The Interledger Foundation (ILF) has expanded the capabilities of its Interledger Protocol (ILP) to support organizations that are developing their stablecoins. This development addresses a key gap in infrastructure, enabling smoother interactions between different digital currencies regardless of who issues them or on which blockchain they operate.

With Congress working towards establishing regulatory guidelines for stablecoins, financial institutions and large corporations such as Fiserv, Mastercard, and Amazon are stepping up to launch their own versions. However, the current approach often relies on individual partnerships, which can create a fragmented network of incompatible stablecoins. This could complicate transactions and hinder future innovation.

Key Features of the Interledger Protocol (ILP)

The Interledger Protocol is an open-source technology inspired by TCP/IP that simplifies cross-border money transfers. It was developed with input from financial service providers and standards organizations like the World Wide Web Consortium, making it adaptable for various innovative applications.

Through ILP, issuers of stablecoins can integrate into a unified network, facilitating acceptance and transactions with other third-party stablecoins more efficiently.

Key benefits include:

• Avoiding the need for one-off partnerships by fostering broader interoperability among providers;
• Bridging the gap between tokenized assets and fiat currencies, essential for the widespread adoption of digital currencies;
• Establishing a global standard for stablecoin payments that minimizes friction in cross-border transactions;
• Designing from the outset with interoperability as a core principle.

The Interledger Protocol is aimed at enhancing access to the digital economy and has been shaped through collaborative efforts across 40 countries, focusing on creating seamless payment connections among individuals, businesses, financial institutions, and governments.