin payment rails
Mastercard Executive Vice President of Blockchain and Digital Assets Raj Dhamodharan told PYMNTS that stablecoins can be viewed as payment rails. “Each stablecoin can be thought of as a global ACH (automated clearing house), where the consumer doesn’t see the complexity,” he said.
Dhamodharan added that the technology is powerful, but not enough on its own. “To unlock the full value, really that orchestration needs to be provided,” he told PYMNTS.
Citi Global Head of Digital Assets, Treasury and Trade Solutions Ryan Rugg told PYMNTS’ “From the Block” podcast that the current phase recalls earlier payment innovation. She said early digital payment companies were once expected by some observers to displace banks, but later operated on bank infrastructure.
Rugg said reducing reliance on intermediaries may improve speed and fiat settlement, while regulators and market participants still need clarity on how new accounts work, how they are supervised and how operations function. “The big thing is same risk, same activity, same regulation,” she said.
PYMNTS said the next test for stablecoin payments is not additional settlement speed, liquidity or blockchain capacity, but interoperability in compliance and governance. Without a coordinated trust layer, the model may continue to develop by corridor and provider rather than as a unified institutional network.
This story draws on original reporting from PYMNTS.
