Bank of Italy: Stablecoins Not Cheaper for Remittances
In brief
- Bank of Italy tested 200 USDC transfers across 10 remittance corridors
- End-to-end costs ranged 0.3% to 9% depending on corridor and providers
- Exchange fees and currency conversion dominate total costs; gas fees negligible
- Stablecoins save money only when sender and recipient remain in crypto ecosystem
The experiment
The Bank of Italy conducted a mystery-shopping exercise spanning 10 international remittance corridors to test how stablecoins actually perform in practice. The study tracked transfers of 200 USDC from Italy to destinations including Argentina, Brazil, South Africa, the UAE and Japan.
The findings were striking. 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 to as long as two business days depending on the corridor.
Where the real costs hide
Here's what the researchers discovered: network gas fees accounted for only a negligible share of the total cost. Instead, the largest expenses came before and after the on-chain transfer itself. Converting euros into USDC, withdrawing funds into local currency, foreign exchange spreads and fees charged by exchanges and domestic banking networks dominated the bill.
This matters because it exposes the core problem: most remittance recipients ultimately need local currency to pay rent, buy groceries or settle utility bills, requiring conversion from stablecoins. That conversion step reintroduces the middlemen and fees that stablecoins were supposed to eliminate.
The intermediary shuffle
Rather than eliminating middlemen entirely, today's stablecoin remittance market often replaces traditional correspondent banks with a different set of intermediaries. Crypto exchanges, wallet providers, and on-ramp services step in where banks once stood. The net result: similar costs, different players.
Stablecoins only deliver their headline cost advantages when both sender and recipient remain inside the crypto ecosystem. That's a narrow use case for remittances, where the entire point is converting fiat to fiat across borders.
The Bank of Italy's conclusion doesn't dismiss stablecoins entirely. The central bank notes that stablecoins can reduce costs in specific corridors, while their always-on settlement and programmability offer advantages over legacy payment rails. But the hype doesn't match the data. For most remittance corridors, the cost advantage is either minimal or non-existent.
