Cuy Sheffield, Head of Visa Crypto, Talks About the Present and Future of Stablecoins

Core Viewpoint

Raj's Opening Reminiscence

Raj:
First, I've known Cuy for many years. Cuy is a good friend, mentor, and my former boss at Visa. I want to start with a story.

Now, everyone takes stablecoins and programmable money for granted, but it wasn't like that six years ago. The early days of Visa Crypto were some of the most important moments in my career, and Cuy was the key person.

Cuy was the true "patient zero" within Visa, evangelizing blockchain, cryptocurrencies, and stablecoins throughout the company. At that time, I was a product manager at Visa, interested in crypto but not deeply knowledgeable. It was Cuy who brought me in. I still remember his "Stablecoin 101"—introducing USDT and USDC, which was five or six years ago. We would gather people from various departments at Visa to listen to these foundational explanations. It was a very special experience to witness how Cuy advanced the entire topic at that stage.

Cuy:
Thank you. I've always thought of myself as the "crypto fanatic" at Visa. I joined the company when Visa acquired TrialPay. At that time, I knew nothing about payments and nothing about crypto. During the day, I was learning about Visa—its company history, structure, Dee Hock's culture, and how the payment network operates; I read "One from Many" (Dee Hock's book) and became fascinated with Visa's history.

At night, I was in San Francisco, where my friends were trading altcoins, and I started attending various crypto meetups. Thus, a magical crossover experience emerged: learning payments by day and learning crypto by night. The more I learned, the more I realized that the intersection of payments and crypto is one of the most important directions for the next few decades.

I realized:

I would never become the most knowledgeable person about payments at Visa.
I would also not become the most technically skilled person in the crypto space.
But I could become the kind of person who "understands a bit about payments and a bit about crypto."
And that is very rare in the industry.

So I decided:

My career path for the next decade would be to stand at the intersection of payments and blockchain.

At that time, we needed "internal evangelists" to push things forward. No one officially assigned this task to us; we just started doing it ourselves. This is the reality of innovation in large companies: you have to take the initiative and push it forward. One of my proudest achievements is that we formed the "Visa Crypto Mafia." Many people who worked in Visa Crypto later went on to start their own companies, at least five of which have successfully raised funds, two of which have already exited. We cultivated a group of people who understand both payments and blockchain, which is the most needed in the industry. Previous teams working on stablecoins lacked payment experience, which is a huge problem.

Misalignment of Perceptions Between Payment People and Crypto People

Cuy:**
At that time, I was talking to two groups of people simultaneously: one group was from the payment industry, and the other was from the crypto industry. I asked people in the payment industry, "What do you think of crypto?" They said: "It's strange, crazy, and we don't understand what they are doing."

I asked people in the crypto space, "What do you think of payments?" They said: "Everyone will use Bitcoin for payments in the future, and cards won't be needed." At that moment, I realized that these two worlds would inevitably meet. Very few people can understand both worlds simultaneously, and that is the opportunity.

Raj: Where exactly are the differences between payment people and crypto people?

Raj:
That's very interesting. For the audience who may not understand this intersection, can you talk about:

The "obvious" things in the payment industry that crypto people often completely overlook?

The Real Barriers of Payment Networks

Cuy:** Of course. One of the most underestimated points in the payment industry is that the "global merchant acceptance network" is not a technology; it's an ecosystem built over decades of accumulated network effects. Many crypto projects focus solely on TPS, saying:

"Our chain's TPS is faster than Visa's, so we can replace Visa."

But the real challenges are:

How do you support 150 million merchants globally?
How do PSPs, payment gateways, and acquirers in each country connect?
Refunds (chargebacks)? Dispute handling?
Transaction reconciliation file formats?
Risk control? Fraud? Regulation? Taxation? KYC? AML?

These are not problems that can be solved by writing a white paper or making an EVM-compatible chain.

Cuy:** The Economic Model of Wallet Payments is a Negative Incentive**

Furthermore, many crypto projects fundamentally misunderstand the core economic mechanism of the payment industry: interchange (the card issuer's share), which leads to a very critical point:

If users pay merchants directly with stablecoins, the wallet earns no money and actually loses money.

