The Bank of Italy has put a sharp point on a debate that usually gets lost in adoption charts. In a note flagged by Cointelegraph on August 1, 2026, the central bank argued that stablecoins deliver a meaningful efficiency advantage only when users can spend them from end to end, without converting back to cash. The moment a stablecoin has to be redeemed for fiat to be useful, most of the promised savings disappear into the same banking rails the technology was supposed to bypass.
The observation is simple, but it reframes years of growth. Stablecoin supply has climbed past record levels, yet a large share of that supply exists to sit on exchanges or move between trading desks. Under the Bank of Italy's framing, that activity is not where the efficiency case is won or lost. The case is won at the edges, where a stablecoin either flows straight into a payment or gets swapped back into a national currency at a cost.
The cash-out step is where the savings leak
Every conversion back to fiat reintroduces the frictions stablecoins were meant to remove. A redemption touches a bank, a payment processor, or an exchange, and each of those takes a spread or a fee. It also reintroduces settlement time, cut-off windows, and the currency conversion costs that make cross-border transfers expensive in the first place.
That is the structural point. A dollar-pegged token moving from wallet to wallet is close to free and close to instant. The same token converted to euros in a bank account carries the full weight of the legacy system. If a user has to cash out at the end of the chain, the transfer was never really cheaper. It just moved the cost to the last step.
This is why the "end to end" condition matters more than headline supply figures. Efficiency depends on how far a stablecoin can travel inside its own rails before it has to exit. A short trip with an immediate cash-out captures almost none of the benefit. A long loop, from income to spending to savings, captures most of it.
Spending is what closes the loop
The most direct way to avoid the cash-out step is to spend the stablecoin as money, not to redeem it. That is the entire premise behind crypto cards that draw from a stablecoin balance. Instead of selling USDC or USDT for local currency and moving it to a bank, the user keeps the balance onchain and lets a card handle the conversion only at the point of sale, if at all.
Providers have leaned into this design. Cards from Gnosis Pay and Plasma One are built around holding a stable balance and spending it directly, which keeps funds inside the token's rails until the last possible second. The theory the Bank of Italy describes and the product design these cards ship are the same idea from two directions.
Worth a caution here for anyone reading this as a free lunch. The disclosed card fee is rarely the full cost. Visa and Mastercard network spreads run roughly 0.5 to 0.9 percent, and any crypto-to-fiat conversion at checkout carries its own spread on top. The Bank of Italy's point does not eliminate those costs. It relocates the argument: a stablecoin that stays onchain avoids the bank redemption, but it still meets a conversion spread the instant it touches a fiat-priced merchant. The efficiency is real only to the degree the balance is spent as a stable unit rather than converted.
Adoption is constrained by acceptance, not supply
The framing also explains why adoption feels slower than the growth numbers suggest. For a stablecoin to stay onchain from paycheck to purchase, the whole loop has to accept it. That means employers paying in stablecoins, merchants accepting them, and savings products denominated in them. Most of that infrastructure is still thin outside crypto-native circles.
Where those loops do exist, they tend to be in economies with weak local currencies or expensive banking, and adoption there is driven by necessity rather than novelty. In markets with cheap, fast domestic payments, the efficiency gap the Bank of Italy describes is smaller, so the incentive to keep funds onchain is smaller too. Regional regulation shapes the rest. In Italy and the wider EU, the MiCA framework governs how euro and dollar stablecoins can be issued and spent, which sets the outer bounds of how far a closed stablecoin loop can actually reach.
Overview
The Bank of Italy's insight is narrow but useful: stablecoins are efficient in proportion to how rarely they are cashed out. Supply growth and trading volume say little about that. The metric that matters is whether a stablecoin can travel from income to spending to savings without a fiat round trip. Crypto cards that spend directly from a stable balance are the clearest attempt to satisfy that condition, though network spreads and point-of-sale conversion mean the savings are partial, not total. The efficiency case lives at the edges of the payment chain, not in the middle.
