Stablecoins, but only through the front door

Cross-border invoices are increasingly settled in regulated stablecoins. The reason is unglamorous: a correspondent banking chain takes days and produces fees that only become visible at the end. A stablecoin transfer arrives in minutes and costs what it said it would.

The rest is less unglamorous. In the EU, MiCA governs the issuance of e-money tokens and asset-referenced tokens. FINMA Guidance 06/2024 sets out what it expects of stablecoin issuers under Swiss banking and anti money laundering law, including on identifying token holders and on bank guarantees used as backing.

Under the FinTech authorisation Newton issues no token of its own. That is not modesty, it follows from the shape of the licence: issue a token referencing a value and you land very quickly in a different supervisory category, with different requirements and different capital.

A link to a stablecoin therefore runs through a counterparty that is itself supervised. In that chain Newton is a user, not an issuer, and that distinction is the whole piece.

The record names the ramp, the counterparty and the corresponding fiat amount. A client never sees an anonymous address as the only reference, because a string of hex characters is not bookkeeping.

Which ramps are enabled for a merchant depends on the contracts with such counterparties. This piece describes the boundary within which Newton Pay connects stablecoins.