The reasons are:

Money flows out of the wallet balance → wallet AUM decreases.
No interchange → 0 revenue.
But the wallet still bears costs for risk control, customer service, and technology.

This is a fatal problem in the economic model. It is entirely normal for wallets not to want to promote "on-chain payments."

Host:
Yes, you hit the nail on the head. There are so many easily overlooked details at the intersection of payments and crypto. Let's dive deeper—what are some "common knowledge" aspects of the payment industry that many crypto practitioners completely ignore?

Cuy:**
From Visa's perspective, there are a few points that the crypto industry rarely understands. First, merchant acceptance and global penetration. This is not a technical issue but a "network issue." Many people in the crypto space say:

"I have a new chain, and its TPS is faster than Visa's, so it can replace Visa."

But payment networks are not a TPS competition; rather:

How do you get 150 million merchants globally to support you?
How do you get PSPs, acquirers, and payment gateways to all connect to the same standard?
How do you handle disputes, refunds, and fraud?
How do you provide merchants with reconciliation files, settlement, and batch reconciliation?
How do you ensure KYC, AML, and risk stratification?

The entire payment system is:

An ecosystem coordination formed over decades, not something that a "faster chain" can replace.

Secondly, it's governance and business models.

Cuy:** From the perspective of stablecoin wallet service providers, if your users directly:

Spend stablecoins at merchants—your funds leave the platform—you earn nothing.

It’s even a negative incentive. A customer makes a transaction → the money is no longer in your wallet → your AUM decreases; at the same time, you:

Have no interchange revenue.
Have no reward mechanism.
Still bear costs for risk control, fraud, customer service, and KYC.

So:

Stablecoin wallets actually do not want users to spend stablecoins directly.

This point is crucial, but many crypto projects are completely unaware of it. Traditional card organizations, on the other hand, use the interchange mechanism to ensure that every participant "has something to gain." This is why payment networks have been able to operate for decades.

How Interchange Drives the Entire System

Host:
Maybe you can explain to the audience what interchange actually is and why it is so important?

Cuy:**
Of course. Interchange is the "incentive engine" of the entire payment ecosystem.

When a user swipes a card:

The merchant pays (merchant service fee).
A portion of that fee (interchange) is returned to the issuing bank.
The issuing bank then incentivizes consumers to use the card through rewards, cashback, etc.
Wallets and banks also have the motivation to invest in risk control, customer service, and product experience.

Visa does not profit from interchange (this is a common misunderstanding); Visa's role is:

To provide network standards and ensure the entire system operates efficiently.

It is this revenue-sharing mechanism that motivates banks, fintech companies, and wallets to:

Invest in better UX.
Implement stronger risk control.
Provide users with more rewards.
Drive consumption growth.

Stablecoin payments lack this mechanism, so they cannot scale.

Why "On-Chain Merchant Payments" Cannot Replace Cards in the Short Term?

Cuy:** When someone says, "Stablecoin payments are cheaper, so they will win," I counter with:

How do merchants handle stablecoin refunds?
How do they verify whether consumers are KYC?
What type of stablecoin? USDC? USDT? Which version?
Which chain? What if the chain stops? What if gas prices soar?
How do stablecoins convert to fiat? Who redeems them? What are the fees?
How are risks handled? What if theft occurs?
How do users use wallet signatures at POS?

Each of these questions is enough to make merchants hesitant to accept stablecoins. From the consumer's perspective, changing payment habits is very difficult.

Getting an American consumer to shift from "Tap to Pay" to "open wallet → connect signature → worry about fraud" is completely unfeasible. Therefore:

On-chain payments are necessary but not a replacement; stablecoin cards are the realistic path.

The Explosion of Stablecoin Cards

Host:
You just mentioned an important point: stablecoin cards are becoming a new category. Can you explain why they are growing so fast?

Cuy:**
Of course. Crypto cards initially were just gimmicks like "spending Bitcoin" or "earning Bitcoin cashback." But now, stablecoin cards have become a truly scalable product.

