Artem Tolkachev is the Chief RWA Officer at Falcon Finance.
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Stablecoin regulation has been a long time in the making, and we are finally seeing real progress across multiple major jurisdictions. In the US in particular, the direction of travel is getting clearer, despite the ongoing debate around yield: higher standards for reserves, clearer redemption requirements, and tighter eligibility criteria for issuers and service providers.
For many in the industry, this is welcome news. Clarity is better than ambiguity. But regulatory clarity for stablecoins shines a light on the next major challenge, which sits at the boundary between onchain dollars and the real-world financial system. Confidence in major fiat-backed stablecoins has improved, even after stress events such as USDC’s temporary dislocation in March 2023. As circulation has grown and payment-stablecoin regulation like the GENIUS Act advances, the constraint is shifting from the token to the “real economy” bridge: regulated conversion and payout rails that can reliably move onchain dollars into bank accounts at scale.
Most conversations about stablecoins focus on reserve composition, audit frequency, and redemption mechanics. These are important. But they describe only half the lifecycle of a dollar-denominated digital asset, because the moment a business needs to convert onchain liquidity into payroll, a supplier invoice, or a tax payment, these transactions remain fragmented, expensive, and in many corridors, simply unavailable at institutional scale.
This is why the most meaningful stablecoin developments right now are often not about a new token at all, but about the plumbing that turns onchain dollars into regulated payments.
For businesses that need consistent six-figure daily flows in most corridors, the infrastructure either does not exist at a reasonable cost or requires stitching together multiple counterparties with inconsistent compliance standards.
The result is that organisations operating onchain often maintain two parallel treasury functions: one for digital assets, one for traditional payments, with manual reconciliation in between. The efficiency gains from faster onchain settlement are partially consumed by the friction of getting value back into the banking system.
What makes this problem more pressing now is that regulation is tightening requirements for fiat-backed stablecoins, while the off-ramp layer is governed by a patchwork of existing regimes—MSBs, EMIs, and banks. The gap is less about absence of regulation and more about the lack of a standardized operating model end-to-end: consistent SLAs, cut-offs, reporting, and reconciliation.
The GENIUS Act creates rules for issuers. The FCA’s consultation papers address issuance, custody, and prudential requirements. But the infrastructure that converts onchain dollars into regulated payments, such as the EMIs, the money service businesses, the fiat settlement providers, operates under a different set of frameworks. These are existing financial services regimes rather than crypto-specific ones.
The gap between these two regulatory stacks is where adoption stalls. A stablecoin issuer can be fully compliant with reserve and redemption requirements, and yet the holder of that stablecoin may still struggle to convert it into euros, pounds, or dollars through a regulated channel without delays, fees, or compliance friction.
This matters particularly for synthetic dollars, which are dollar-denominated onchain assets that maintain their peg through overcollateralisation and market mechanisms rather than fiat reserves. Unlike fiat-backed stablecoins, synthetic dollars do not position themselves as digital money. They make narrower claims: dollar exposure, explicit risk, and optional yield through a separate staking mechanism. This distinction means they sit outside the regulatory frameworks now being built for payment stablecoins.
That, to be clear, is not an evasion. It is a design choice that creates clearer compliance boundaries. A synthetic dollar issuer is not competing with bank deposits or positioning itself as a payment instrument. Its regulatory obligations are different, and more contained. But the practical consequence is the same as for any onchain dollar: if the holder cannot convert to fiat through regulated infrastructure, the asset’s utility is limited to the onchain environment.
The emerging solution can’t come from a single regulatory framework that covers everything from issuance to payment. The way to achieve compliance requires an architecture that is modular, where each layer operates within its own perimeter. Onchain issuance follows one set of rules and crypto-to-fiat conversion follows another, typically through a registered money service business or equivalent. And the fiat payments layer is handled by an authorised financial institution, subject to its own prudential and consumer-protection requirements.
Separation allows each component to be regulated by the authority best positioned to supervise it, without requiring a single entity to hold every licence or satisfy every framework simultaneously. It also means that onchain dollar products, whether fiat-backed stablecoins or synthetic alternatives, can access real-world payment rails without needing to become payment institutions themselves.
For the businesses and trading desks that use these instruments, it means gaining the ability to earn yield onchain while still being able to pay suppliers in euros or pounds, without being forced to choose between DeFi returns and real-world obligations. That has been the missing step.
As regulatory frameworks mature, the institutions that provide the off-ramp, like the EMIs, the payment processors, and the regulated conversion providers, gain a clearer legal basis for handling onchain dollar flows. That, in turn, reduces the compliance risk that has historically made traditional financial institutions reluctant to touch crypto-to-fiat conversion.
It is likely that a modular compliance architecture which separates issuance, conversion, and payments into distinct, independently regulated layers will become the standard design pattern. Early versions of this modular stack are already in market: Visa has launched USDC settlement in the U.S., Circle has announced CPN for FI-to-FI stablecoin settlement, and Stripe has rolled out USDC checkout for Shopify merchants with standard fiat payouts. The next phase of onchain dollar adoption will not be decided by whose reserves look best on paper. It will be decided by who can convert onchain liquidity into regulated payments quickly, predictably, and at scale. Solve the off-ramp problem, and “onchain dollars” stop being a product category and start behaving like financial infrastructure.
About the author
Artem Tolkachev is the Chief RWA Officer at Falcon Finance, where he leads the development of tokenized real‑world asset infrastructure and synthetic dollar systems. He has spent more than a decade building digital asset frameworks across Europe and Asia.
