Dual-currency stablecoin arbitrage · the only legal on-chain FX path in the §501 era

Wiki route

This entry sits under fintech index. Read it with Japan Financial Regulation — Legal Framework for Tokens, Crypto Assets, and Payments for adjacent context and Three-Layer Structure of Japan's Stablecoin Regulatory Regime (JPYC, USDC, Project Pax) for the broader system boundary.

[!info] TL;DR GENIUS Act §501 confines the compliance boundary for issuing / holding / transferring stablecoins, and only the “mutual exchange of dual-currency / multi-currency stablecoins” becomes a clearly legal on-chain FX path. The USDC ↔ EURC ↔ JPYC triangular-arbitrage structure is its sample —— interchange cost can be compressed to 0.01% (1/100 of traditional cross-border FX’s 1-3%), and even capturing 1% on the $33T global-settlement rail amounts to a $3.3B/year revenue opportunity.

Key facts

• USDC circulation $40-45B · EURC $200-300M · JPYC $50M+ (2025.Q4) ^•
• Net cost of the triangular arbitrage ~10-20 bp (0.01-0.02%) · traditional FX 1-3% all-in ^•
• Global cross-border settlement annual volume $33T (BIS 2024) · capturing 1% = a $3.3B/year opportunity ^•
• 2026.05 triangular arbitrage is already running live in Curve / Uniswap V4 hooks pools ^•

Mechanism / How it works

Arbitrage route: USDC (Circle USD 1:1) ↔ EURC (Circle EUR 1:1) ↔ JPYC (JPYC Inc. JPY 1:1) ↔ unwind the USDC position.

By contrast: SWIFT + correspondent banking 1-3% all-in · T+1/T+2; Wise / Remitly 0.5-1% · several hours; dual-currency stablecoin 0.01-0.02% · second-level finality. A 100× cost reduction + hundreds of times the speed, moving in the opposite direction from Cross-border SC via SWIFT API (the latter embeds the SC into SWIFT, the former bypasses it).

Origin & evolution

2018-2023 = Circle USDC monopoly · EURC launched in 2022 but with low liquidity. 2024 MiCA Title IV (EMT) activated the multi-issuer structure for euro stablecoins. 2024-2025 under the new framework of Japan’s Payment Services Act, JPYC became the first yen stablecoin. After 2025.07 GENIUS Act §501 took effect = the legal room was clarified: “a dual-currency swap ≠ FX business” · this is the asset allocation of 2 independent 1:1 tokens. 2026 triangular arbitrage moved from theory to a live DEX product.

Related

• Wiki Index
• Dual-currency arbitrage · the §501 legal hack and regulatory fragility
• USD Stablecoin Interchange Market
• GENIUS Act §501 Denylist
• Explosive Growth in B2B Stablecoin Cross-Border Payments (733% YoY, $226B)

Sources

• BIS 2024 cross-border settlement annual-volume report · MiCA Title IV · Japan PSA · GENIUS Act §501 (2025.07)