The logic is perfect:

Users continue to hold on-chain stablecoins (real on-chain balances).
Consumption is completed through the Visa card network (150 million merchants available immediately).
Wallets do not lose AUM.
User experience is equivalent to normal card swiping.
Wallets and issuing banks can both earn interchange revenue.
Risk control and refund systems are all based on the card network.

This allows:

Stablecoin wallets → to become true global "next-generation card" issuers.

You can compare it to Stripe, Revolut, and Marqeta in 2015—only now it's the on-chain version. This will create a huge new ecosystem.

People Only Talk About "Stablecoin Merchant Payments," but That's a Misunderstanding

Host:
Yes, the crypto space often says, "Merchant acceptance of stablecoins will explode." But that's not actually the biggest use case, right?

Cuy:** Absolutely correct. Merchant payments get too much attention, but they are not the most important use case. The most important one is actually: global dollar availability (Dollar Access).

The Primary Use Case of Stablecoins is "Global Dollar Storage"

Cuy:**
In the U.S., people don't feel the need for dollar availability. But in most countries around the world, being able to hold dollars safely, cheaply, and quickly is very difficult. Stablecoins solve this problem.

Over the past few years, we've seen:

USDT has around 500 million holders.
Many markets view stablecoins as a safe-haven asset.
Even ordinary consumers see "buying USDT" as a savings behavior.

We believe that the number of global stablecoin users will exceed 1 billion within 2-3 years. This is a real demand, not speculation.

The Real Situation of Cross-Border Payments?

Host:
Besides "dollar access," cross-border payments are another hot area. What are your thoughts?

Cuy:**
Cross-border payments are a multi-layered structure. In the short term, we will see:

Model 1: Fiat → Stablecoin (On-Chain Movement) → Fiat

That is:

The payer uses fiat.
Stablecoins are used as a cross-border channel.
The payee then converts back to fiat.

This model is already being implemented by many companies and is improving.

Model 2: Direct Settlement Between Stablecoin Wallets (Wallet-to-Wallet)

This is a larger market in the future, but it depends on:

Whether global users all hold stablecoin wallets.
Whether wallets are interoperable.
Whether businesses and enterprises are willing to accept on-chain accounting.

This will take a few years. But the trend is clear:

Cross-border payments will increasingly resemble on-chain transfers.

Host (Raj):
You just mentioned that global stablecoin adoption is rapidly increasing. I want to ask from the banks' perspective: Visa interacts with many global banks; how do they view this trend? Do they realize that "stablecoins are about to become a trillion-dollar asset class"?

Cuy:**
That's a good question. The responses from different banks vary significantly, mainly depending on:

The country they are in.
The regulatory environment they are in.
Whether their customers actually need stablecoins.

U.S. Banks: Experiencing a "Regulatory Whiplash"

On the U.S. bank side, I see:

2021: They set up teams to study stablecoins.
2022-2023: Regulations suddenly tightened, and they couldn't touch any on-chain assets.
Many people were reassigned to other tasks.
2024: The U.S. Congress suddenly passes stablecoin-related legislation.
Banks are again forced to quickly "catch up."
But their customers actually have little demand for stablecoins (because they already have dollar accounts).

This represents a:

"Have to catch up, but don't know where to go" passive stance.

Emerging Market Banks: More Urgent

Cuy:**
In markets like Brazil, Argentina, the Philippines, and Nigeria, the situation is completely different. Because:

Local consumers are increasingly turning to stablecoins as dollar storage.
Local fintechs (like digital wallets and new crypto banks) are rapidly growing.
Local banks find themselves losing young users.

These banks feel that:

Stablecoins are not a new toy; they are competitors.

But they are in a difficult position:

Regulatory ambiguity.
They cannot issue stablecoins.
They cannot allow customers to hold coins on-chain.
Meanwhile, overseas wallets (self-custody) can do so.

This creates intense pressure from unfair competition.

Banks Need to Push for Regulation, Not Wait for It

Banks are gradually realizing:

"If we don't push for regulation that allows banks to issue stablecoins and custody stablecoins, the local market will be taken over by foreign fintech."

