At one American bank, dollar-backed stablecoin use looks likely to overtake dollars sent over traditional payment rails this year.

Why it matters: Stablecoins are the first killer app of cryptocurrency.

FV Bank, based in Puerto Rico, was built to serve fintech firms, and that's led to a substantial business in the blockchain space.

• "Some banks are adding fintech capabilities to their portfolio. We're a fintech company that got a bank charter," Miles Paschini, FV's chief executive, tells Soixa.

• One product they've offered customers is the ability to deposit and pay with dollar-backed stablecoins directly from their accounts.

Context: There's around $200 billion on deposit around the world backing stablecoins today, up from roughly $136 billion a year ago.

• Those stablecoins processed almost $6 trillion in transactions over the past 12 months.

What they're saying: "Once our customers try it, they don't really switch back to using wires," Paschini says. He named several big buckets of use cases he's seeing customers use stablecoins for, such as:

• Paying salaries overseas to contract workers.

• Equity or bond brokers internationally who want to buy U.S. securities.

• Trade settlement between digital asset native companies.

The advantages stablecoin transactions have over wire transfers include speed, traceability, finality, and, in some places, better foreign exchange rates, Paschini says.

Friction point: Banks elsewhere in the U.S. that have attempted to serve the blockchain industry have met roadblocks.

• While FV Bank is subject to all U.S. banking laws and regulations, its location in Puerto Rico has allowed it to get more flexibility as a crypto-forward bank, Paschini says.

Zoom in: Puerto Rico's local regulator, OCIF, approved FV's business model once it made clear it had made investments in compliance that satisfied regulators' concerns.

• Those concerns have often centered on cryptocurrency's open networks and the potential ease of transaction with bad actors and entities under U.S. sanctions.

• FV Bank deals with these issues by pre-approving addresses it will transact with. If a client wants to send to someone new to the bank, FV has ways of vetting it first, Paschini notes.

Notably, FV is a reserve bank. That is, it doesn't lend out customer deposits at all. It could handle a complete drawdown of all customer deposits if it had to.

• Its model, often referred to as a narrow bank, is based on profits generated from customer fees, rather than the more typical banking model of investing deposits.

Zoom in: Its stablecoin business started with Circle's USDC. It has since expanded to Tether's USDT and, just last week, Paypal's PYUSD.

• It made news in 2022 as the commonwealth's first bank to offer custody services.

• The bank is looking to expand into lending soon, though not in the traditional way. It's likely to offer loans against cryptocurrency deposits, such as against bitcoin, similar to what startups like Unchained Capital and Ledn do.

What we're watching: FV Bank is seeing the fastest growth now with its business customers, particularly in international transactions, but Paschini points out that, that momentum could extend to consumers as more and more credit cards integrate with stablecoins.