

Stablecoins: Superpower & Kryptonite
The Dual Edged Sword of Stablecoins
Stablecoins, cryptocurrencies pegged to stable assets like the U.S. dollar, have emerged as a transformative force in the financial landscape. They promise rapid, low-cost, and programmable transactions, potentially revolutionizing global payments. However, their rise also introduces significant risks, particularly concerning centralization, fraudsters, and hackers . This duality positions stablecoins as both a superpower in financial innovation and a potential kryptonite to personal finances.
As payments move faster, so too will fraudsters, hackers criminals and cyberstates.
The race for security will be fiercely contested by everyone involved in payments.
- Peter Toumbourou, 2025
The Promise: Transforming Global Payments : Eliminating Intermediaries
Traditional payment systems are laden with slow intermediaries—banks, payment processors, and clearinghouses—that introduce latency, increase costs, and limit accessibility. Their incumbency is often based on history rather than adding any real value to consumers or enterprises involved in the movement of money.
Stablecoins offer a paradigm shift by enabling peer-to-peer transactions without these intermediaries, reducing fees and transaction times. For instance, sending $200 from the U.S. to Colombia via stablecoins can cost less than $0.01, compared to traditional remittance fees that average 6.62% . While this is a big win for those Columbian consumers, traditional payment providers will not be happy to lose that margin. Expect a battle royale.
Enhancing Financial Inclusion
In regions with unstable economies and limited banking infrastructure, stablecoins provide a gateway to financial services. They allow individuals to store value in a stable asset and transact globally, fostering economic participation and resilience. Companies like Bridge, now part of Stripe, are building infrastructure to support stablecoin payments, enabling seamless money movement at internet speed(Sequoia Capital)
Programmable Money and AI Integration
Stablecoins are not just digital representations of fiat currency; they are programmable assets that can integrate with smart contracts and AI agents. This programmability allows for automated transactions, conditional payments, and complex financial operations executed by AI, paving the way for advanced financial applications and services.
The Risks: Systemic Vulnerabilities and Instant Points of Attack
While stablecoins aim to decentralize finance, many are issued by centralized entities, introducing single points of failure. These centralized issuers control the minting and redemption processes, and their operational failures or regulatory non-compliance can jeopardize the entire stablecoin ecosystem. The collapse of algorithmic stablecoins like TerraUSD (UST) underscores the fragility of certain stablecoin models.
Regulatory Challenges and Lack of Transparency
The rapid growth of stablecoins has outpaced regulatory frameworks, leading to concerns about consumer protection, financial stability, and monetary policy interference. Many stablecoin issuers lack transparency regarding their reserve holdings, raising questions about their ability to maintain the peg during market stress. Regulatory bodies are now considering frameworks to oversee stablecoin operations, aiming to align risk with appropriate oversight. (a16z crypto).
"We passionately believe with the right architecture, safeguards and pre-emptive thinking, stablecoins will change payments globally – for the good."
- Peter Toumbourou, 2025
Integration with AI: A Double-Edged Sword
The integration of stablecoins with AI agents introduces both opportunities and risks. While AI can enhance efficiency and enable complex financial operations, it also raises concerns about algorithmic biases, decision-making transparency, and the potential for automated systems to amplify financial instability if not properly regulated and monitored .
The Path Forward: Balancing Innovation and Stability. Embracing Decentralized Stablecoins
To mitigate centralization risks, the development and adoption of decentralized stablecoins are crucial. These stablecoins operate without a central authority, relying on smart contracts and decentralized governance to maintain their peg and ensure transparency. However, they must be designed with robust mechanisms to handle market volatility and prevent scenarios like the UST collapse.
Establishing Regulatory Frameworks
Developing comprehensive regulatory frameworks is essential to ensure the safe integration of stablecoins into the financial system. Regulations should focus on reserve transparency, operational resilience, and consumer protection without stifling innovation. Collaborative efforts between regulators, technologists, and financial institutions can create standards that balance innovation with systemic stability .
Leveraging AI Responsibly
As AI becomes increasingly integrated with stablecoin operations, establishing ethical guidelines and oversight mechanisms is vital. Ensuring that AI-driven financial services are transparent, fair, and accountable will help harness their benefits while minimizing potential harms.
Fraudsters, Hackers & Scammers
But, as payments move faster, so too will fraudsters, hackers, criminals and cyberstates. The race for security will be fiercely contested. While blockchain enabled verification will assist, it will not be a full match for hackers. Consumers and financial institutions must rigorously prepare for both sides of the lightning bolt.
The largest opportunity and threat in finance’s history will be the lightning speed movement of funds inwards and outwards. Many financial institutions simply won’t make it through the next wave of instant disruption.
While cyber-attacks and fraud will be relentless, consumers simply won’t accept anything less than instant hyper-security. Mediocre technology or latency will be unacceptable. The market will decide. Legacy systems and silos will simply crumble under the weight of consumer dissatisfaction.
If fraudsters and hackers don’t destroy the banks, consumers will leave them in droves. Tomorrow’s consumer will simply “cancel” the financial institutions in the event that latency drags them back to analogue worlds. No callback, no email, no sorry, no feedback. Instant On also equates to Instant Off. Just see how many Blockbuster Video stores are left out there. Most bank branches will go the same way as Blockbuster, only faster.
With reduced switching costs and instant onboarding, the instancy will be costly for those without the right architecture
Navigating the Superpowered Kryptonite
Stablecoins embody a transformative potential in the financial sector, offering unprecedented efficiency, inclusivity, and programmability. However, their ascent is accompanied by significant risks that must be carefully managed. By embracing decentralized models, establishing robust regulatory frameworks, and integrating AI responsibly, we can harness the superpowers of stablecoins while mitigating their kryptonite-like vulnerabilities.
Stablecoins are revolutionary because they combine the stability of traditional fiat currencies with the speed, programmability, and borderless nature of blockchain technology—enabling instant, low-cost global payments without intermediaries. Unlike volatile cryptocurrencies, their value is pegged to assets like the US dollar, making them suitable for everyday transactions, remittances, and automated financial services. Their integration with smart contracts and AI opens the door to decentralized finance (DeFi) applications, programmable money, and autonomous economic agents—fundamentally reshaping how value is stored, transferred, and managed across digital ecosystems.
Peter Toumbourou
2025
See more here
Trillions of Kodak Moments
Revolutionizing Legal AI Benchmarks with “AI Law”
The Role of Machine Learning in Predicting Tax Audits and Red Flags
Deep Learning x Tax : A Logical Revolution
5 Ways Blockchain is reshaping the Future of Tax