How Will Stablecoins Ultimately Enter National Financial Infrastructures?

Host:
It sounds like banks are being forced to accelerate. How do you think the financial system will absorb stablecoins in the coming years? Will local banks issue stablecoins? Or will self-custody wallets dominate the market?

Cuy: I believe there will ultimately be two types of stablecoins:

Track 1: "Dollar Stablecoin Accounts" Provided by Global FinTech/Self-Custody Wallets

For example:

OKX Wallet
Binance Wallet
Global independent wallets
Dollar balances issued by third-party fintechs (like USDC)

These products are cross-border and do not require local banks. They meet:

Dollar storage.
Peer-to-peer transfers.
Cross-border payments.
Merchant payments (through card networks).
Currency exchange needs.

Track 2: Local Banks Issuing Local Currency Stablecoins

For example:

Brazilian Real Stablecoin (BRL)
Singapore Dollar Stablecoin (SGD)
Korean Won Stablecoin (KRW)
And so on.

This will bring several benefits:

The local currency can form a more transparent FX market with USD stablecoins on-chain.
Banks can continue to dominate deposits and lending.
It will not allow "dollarization" to erode too quickly.

This is crucial for regulators.

Cuy: The More Open the Regulation, the More Local Banks Can Compete

If regulators allow banks to:

Hold stablecoins.
Issue stablecoins.
Conduct on-chain settlements.
Provide on-chain accounts.

Then:

Banks will be able to retain users and not be taken away by fintech.

If regulators continue to block, then:

Users will go directly to global fintech and self-custody wallets, which is even more dangerous.

Host:
So now it seems like a three-way competition:

Local banks.
Global fintech.
Crypto wallets/on-chain wallets.

Whoever adapts to on-chain infrastructure the fastest will win?

Cuy:**
Absolutely correct. Every year, the competitive advantage of fintech that lays the groundwork in advance will grow larger. The later banks enter, the harder it will be to catch up.

On-Chain Credit and the Future of DeFi

Host:
We have discussed the applications of stablecoins in payments and cross-border transactions. But there is another area that is exploding, which you mentioned:—on-chain credit (On-chain Credit & Lending). Visa recently published a research paper stating that the cumulative scale of stablecoin-denominated on-chain loans has reached $670 billion. Can you explain why this is so important?

Cuy:** DeFi (on-chain lending) has actually been "validated in practice," and this number is something we spent a lot of time calculating. The question we researched was:

"So far, how many loans globally have been issued through smart contracts using stablecoins?"

We had to analyze:

Multiple chains (Ethereum, Solana, BSC, etc.).
Multiple protocols (Aave, Compound, Morpheus, Maker, Morpho, etc.).
Various stablecoins (USDC, USDT, DAI, etc.).
Different contract structures (collateral, liquidation modules, interest rate models).

In the end, we calculated that approximately $670 billion in loans have been issued on-chain through stablecoins. This is an astonishing figure.

Although these loans:

Are mostly collateralized by crypto assets.
Are primarily used for trading and leverage.
Are not "real-world asset" loans.

It proves an extremely important point:

The technical model of on-chain credit has been fully validated. Automated liquidation, collateral management, interest rate curves, and lending markets have been operating for years.

What Could the Future of On-Chain Credit Look Like?

Host:
It sounds like on-chain lending is no longer an experiment but a mature system. From Visa's perspective, will this technology enter traditional finance in the future?

On-Chain Credit Will Be More Important Than "On-Chain Payments"

Cuy:** Yes, I even believe:

The impact of stablecoins on the global credit system will be greater than their impact on the payment system.

The reason is simple: payments are "low-margin, highly regulated" businesses; but credit is the core business for banks to profit. If on-chain lending can:

Manage collateral at a lower cost.
Automate lending and settlement.
Match funds globally.
Allow assets (gold, stocks, invoices) to be tokenized and collateralized.
Shorten settlement cycles and enhance transparency.

Then it will reshape the core structure of finance. In other words, global credit will shift from "national silos" to "cross-border on-chain flowing collateral systems."

