Earlier on we had Schmid on monetary policy: Fed’s Schmid says inflation too high, worrying that price rises becoming more widespread

Kansas City Fed President Jeff Schmid casting a wider net now, says its hard to know if stablecoin is anything different from Venmo on steroids.

Let’s consider.

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Firstly, what is Venmo, and what are stablecoins?

Venmo is a centralised payment service operated by PayPal, built entirely on the traditional banking system:

• Balances in Venmo are denominated in US dollars and held by PayPal’s partner banks.

• Transfers happen off-chain — they’re recorded in PayPal’s internal ledger, not on any blockchain.

• When you “send” money to a friend, Venmo simply updates its database; the real banking settlement happens later.

• Users rely on PayPal’s custody and U.S. banking regulations for trust and protection.

What a Stablecoin is:

A stablecoin (like USDT, USDC, or PayPal’s PYUSD) is a cryptocurrency designed to maintain a stable value, usually pegged to a fiat currency like the US dollar.

• It operates on a public blockchain (like Ethereum or Solana).

• Transactions are peer-to-peer and transparent, recorded immutably on-chain.

• Users self-custody their funds if they choose — no intermediary like PayPal is needed.

• Settlement is instant and final, with no bank delays.

• Trust relies on the issuer’s reserves and the blockchain protocol, not on a private company’s internal ledger.

In short:

• Venmo is a digital wrapper around the banking system — convenient but centralised.
• Stablecoins are digital dollars that live on the blockchain — programmable, global, and more transparent but with different regulatory risks.

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The two have very different FX and cross-border implications:

Venmo is purely domestic, stablecoins are global

• Venmo operates entirely inside the US banking system — all balances are USD-only, and cross-border transactions aren’t possible. That means no FX element, no offshore liquidity, and no arbitrage opportunities.

Stablecoins, by contrast, circulate globally 24/7 across crypto exchanges, DeFi platforms, and OTC desks. They effectively act as synthetic U.S. dollars offshore — liquid, transferable, and tradable against other assets without touching the banking system.

Venmo is non-convertible — it’s domestic USD only.
Stablecoins, however, enable on-chain FX via decentralised exchanges or stablecoin pairs (e.g., USDC/USDT vs EURS/JPY stablecoins).

They’ve also become de facto settlement rails for crypto-native trade and, increasingly, for cross-border B2B payments.

• Emerging-market businesses use USDT as a hedge against local currency volatility.

• Offshore exchanges use stablecoins for collateral and margin, bypassing traditional bank FX bottlenecks.

This has led analysts to describe stablecoins as the new eurodollars — private, offshore dollar instruments that expand global USD liquidity outside U.S. banks.