What Is the Stablecoin Sandwich?

What is the stablecoin sandwich?

A stablecoin sandwich is a payment flow that starts in fiat, converts into a stablecoin for the cross-border or settlement leg, and converts back into fiat at the destination, so the customer never handles a stablecoin. Episode 105 of Tokenized examined how Mastercard, BVNK and Visa are moving past it.

“I always say that it could be a donkey carrying the money to the border. They just want the money to get there fast, reliably, and they want to maximize the money they send, right?”

— Manuel Godoy, Co-Founder and CEO, Felix Pago

The fiat on either side are the bread and the stablecoin is the filling. A sender pays dollars, the provider swaps them into USDC or another token, moves the token across a blockchain, and a local partner sells it for pesos or another currency. The sender and the recipient only see fiat.

Why companies built it

Felix Pago began by serving Latin American immigrants in the US who send money home. Godoy says those users trusted physical stores and did not care how the money crossed the border, only that it arrived quickly and cheaply. The sandwich let Felix use stablecoins for speed and cost while the customer saw cash and bank deposits.

“it felt like the stablecoin sandwich when we talked about it on on the show was like one of the first flows that resonated with people.”

— Cuy Sheffield, Head of Crypto, Visa

When Felix started, no off-the-shelf version of this flow existed. Godoy says the company built its own rails in each corridor, starting with Bitso in Mexico, so that it had both a fiat component and a crypto component to cut costs and pass savings to users.

Why networks are moving past the sandwich

Episode 105 opened with Mastercard and BVNK launching a platform with one API for fiat and stablecoin accounts. Banks, fintechs and enterprises can embed multi-currency accounts under their own brand, hold fiat and stablecoins with real-time conversion between them, and attach stablecoin-linked cards and local bank payouts. The platform goes live in 40 territories, with Nuvei, Beam and Almond named as early users.

“I'm actually hearing less about the stablecoin sandwich right now and more about what we announced today was you know stablecoin prefunding, being able to send the stablecoin to Visa for us to pay out in fiat”

— Cuy Sheffield, Head of Crypto, Visa

The same week, Visa Direct moved its stablecoin pilots to production. Sheffield says the sandwich earned its place when skeptics needed stablecoins hidden, but adoption and the GENIUS Act have changed the mix. Providers now see more stablecoin-in, fiat-out and fiat-in, stablecoin-out flows, because one side of the market is already stablecoin native.

Own the account, not just the rails

Melinek argues the sandwich exists because on-ramps and off-ramps are friction points on a new technology. If banks and networks own the account itself, the conversion steps could disappear into the product, with value held on chain and only spent through familiar channels.

“if we start to get these like full stack developments or you know banks or these different networks deciding they want to own the accounts, not just the rails, I think it'll become more commonplace.”

— Jacquelyn Melinek, Founder and CEO, Strata Media

Rain shows the same direction. Melinek describes the company as moving from card issuer to balance holder, adding embedded non-custodial wallets, virtual-account funding, stablecoin-linked Visa and Mastercard cards and local payouts. Custodial wallets and earn on balances are due before the end of 2026.

Pre-funded accounts versus trading on chain

Sheffield contrasted two models. Traditional remittance firms such as Wise keep pre-funded local-currency accounts, so a payment to Mexico is paid out of pesos already held there. The stablecoin model avoids locking up that capital, but the provider must find a partner to convert into local currency, and the FX rate may suffer.

“we're doing what Wise did on chain. We're tokenizing that flow because think about it, stablecoin is bits.”

— Manuel Godoy, Co-Founder and CEO, Felix Pago

Godoy says Felix avoids local pre-funding by trading directly in a 24/7 market, which removes intermediary fees and gets an FX rate close to interbank. Where that market is thin, Felix still falls back on traditional partners and pre-funding.

The liquidity gap in smaller corridors

Godoy says Mexico, Colombia and Brazil have strong stablecoin liquidity. Smaller Central American corridors do not, which forces Felix to work with traditional players who hold local distribution. He says he has discussed liquidity support with Mastercard, Visa and Circle.

“Nicaragua, Honduras, Guatemala, liquidity is hard to find, so you do have to play with the traditional players.”

— Manuel Godoy, Co-Founder and CEO, Felix Pago

That gap is also why he expects incumbents such as Western Union and MoneyGram to keep their share in those corridors, and why he doubts branded stablecoins will gain traction there. Taylor and Sheffield disagreed, arguing a power law in liquidity does not rule out a few additional issuers with strong ecosystems.

Where tokenized deposits fit

Taylor raised tokenized deposits as a way to remove the remaining fiat leg. He cited SoFi, which offers SoFi USD that can be swapped 24/7 for its tokenized deposit. If bank money runs around the clock on chain, converting between a stablecoin and that bank money no longer waits for office hours.

“if your fiat only works office hours and your stablecoins work 24/7, you need a sort of fiat like money that can work 24/7 at the bank, and tokenized deposits give you that.”

— Simon Taylor, Host, Tokenized

• Treat the sandwich as a feature, not a product. Sheffield calls stablecoin support a table-stakes feature for any global money movement platform, as Mastercard and BVNK launch in 40 territories (Episode 105, October 2026).
• Expect prefunding flows. Visa Direct moved stablecoin pilots to production, letting stablecoin-native senders pre-fund in stablecoins and pay out in fiat, or banks send fiat and pay out in stablecoins (Episode 105).
• Check corridor liquidity before committing. Godoy says Mexico, Colombia and Brazil have deep liquidity, while Nicaragua, Honduras and Guatemala do not, so local partners remain necessary (Episode 105).
• Owning the balance owns the customer. Rain's move from card issuance to embedded wallets, with custodial wallets and earn due before the end of 2026, follows that logic (Episode 105).