Host:
If we really want to achieve "trillions of dollars in on-chain credit" in the future, what do you think is currently the most lacking?

Cuy:**
The current state of DeFi lending is:

Anyone.
Completely anonymous.
Collateralized assets are often cryptocurrencies.
Protocols are completely permissionless.

But real-world lending must:

Know who the borrower is (KYC/AML).
Determine risks in a compliant manner.
Allow freezing of assets.
Allow emergency pauses (circuit breakers).
Allow court intervention.

This means that in the future, there will be:

A structure that overlays a "permissioned layer" on top of DeFi protocols.

Similar to:

Whitelisted liquidity pools.
KYC user lending pools.
On-chain collateral markets that banks can participate in.
Mechanisms that allow freezing, rolling back, and arbitration.

Technically, this is entirely feasible.

Host: Could On-Chain Credit + Stablecoin Cards Lead to a Surge in Credit Cards in Developing Countries?

If in the future someone uses on-chain loans to obtain stablecoins, and Visa cards can be used for direct consumption, does this mean that credit cards might see a second surge in emerging countries?

Cuy:** It's entirely possible. Because:

Many countries lack mature credit scoring systems.
Banks are hesitant to extend credit to users.
But on-chain collateral can automate lending.
Loans are issued in stablecoins.
Visa cards handle the consumer experience.

This model is very powerful. In the future, we may see a combination product of "on-chain collateralized loans + stablecoin balances + Visa card consumption." This presents a huge opportunity in emerging markets.

Host (Raj):
Before we move on to the next topic, I want to ask one last question: besides mainstream use cases like cross-border payments and dollar access, many people will ask:

"What are some longer-term, more future-oriented use cases for stablecoins?"

Recently, we saw Visa's article mentioning on-chain lending and the capital markets applications you previously mentioned.

But another rapidly rising direction is: Agentic Commerce (AI Agent Commerce/Agent-to-Agent Payments).

Today, we are already seeing prototypes of "AI agent payment protocols" like X42 emerging. Can you talk about how Visa views the AI agent economy and machine payments? Will it become the next wave of demand for stablecoins?

Agentic Commerce is One of the Most "Out-of-the-Box" Yet Promising Directions

Cuy:**
This is a very interesting direction, and I believe it is one of the most "intellectually interesting" fields at present. Frankly speaking, not many people truly understand it right now.
That's what makes it intriguing. We roughly see two possible scenarios:

Scenario 1: Human → AI Agent → Merchant (AI Purchasing/AI Agency)

Cuy:**
In the future, you might have an AI agent complete tasks for you, such as:

Booking flights.
Buying birthday gifts for children.
Reserving hotels.
Selecting the cheapest flights.
Automatically comparing prices.

In these "AI purchasing" scenarios:

Visa's card network fits perfectly, as it is a cross-merchant, cross-scenario, instantly available payment tool.

If an AI agent is to help you "purchase products across the internet," the simplest way is to use a Visa Tokenized Card.

This allows the AI to:

Initiate payments.
Deduct funds.
Manage refunds.
Seamlessly interact with all merchants.
Fully inherit the existing payment dispute and risk control systems.

Visa is already building a dedicated Agentic Commerce team to handle this direction.

Scenario 2: AI Agent ↔ AI Agent (Pure Machine Economy/Machine-to-Machine Payments)

Cuy:**
This scenario is currently more "forward-looking," but has huge potential. Imagine the future:

Your AI agent needs to call a "weather API," but it has no corresponding service.
It goes to the market to inquire with another AI (an agent specializing in weather functions).
It pays that agent $0.0001.
The other agent completes the task and returns the data.
The entire process requires no human involvement.
This process requires: micropayments.

This is exactly what stablecoins excel at:

Small payments.
Instant settlement.
Automation, programmability.
No need to establish cumbersome billing systems.
Supports paying "different machine service providers" one by one.

X42 is an Interesting "Early Testing Ground"

Cuy:**
I check X42's blockchain explorer every day to see what's happening. The current main use cases are:

Minting Meme Tokens.
Trading Meme Tokens.

