Stablecoins are increasingly integrating functions such as accounts, payments, foreign exchange, and credit, reducing reliance on traditional banking systems, according to a report by a16z Crypto. However, fiat currency exchange liquidity remains a significant bottleneck. The report also notes that competition among stablecoin issuers is shifting towards regulatory compliance, with licensing and regulatory status influencing their roles in the financial system. Additionally, stablecoins are being used in emerging markets to access dollar-denominated assets, potentially driving further development of on-chain credit.