Luisa Crawford
Jan 23, 2026 19:15
Stellar (XLM) outlines how code-based blockchain protocols can deliver accountability, privacy, and compliance features that traditional payment networks require.
The Stellar (XLM) Development Foundation used its Davos 2026 platform to argue that blockchain protocols and traditional payment networks are converging rather than competing—a message that aligns with the broader shift in this year’s World Economic Forum discussions from “if crypto” to “how crypto.”
Representatives from legacy payment systems and open blockchain protocols shared a stage this week in Davos, marking a notable departure from previous years’ adversarial debates. The conversation centered on coordination, not replacement.
Two Coordination Models, One Goal
Stellar’s analysis breaks down global value transfer into two distinct approaches. Committee-based coordination—the domain of Swift, ACH, and SEPA—operates through negotiation, bilateral agreements, and consensus-building among sovereign institutions. These systems offer accountability, governance, and legal certainty built over decades.
Code-based coordination flips the script. The protocol becomes the agreement itself. Compliance is computational rather than contractual, and participation doesn’t require negotiation.
The foundation’s key argument: blockchain protocols have matured enough to encode the very properties that made traditional systems essential. On-chain records provide accountability no party can alter. Protocol rules establish governance. Deterministic execution creates legal predictability.
Privacy Becomes the Bridge
Financial institutions have specific privacy requirements that code can now address, according to Stellar. They need balance obfuscation to prevent competitors from inferring positions, transfer obfuscation to keep transaction volumes confidential, and tools for regulators to maintain oversight.
“What’s remarkable is that code can now help deliver all three simultaneously,” the foundation stated. “That’s convergence: compliant privacy solutions enabled by code.”
This framing arrives as regulatory frameworks mature. The EU’s MiCA regime and the U.S. GENIUS Act have established clearer parameters for stablecoin issuance and oversight, creating the legal certainty institutions require.
Davos Context Matters
The timing isn’t accidental. This week’s Davos discussions have treated tokenization and stablecoins as technologies to be tested within existing financial architecture rather than parallel systems. UnionPay presented its own cross-border payment transformation plans on January 21, while BRICS nations continue exploring CBDC interoperability.
Interoperability, risk management, and supervisory coordination remain unresolved questions across the industry. Stellar’s pitch positions its protocol as a bridge solution—permissionless access combined with the compliance features committees have historically provided.
The foundation notably avoided the “disruption” rhetoric that characterized earlier blockchain advocacy. Whether traditional finance agrees that code-based systems can truly replicate committee-derived trust remains the central question for 2026’s integration efforts.
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