This is actually very normal—historically, every round of chains and every new technology starts by attracting developers' attention with "speculative use cases." Solana, Fantom, and Polygon are all examples of this. But afterward:

Developers, capital, and tools will continuously come in, leading to the emergence of real use cases.

I believe:

Machine payments.
Micropayments.
Machine service markets.
Agent-to-Agent economy.

Will begin to take shape in the coming years.

What Visa wants to do is:

Enter the ecosystem early, understand the real interaction patterns, and ensure we can provide value in the future.

Host: The development of AI × Payments Will Be Similar to the "Logic of Uber's Birth"

I love what you said. It's actually very similar to the birth of Uber:

Mobile phones.
GPS.
App Store.
Payments.
Gig economy.
Real-time location services.

These technologies existed independently, but when they "matured simultaneously," Uber became "feasible" at that moment.

AI agent payments also need:

Micropayments.
Stablecoins.
Chains that support machine calls.
Agent platforms.
Data service markets.

When all these elements mature, an explosion will occur.

Cuy:**
I completely agree. We still don't know:

What the first killer use case for AI agents will be.
What the first profitable agent service will be.
Where the first truly high-frequency machine payment scenarios will emerge.

But one thing I am very sure of:

Stablecoins will be the preferred tool for payments between AI agents.

Because they possess:

Global interoperability.
Low-value payment capability.
Programmability.
24/7 borderless.
Machine-callable interfaces.

This is precisely what the machine payment economy demands.

Host: Back to Stablecoins—Visa's Outlook for the Next Five Years?

A few quick-fire questions. If we look five years ahead, what do you think:

"The successful appearance of stablecoins within the Visa system will look like?"

Cuy: The Four Major Success Indicators of Stablecoins at Visa in the Next Five Years

Cuy:

1) Stablecoin Cards Become a Mainstream Category in the Visa Network

In the future, there will be a batch of large fintechs built entirely on:

Stablecoin balances.
Visa consumption.
On-chain transfers.

This is a huge opportunity.

2) Visa's On-Chain Settlement (Stablecoin Settlement) Reaches Billions of Dollars

We have publicly stated:

Visa's current on-chain stablecoin settlement run rate is $2.5 billion:

"If we can do $1 billion, we can do $10 billion; if we can do $10 billion, we can do more."

In the future, Visa's backend settlement system will see more and more transactions using stablecoins.

3) Cross-Border Payments (Visa Direct + Stablecoins) Become a Major Business

Visa's cross-border valuation is already enormous. If stablecoins are integrated with Visa's payout rails:

B2B.
B2C.
Remittance.
Marketplace payouts.

All could see significant upgrades.

4) Providing "Stablecoin Infrastructure" for Banks and Institutions

In the next five years, Visa aims to become:

The technical and compliance gateway for banks entering the stablecoin world.

Visa will help banks:

Choose chains.
Integrate stablecoin custody.
Conduct on-chain settlements.
Connect KYC wallets.
Launch stablecoin products.

This is a massive B2B opportunity.

Host: And what about ten years from now? Payments on Mars? Should we deploy stablecoins on Mars?

Cuy: Haha. Dee Hock once said:

"Visa's ultimate goal is not credit cards, but the exchange of all value on Earth."

I think he was too limiting. Why limit it to Earth? In the future, if we establish colonies on Mars, why can't we use stablecoins on Mars? What currency will they use then?

U.S. dollars?
Stablecoins?
Bitcoin?
Or "Martian Dollars"?

This is a very interesting future topic.

Host:
Which book or content would you recommend to the audience?

Cuy:**
Definitely Dee Hock's "One from Many."
But that book is not easy to read. If you want to understand quickly, you can listen to his seven-episode podcast series on The Innovation Show. He was already 90 years old at the time, but he spoke very brilliantly.

Host:
One last question: which industry insider should we invite to the show?

Cuy:**
There are so many people it's hard to choose. But I think we should interview more:

People responsible for digital assets/stablecoins/tokenization projects within banks.

They understand the real challenges best, but often find it difficult to speak publicly due to PR restrictions. I can privately recommend a few to you later.