For decades, people in emerging markets have found ways to protect their savings when the local currency loses value. Some bought US dollars in cash. Others kept foreign-currency bank deposits or sent money to accounts outside the country.
Stablecoins offer a new route.
A stablecoin is a digital token that aims to keep a stable value against a real currency or another asset. The most important group is the US dollar stablecoin. Tokens such as USDT and USDC give users digital access to dollar value without the need for a traditional US bank account.
This matters because access to dollars can now happen through a phone and a crypto wallet. A person may convert local currency into a dollar stablecoin and hold that asset outside the normal banking system.
The change may look small from the outside. But for countries with weak currencies, high inflation or strict foreign-exchange rules, it can have much larger effects.
Stablecoins Have Become a Large Market
The stablecoin market has grown sharply in recent years. The IMF says its total market value nearly tripled between 2021 and 2025. By 2026, it stood at about $300 billion and had stayed close to that level over the previous year.
The dollar has a clear lead in this market. Almost 99 percent of stablecoins are denominated in US dollars, according to the IMF. The BIS puts the dollar share at about 98 percent.
This makes stablecoins more than a crypto story. They are also part of the wider dollar system.
Stablecoin transaction numbers can look enormous. Some estimates put total stablecoin transaction volume above $30 trillion in 2025, with about $6.1 trillion of that linked to cross-border activity. Yet these figures need care. Much of the volume comes from crypto trading, automated systems and arbitrage rather than normal payments.
The BIS estimates that only about $390 billion of stablecoin flows in 2025 were related to payments. That is still small beside the global cross-border payments market, which is estimated at around $1 quadrillion a year.
Why Emerging Markets Matter
Stablecoins are especially important in countries where people do not fully trust the local currency.
When inflation rises, the value of local savings can fall. When the currency drops against the dollar, imported goods become more expensive. People then have a strong reason to seek a safer store of value.
Dollar stablecoins can meet that demand.
The IMF says stablecoin inflows tend to be larger in countries with high inflation, exchange-rate volatility, weak institutions and limited trust in economic policy. These are the same conditions that have caused people to hold physical dollars or foreign-currency bank deposits in the past.
The difference is speed.
Past forms of dollarisation often took years. People first bought some cash dollars, then opened foreign-currency accounts or moved part of their wealth abroad. A digital wallet can make access much easier.
A smartphone can therefore become a simple gateway to dollar assets.
The Pressure on Local Currencies
This creates a basic foreign-exchange problem.
Imagine a person earns money in the local currency but decides to move part of those savings into USDT or USDC. That person must first sell the local currency and obtain a dollar-linked asset.
If millions of people do the same thing, demand for dollars rises.
At the same time, demand for the local currency can fall. That can place pressure on the exchange rate.
New BIS research gives this idea stronger evidence. The study looked at four major dollar stablecoins across 27 fiat currencies and 64 exchanges from 2021 to 2025. It found that a rise in stablecoin demand can weaken the local currency in traditional foreign-exchange markets and raise the cost of obtaining dollars through FX swaps. The effect is stronger for emerging-market currencies, where price gaps are larger and arbitrage is weaker.
The IMF research reached a similar result. It found that a 1 percent exogenous increase in net stablecoin inflows raises stablecoin parity gaps by about 40 basis points, weakens the local currency and increases the dollar premium in synthetic funding markets.
This is important because it shows that crypto and traditional currency markets are not separate worlds.
Stablecoins Can Create a Digital Form of Dollarisation
Dollarisation is not new.
In some countries, people already keep large amounts of their wealth in US dollars. They may use dollars for savings, property deals or large purchases even when the local currency remains the official money.
Stablecoins can create a digital version of this process.
The BIS says widespread stablecoin use could affect the role of domestic currencies as a store of value and as a medium of exchange. The risk is greatest in economies with weak macroeconomic conditions.
At first, people may use stablecoins only for savings. Later, businesses may accept them for payments. If the process goes further, prices, contracts or wages could also use dollars.
At that point, the local currency could lose part of its role in everyday economic life.
That would make it harder for the central bank to influence the economy through interest rates and other monetary tools.
Capital Controls Face a New Challenge
Many emerging markets have rules that limit how much foreign currency residents can buy or move abroad.
These rules are easier to enforce when transactions pass through banks and other regulated financial institutions.
Stablecoins can create another route.
A user may buy a dollar stablecoin through an exchange, move it to a personal wallet and send it across borders. The transaction can occur on a blockchain rather than through the traditional banking network.
The BIS warns that this could make capital flows more volatile. In good times, money could leave the country faster. During a crisis, people could also rush out of the local currency at greater speed.
This does not mean every stablecoin transaction breaks a capital-control rule. It means the technology can make enforcement harder because the payment system crosses national borders.
The Benefits Are Real Too
Stablecoins are not only a threat to emerging-market currencies.
They can also solve real problems.
Cross-border payments can be slow and expensive. Remittances are a good example. The IMF says the average global cost of sending a remittance is about 6.5 percent, while stablecoin transfers can have much lower end-user costs in some corridors. Still, the cost is not always lower because exchange-rate differences and fees at the entry and exit points can add to the final price.
For a small business that needs to pay an overseas supplier, a stablecoin can also offer faster settlement.
For someone who lives in a country with a weak currency, a dollar stablecoin can provide a simple way to preserve savings.
So the same product can create both benefits and risks.
The Impact Will Differ From Country to Country
There is no single outcome for every emerging market.
In a country that already uses the dollar widely, stablecoins may mainly replace cash dollars or traditional dollar deposits. In that case, the total demand for foreign currency may not rise much.
In a country where people have little access to dollars but strong demand for them, the effect can be much larger. Stablecoins may create new dollar demand rather than simply replace an existing form of dollar holding.
Countries with strong institutions, stable domestic currencies and efficient payment systems may face fewer risks. Demand for dollar stablecoins may remain limited because people have less reason to leave the local currency.
This is why the IMF argues that the impact depends on each country’s economic structure, existing level of dollarisation, financial system and capital-flow rules.
What Central Banks Can Do
The strongest defence is still a credible domestic currency.
Sound monetary policy, sustainable public finances, strong institutions and reliable payment systems can reduce the desire to move savings into foreign currencies.
Regulators also need better data. Blockchain transactions are visible in many cases, but wallets do not always reveal the identity of their owners. Activity through exchanges, private deals and self-hosted wallets can be harder to measure.
Regulators therefore face a new task: they must understand both the traditional FX market and the digital market that now connects with it.
International cooperation will also matter. Stablecoins can move across borders, while most financial regulation remains national.
The Bigger Picture
The rise of stablecoins changes the meaning of access to the dollar.
A person no longer needs a bank account in the United States to hold digital dollar value. A phone, an exchange and a wallet may be enough.
That can make payments faster and give people more choice. But in countries with weak currencies, it can also speed up dollarisation and place extra pressure on the local currency.
The most important point is that stablecoins are no longer only a crypto-market issue. Research from the IMF and BIS shows that their flows can affect traditional foreign-exchange markets, exchange rates and dollar funding costs.
The future will depend on how quickly people adopt them, how governments regulate them and how much trust people place in their own currencies.
If stablecoins remain mainly a crypto trading tool, their effect on emerging-market currencies may stay limited. If they become a common way to save, pay and move money across borders, they could become a much more important part of the global dollar system.
The crypto dollar trade, in other words, is not just about crypto. It is about who gets to hold dollars, how easily they can get them, and what happens to local currencies when digital dollars become available to almost anyone with a phone.
