Why We Convert Stablecoin Immediately

When clients started paying in stablecoin, holding the balance seemed reasonable. It is pegged to a dollar, so what is there to worry about. I worked this out by comparing against a regulated stablecoin payment processor, which publishes the numbers I was guessing at.

Three things, it turned out.

Reason one: it is a promise, not money

A stablecoin is a claim on the company that issues it, backed by reserves they hold and report on.

That is not the same as money in a bank. It is better than it was, because issuers are now regulated with reserve and redemption requirements, and it is still a private company’s obligation.

For a balance we do not need, that is an exposure we did not decide to take.

Reason two: it can be frozen

Issuers can freeze specific addresses, and do, at the request of authorities.

This is remote for an ordinary business and it is not zero. It applies wherever the balance sits, including a wallet we control entirely, which surprised me.

Another reason not to accumulate.

Reason three: the accounting

This is the one that actually decided it.

A stablecoin balance is an asset requiring valuation at each reporting date, with a disposal recorded whenever we convert. Past a certain amount the answer stops being a wallet and becomes a payment processor for high-risk e-commerce.

Converting on receipt means our books show revenue in euros and a fee. Nothing on the balance sheet, nothing to revalue, no disposals to track.

Holding means a monthly revaluation and a disposal calculation per conversion. For a small company that is real ongoing work for no benefit we could name.

When holding would make sense

If we paid suppliers in stablecoin, holding enough to cover that would remove two conversions and obviously be sensible.

We do not, so it would be a position taken by inattention.

What our policy says now

Convert on receipt. Hold no stablecoin balance beyond what is in transit.

If that changes, it changes as a decision with a stated maximum and someone accountable for it, not by accumulation.

The general point

Every balance sitting somewhere is a choice, even when nobody made it deliberately.

We had several thousand in stablecoin for two months before anyone asked why. Nobody had decided to hold it. It was just what happened when nobody decided not to. Check the country list before planning anything. a provider you can actually reach publishes it and it is shorter than I expected.