The Future of Stablecoins and Payments: Evidence from Financial Markets

In March 2026, the International Monetary Fund (IMF) published a working paper titled “Stablecoins and the future of payments: Evidence from financial markets.” The paper explores market participants’ expectations regarding the role stablecoins will play in the payment sector. Using high-frequency stock price data before and after the passage of the U.S. “Genius Act,” the authors estimate that this legislation caused the market capitalization of existing listed payment firms to decline by approximately 18%, indicating that the market anticipates stablecoins will significantly intensify competition in the payments industry. This impact is more pronounced among cross-border payment companies, while firms with network effects or already involved in crypto assets are relatively protected. The study provides empirical evidence from financial markets on the prospective economic impact of stablecoins. The Institute of Financial Technology at Renmin University of China has translated this research.

Introduction

Since the release of the Bitcoin white paper, whether cryptocurrencies can be widely used for legitimate payments has been a contentious issue. The reality is that Bitcoin’s use in payments remains concentrated in illegal transactions, while supporters of stablecoins predict they will be adopted on a large scale, opponents still believe the primary function of cryptocurrencies is crime.

From an empirical perspective, assessing the potential of stablecoins in the payment sector faces three major challenges. First, the adoption of new payment technologies often relies on network effects, leading to slow initial growth, as potential users tend to wait for enough others to adopt first. Second, among stablecoin transactions recorded on the blockchain, less than 10% are between real users; the rest mainly involve bot activity or internal account rebalancing within exchanges. Third, blockchain data itself cannot reveal whether a transaction is for goods and services payment or for investment purposes.

Given these difficulties, this paper infers the prospects for stablecoins in payments by examining how financial markets value existing listed payment firms. Stock market reactions to shocks can be predictive; investors in listed payment companies must assess their future competitive environment, and their responses to news related to stablecoins reflect market expectations of stablecoins.

Theoretical Framework: How Stablecoins Affect Listed Payment Firms

If stablecoins are widely adopted in payments, they will mainly influence the future cash flows of listed payment firms through two channels. First, they will intensify competition. Public blockchains, as globally accessible ledgers, lower the barriers to providing payment services. New entrants can leverage stablecoins to offer payment services at scale, and end-users can perform peer-to-peer payments, bypassing incumbent payment firms and compressing their profits. Second, firms themselves can use stablecoins to reduce marginal payment costs. In fact, stablecoins have become a relatively inexpensive means of transferring funds; any settlement scale can be completed in less than a second at a cost of less than $0.01.

Based on these two channels, the authors propose four hypotheses. Hypothesis 1 posits that financial markets expect stablecoins to play an important role in payments, with the “intensification of competition” effect dominating; thus, policy shocks supporting stablecoin use will decrease the market value of payment firms. Hypothesis 2 suggests that cross-border payments are slower and more expensive than domestic payments, and since blockchain infrastructure supporting stablecoins is inherently borderless, firms focusing on cross-border payments will face greater competitive pressure. Hypothesis 3 argues that strong network effects benefit payment network platforms (like Visa, PayPal), providing them with a competitive shield. Hypothesis 4 predicts that payment firms early involved in blockchain technology will better seize new opportunities or respond to new competition, thus experiencing less impact.

Regarding the relationship between expectations and market prices, the authors also consider how some expectations influence the estimation results. When a policy shock is partially anticipated by the market, immediate price changes at the time of occurrence do not fully reflect the policy’s effects. Borrowing from Snowberg et al., they use prediction market data to estimate the market’s probability of policy passage, and scale the observed causal effect by the probability update to infer the full effect of the policy.

Empirical Study

This paper’s empirical focus is on U.S. Senate Bill 1582, known as the “Genius Act,” which established the first federal regulatory framework for stablecoins in the United States. The authors analyze stock price movements during ten trading hours before and after the decisive vote in the House of Representatives on July 17, 2025. This event has three advantages: first, the vote occurred during “Crypto Week” in Congress, with high market attention, and the Genius Act was the only crypto-related legislation that week; second, the House vote was the final critical step before the bill became law, with the Senate already passing it and the President publicly supporting; third, the outcome was uncertain beforehand, with intra-party and partisan disagreements.

Data and Regression Setup

The study uses high-frequency Bloomberg stock price data covering 35 U.S.-listed payment firms, other financial sector firms, and non-financial firms in the S&P 500. Based on regulatory filings, the authors classify payment firms into three subgroups: cross-border payment firms, network operators, and firms involved in crypto assets. The baseline regression employs a difference-in-differences model, comparing stock price differences between payment firms and other financial firms at 15-minute intervals before and after the vote, controlling for firm and time fixed effects, with standard errors clustered at the firm and interval levels.

Baseline Regression Results

Within five hours before the vote, the stock price trends of the two groups show no significant difference, consistent with the parallel trends assumption. After the vote, the stock prices of payment firms decline by approximately 0.75 percentage points relative to other financial firms (significant at the 1% level), and a value-weighted decline of about 1.3 percentage points, corresponding to a market value loss of roughly $21.5B.

Figure 1: Changes in enterprise market value during the House passage of the Genius Act

Table 1: Average abnormal returns of payment companies versus other financial firms

Since the market had partially anticipated the bill’s passage, the immediate reaction does not reflect the full policy effect. The authors use Polymarket data, which shows the implied probability of passage was about 93% before the vote and nearly 100% afterward. Scaling by this probability, the passage of the bill is estimated to have reduced the total market value of listed payment firms by about 18%, roughly $3 trillion. Robustness checks confirm that this result holds under alternative control groups, controlling for differential trends in firm characteristics, adjusting the event window (from 4 to 48 hours), aggregating all five legislative votes, and excluding the other crypto legislation (H.R.3633) passed on the same day. Placebo tests also support the specificity of the findings.

Heterogeneity Analysis

Consistent with Hypothesis 2, cross-border payment firms experienced significantly larger declines than other payment firms, with an estimated 27% decrease in market value after expectations adjustment, and all cross-border firms in the sample showed significant declines. Consistent with Hypothesis 3, payment network platforms (like Visa, PayPal) did not show significant declines; their returns were significantly higher than the average of payment firms, indicating that network effects provide effective protection against stablecoin competition. Consistent with Hypothesis 4, firms already involved in crypto assets also did not experience significant declines, suggesting that early adoption of new technology helps maintain competitiveness.

Conclusion

This paper provides forward-looking empirical evidence on whether cryptocurrencies can play a role in payments. The findings indicate that market participants expect stablecoins to be important in the payment ecosystem. U.S. stablecoin legislation caused a cumulative decline of about 18% in the market value of existing listed payment firms, slightly larger than the effects of other regulatory shocks promoting competition, such as the “Debin Amendment” and the digital euro plans.

Figure 2: Comparing the impact of other historical shocks on payment institutions

The impact varies significantly across different types of payment firms. Cross-border payment firms face the largest impact, consistent with the comparative advantage of stablecoins in this scenario; firms protected by network effects experience smaller impacts, indicating that such competitive advantages are more difficult to overturn than technological expertise; firms involved in crypto assets also experience smaller impacts, suggesting that early adoption of new technology helps firms seize opportunities and respond to competition. In the months following the Genius Act, the proportion of payment firms offering crypto-related services increased, and mentions of stablecoins in earnings calls surged, confirming that payment companies are actively responding to the competitive pressure brought by stablecoins.