Stablecoins as Rails for Private Credit: Why Transaction Infrastructure Matters

Private investing continues to grow more complex, but the rails that move capital remain slow and costly. Stablecoins offer a way forward with instant, low-cost settlement that could reshape recurring and cross-border capital movements and private credit payments. At Clockwork, our focus is on reducing friction across the investment lifecycle which is why we view the continued institutionalization of stablecoins as a promising private market opportunity.

The Friction in Private Credit Today

Most private credit transactions rely on traditional wire transfers and bank custodians. Fees can accumulate quickly, especially in credit agreements with frequent payments. Cross-border flows are even more costly, with wire charges layered on top of FX spreads and delays from intermediary banks. Settlement can take days, creating liquidity mismatches and frustration for both sponsors and investors.

Why Stablecoins Fit the Use Case

Stablecoins address these pain points directly:

Negligible transaction costs: Moving tokens like USDC costs a fraction of traditional wires.
Instant settlement: Transactions are confirmed within minutes, around the clock.
Cross-border simplicity: Transfers do not depend on correspondent banks or time zones.
Programmability: Smart contracts can automate coupon payments or repayments, reducing operational overhead.

For investors and managers, these features translate into lower costs, faster liquidity cycles, and more predictable capital flows.

The Custody Question

The biggest hurdle has been custody. Until recently, banks were reluctant to handle stablecoins, leaving platforms such as Coinbase and Circle as the only practical options. That began to change in March 2025, when the U.S. Office of the Comptroller of the Currency (OCC) issued guidance allowing banks to offer custody of stablecoins without prior approval. The policy shift reduces barriers to entry, but adoption remains limited since the Federal Reserve and FDIC have yet to align their rules. For now, most institutional investors still prefer to watch from the sidelines, waiting for a fully harmonized regulatory environment.

Integrated KYC?

For cross-border transactions, an intriguing feature of some stablecoins is their embedded KYC infrastructure. BUIDL, a yield-generating stablecoin offered by BlackRock, is freely transferrable between whitelisted wallets that are institutionally vetted for KYC/AML compliance. Its utility as payment rails for private credit is limited for now, as only qualified purchasers (SEC Rule 2a51-1) can be whitelisted. This is an understandably conservative move by a blue chip institution, and we look forward to seeing a greater variety of offerings in the future that offer broader accessibility in addition to efficient compliance tools.

Signs of Migration Ahead

While current uses of stablecoins in private credit are marginal, the momentum is clear. Tokenized treasuries, on-chain settlement pilots, and the rising use of stablecoins in remittances and trade finance show how digital rails are seeping into mainstream capital flows. Private markets have historically been fast to adopt tools that reduce friction once they reach a certain threshold of reliability. Stablecoins are on that trajectory.

Key Takeaways

As long as the onramps and offramps for stablecoins are exchanges rather than banks, any useful transaction will still require a wire or ACH transfer. Client pressure is needed to hasten this development because the fees and delays from wire transfers represent revenue to banks. Until your bank can take custody and convert stablecoin payments (or exchanges implement core banking functions), any savings or transaction acceleration will be negated.

Stablecoins are not yet ready for prime time in private investment, but their advantages are undeniable. Recurring coupon payments, cross-border credit deals, and the broader inefficiencies of traditional banking all point to a strong case for adoption. Custody and regulatory clarity are the main obstacles, but they are moving in the right direction.

We expect that as sponsors and investors grow comfortable with these tools, private credit and other forms of private investment will begin migrating to stablecoin rails. For cross-border markets such as Mexico, where private credit demand is rising and international capital is increasingly important, the benefits may be even more pronounced.