Stablecoin sandwich: how fiat-stablecoin-fiat works

A stablecoin sandwich puts a stablecoin transfer between two currency conversions, which lets the sender and the recipient both keep ordinary bank money while the cross-border leg settles in minutes. The money the payments company pre-funds with its payout partners waits inside that structure, and it can earn between payouts.

Imagine sending $1,000 from Houston to your family in Monterrey on a Sunday night, and the pesos reaching their bank account within minutes. In a stablecoin sandwich, a licensed provider takes your dollars and turns them into USDC. The USDC reaches a payout partner in Mexico within seconds to minutes, and that partner converts it into pesos for the family's bank account. Neither side ever holds a stablecoin. The name comes from that shape, fiat on the outside and a stablecoin in the middle. Most stablecoin remittance and B2B payment companies run their corridors this way. The remittance company Felix Pago uses a USD-MXN-USDC sandwich behind a WhatsApp interface in exactly this corridor, according to a February 2026 Harvard Business School working paper by Wenxin Du, Catherine Huang and David Scharfstein.

What happens in each layer of a stablecoin sandwich?

Each layer has its own operator and its own licence. A payments company rarely runs all three itself. The HBS paper found that payment companies "often need to partner with crypto exchanges and different fintech intermediaries to complete all pieces of the sandwich."

1. On-ramp. The sender pays in dollars by ACH, card or wire. A licensed provider checks the sender (KYC and sanctions screening), then sources USDC or USDT by minting it with the issuer or drawing on inventory. Circle, Zero Hash and Bridge are common sources of supply, according to Fireblocks' guide to the model.
2. Onchain transfer. The stablecoin moves to the payout partner's wallet, with the payment details passed alongside it.
3. Off-ramp. A partner with local banking access sells the stablecoin for pesos, naira or rupees and pays the recipient through the local rail. In Mexico that's usually SPEI, the central bank's real-time payment system.
4. Reconciliation. The provider matches the onchain transfer to the local payout and closes the payment. Fireblocks counts passing the "for benefit of" and routing details to the off-ramp as its own step.

The middle layer runs in seconds to minutes at any hour, including weekends. The two fiat layers are where the time and the cost sit. The full flow from collection to payout, with the balances that build up along the corridor, is in our guide to stablecoin cross-border payments.

What does a stablecoin sandwich cost?

The stablecoin leg is close to free. Circle says a stablecoin transfer can cost as little as $0.00025, and the HBS authors call blockchain transfer fees "economically negligible." Their worked example sends USD through USDC to euros. The sender deposits dollars at Coinbase at zero ACH cost and pays about $0.19 of gas to move the USDC on Ethereum. Then a 1% trading fee applies when Kraken converts it to euros, plus a fixed €1 SEPA withdrawal fee. On our $1,000 example, that structure would come to roughly $10 in trading fees plus a few dollars in fixed costs (an illustration only, since peso off-ramps price differently).

Those numbers compare well with bank wires. The same paper measured FX markups of 200 to 400 basis points on retail bank wires, which is $20 to $40 on $1,000 before the wire fee. Non-bank money transmitters charged roughly 40 to 60 basis points all-in for the most liquid currencies. Still, the paper's conclusion is cautious: stablecoin rails "do not eliminate intermediation," and fixed withdrawal fees make small transfers expensive in percentage terms. The global average for sending $200 was 6.36% in Q3 2025, according to the World Bank's Remittance Prices Worldwide.

Where does the name stablecoin sandwich come from?

FXC Intelligence's 2025 primer on stablecoins in cross-border payments says the term is widely credited to Ran Goldi, Fireblocks' SVP of payments and network, in 2021. The image is literal. Fiat is the bread on each side, and the stablecoin is the filling.

What is an open stablecoin sandwich?

An open sandwich (some call it open-faced) drops the last slice of bread. The recipient keeps the stablecoin, or a dollar balance backed by one, and converts to local currency only when they choose. Fireblocks splits the model into a full sandwich, where "fiat is converted to stablecoins and ultimately off-ramped back into fiat," and an open one, where "funds remain in stablecoins." MoneyGram's app in Colombia works the open way. It lets people receive money from abroad and keep it as a dollar balance, with USD-pegged stablecoins in the background, according to MoneyGram's 2025 announcement. Circle calls the same thing a one-legged flow. In countries with a weak currency, a dollar balance is often the product people want.

There's also a double-decker version. The HBS paper describes a USD to USDC to EURC to EUR route, where the currency swap happens onchain between two stablecoins. It's rare today, because most stablecoins in circulation are dollar-denominated.

