Blockchain transaction fees represented only a tiny fraction of overall costs, with exchange fees, foreign exchange spreads and local banking charges accounting for the bulk of expenses. Researchers conclude stablecoins solve the speed of moving value on-chain but have yet to eliminate the costly "last mile" between crypto and local fiat currencies. The Bank of Italy notes that stablecoins can reduce costs in specific corridors, while their always-on settlement and programmability remain meaningful advantages over legacy payment rails. For years, stablecoins have been marketed as crypto's breakthrough application for cross-border payments, promising near-instant transfers at a fraction of the cost charged by traditional remittance providers. Sending USDC across a blockchain may indeed cost only a few cents but a new study from the Bank of Italy suggests that isn't wha…

86, tracked transfers of 200 USDC from Italy to destinations including Argentina, Brazil, South Africa, the UAE and Japan. End-to-end costs varied dramatically, ranging from roughly 0.3% to almost 9% of the value transferred depending on the corridor and service providers used. Settlement times also differed widely, from around 20 minutes where domestic instant payment systems supported withdrawals to as long as two business days when recipients relied on conventional bank transfers. A central bank highlighting shortcoming in the promises that stablecoins may make is in some ways to be expected. Traditional financial (TradFi) institutions may have a vested interest in undermining adoption of stablecoins - digital tokens pegged to fiat currencies. Digital currencies and blockchain were designed to remove much of the need for intermediaries, such as central banks, after all.