Why not send stablecoins straight to the recipient?

Because most recipients, and most of the businesses paying them, need local currency in a bank account. Rent, payroll and supplier invoices in Mexico get paid in pesos. A full sandwich lets the sender keep paying in dollars and the recipient keep receiving pesos, with no wallet setup and no crypto exposure on either side. The licensing sits with the providers at each end, and each needs its own licence in its market. The rules for stablecoin issuers and service providers differ by market, and payment gateways handle different parts of the stack (see the best crypto payment gateways for how they compare).

Why pre-fund if the stablecoin arrives anyway?

The USDC reaching Mexico and the pesos being ready to pay out are two separate problems, and the stablecoin only solves the first one.

Start with the payout partner. USDC lands in minutes, but turning it into pesos means selling it in the local market, and that market can be thin, shut for the weekend or tied to a bank that settles the next day. The partner deals with that from its own inventory, keeping some pesos of its own to pay out at once and selling the USDC afterwards. That peso float is the partner's working capital, and it prices the cost into its fees.

The sender's side has its own delay. Your $1,000 often reaches the remittance company by bank transfer or card, which can take a day or more to settle. Until then the company is paying out money it hasn't fully collected. It covers that gap by parking USDC with each payout partner ahead of time, and that stablecoin balance is the pre-funding. And no partner hands over pesos against a promise (they're the ones left exposed if the money never arrives).

The old model needed pre-funding too. Correspondent banking kept fiat in foreign bank accounts, called nostros, in every country. A stablecoin corridor keeps USDC with each payout partner instead. That balance is smaller, can be topped up at any hour and moves between corridors in minutes.

Where does money wait inside a stablecoin sandwich?

Payment companies size the balance at each partner to the next few days of payouts. Artemis measured stablecoin prefunding flows at a $3.6B annualised run rate in August 2025 in its stablecoin payments report, and that's only the share it could attribute. In a busy corridor the balance never empties. It refills as payouts go out, and a core amount sits there all the time.

That core can earn. A payments company can keep the working float in plain USDC and move the stable core into a stablecoin vault. The vault holds tokenised T-bills or lends to blue-chip markets, with an instant exit for the days payouts spike. Upshift is non-custodial vault infrastructure for stablecoin yield. Upshift processes claimable redemptions daily, and most vaults offer instant redemption for a fee, subject to liquidity. A vault can also be whitelisted to the payments company alone. Returns float with the strategy and aren't guaranteed. How to set limits, approvals and accounting for those balances is covered in stablecoin treasury management.

What can go wrong in a stablecoin sandwich?

Most of the risk sits at the edges. An off-ramp partner can run short of local currency, freeze a payout for compliance review or fail outright. Until it's recovered, the balance pre-funded with that partner is exposed. The stablecoin can trade below $1 for a period, which is why issuer choice matters (see USDC vs USDT and how stablecoin depegs happen). And liquidity is thin for large tickets. The HBS authors found stablecoin rails competitive for retail-sized payments but "currently limited" for high-value institutional transfers. Even the most liquid pair, USD stablecoins to euros, trades only about $185M a day on centralised exchanges. Any yield on pre-funded balances adds smart contract and strategy risk on top. The vault contracts have been through 11 smart contract audits by 6 independent firms, which reduces that risk without removing it.

For information only. Nothing here is financial, legal or tax advice. Do your own research and take professional advice before moving client funds.

Frequently asked questions

What is a stablecoin sandwich?

A payment that converts fiat into a stablecoin, moves the stablecoin onchain and converts it back into fiat at the other end. Felix Pago runs one between the US and Mexico.

What is the difference between a full and an open stablecoin sandwich?

A full sandwich ends in local currency in a bank account. An open one ends with the recipient holding stablecoins or a dollar balance, as in MoneyGram's Colombia app.

Is a stablecoin sandwich cheaper than SWIFT?

Often, for retail-sized payments in liquid corridors. Retail bank wires carried FX markups of 200 to 400 basis points in the HBS data, while the stablecoin leg itself costs cents.

Who invented the stablecoin sandwich?

FXC Intelligence says the term is widely credited to Ran Goldi of Fireblocks, in 2021.

Keep reading

• Stablecoin cross-border payments. The end-to-end corridor, from collection to payout.
• What PayFi is. Payment finance and where payment balances sit.
• How card programs earn yield on float. Instant exits at the point of sale.
• Onchain yield for payments companies. Vaults built around settlement and payout timing.