Stablecoins can transform the Global South by reimagining digital finance, trade, and development

Stablecoins are rapidly evolving from crypto tools to experimentation of financial infrastructure with a supply that has grown from $6.8 billion in 2020 to $273 billion in 2026 and transaction volumes that have reached $10.9 trillion annually. Stablecoins have the potential to address structural gaps in emerging markets, from currency instability and weak banking access to expensive cross-border payments, making them an attractive facet of the financial ecosystems of the future. Yet despite their potential to help address some of the challenges emerging markets face, they also bring about additional complexities, especially related to the need for regulation to properly seize these opportunities.  

Emerging markets are the key holders and users of stablecoins, with individuals in emerging markets holding 66% of the global stablecoin supply across various use cases. According to the 2025 Global Crypto Adoption Index, Asia has the highest volume of stablecoin activity, with Indonesia, Vietnam and the Philippines leading in adoption. North America follows, fueled by the United States and its development of regulatory and institutional frameworks. The United States is in the number two position in stablecoin activity, and the most popular stablecoins are pegged to the U.S. dollar to avoid volatility as the dollar serves as the world’s primary reserve currency.

Meanwhile, Africa, the Middle East, and Latin America lead in terms of stablecoin volume relative to GDP. The Global Crypto Adoption Index shows that overall crypto adoption grew 63% in the past year in Latin America, as it is increasingly used in retail and institutional settings, and 52% in sub-Saharan Africa, where it is used for remittances and daily transactions. Eastern Europe leads in crypto adoption when adjusted for population size. In countries like Ukraine, Moldova, and Georgia, crypto is seen as a flexible and reliable alternative to conventional financial institutions.

There are a variety of reasons why stablecoins matter in developing countries, especially in economies that have struggled to maintain resilience around payment systems and remittances. Additional ways stablecoins can be leveraged by the Global South are discussed below.

Fixing broken payment systems

Stablecoin technology offers near-instant transfers across borders, addressing a key constraint of traditional payment channels in regard to fees and time. While traditional cross-border payments can take 3-5 days to process with transaction costs of 2%-7%, stablecoins have the potential to have a near-instant settlement and often cost less than $1 per transaction. According to a survey by EY-Parthenon, 41% of organizations using stablecoins have reported savings of greater than 10%. In Latin America, 71% of firms already using stablecoins cite international payments as their top use case, meanwhile a Mastercard survey found that more than one-third of consumers have used them for everyday transactions. Their speed and cost-effectiveness for international transactions make stablecoins particularly promising for the 40% of freelance workers who reside in low-to-middle-income countries, creating opportunities for more clients and contracts around the world. Compared to other instant payment networks, such as Pix in Brazil that enables quick payments within the country, stablecoins have a unified and open rail that works the same across the world, which overcomes the need to connect separate national infrastructure. Yet overall, the extent to which stablecoin technology delivers these potential benefits related to payment systems relies on the factors that underlie their use, such as on- and off-ramps, liquidity, regulatory certainty, merchant acceptance, and user behavior.

Domestic opportunities

Stablecoins can also increase benefits related to tax, although many of these outcomes depend on their design, governance structure, and integration within regulatory and financial systems. Transactions via compliant and regulated stablecoins may be more transparent, fast, reliable, and simplified. Smart contracts could be embedded in stablecoins where software can be programmed to automatically calculate and trigger tax withholding or tax remittances, which could help both the public sector in countries developing new flexible or targeted tax policies, and the public sector, as companies could enable real-time tax planning which can increase companies’ efficiency and improve overall tax transparency. Smart contracts can also have the potential to better monitor and lower the usage of stablecoins for money laundering and improve lending operations by embedding on-chain lending protocols that lower costs and improve access to credit.

Remittances

In facilitating frictionless payments, stablecoins naturally offer benefits for remittances. Mexico’s remittance market (the fourth largest globally) has driven the Banco de Mexico to launch a comprehensive stablecoin framework in 2025, with USDC (USD Coin, a stable coin pegged to the U.S. dollar issued by Circle) transaction volume growing 450% and stablecoins now capturing about 8% of its remittance flow. Eight of the top 10 remittance destinations are in emerging markets, indicating that stablecoins could serve as an important technology and infrastructure for these economies, especially as global remittances more than doubled between 2010-2024. Stablecoins’ blockchain technology in particular has the benefit of simplifying the challenges that international payments face, such as overcoming the multiple data formats, operating hour mismatches, and long process chains, while also providing the security that comes with fiat-backed stablecoins in terms of value storage.

Digital dollarization and monetary stability

Stablecoins also act as a store of value, which can be especially important in economies with high inflation. For example, Argentina, with consumer price inflation over 30%, had $34 billion in stablecoin transactions in 2024 and the highest crypto adoption rate in the Western Hemisphere. In contrast to volatile cryptocurrencies like Bitcoin, which lower welfare, stablecoins can improve welfare by smoothing household consumption during shocks. Digital dollarization is thus a promising hedge against macroeconomic risk that can enhance monetary stability for households, as long as risks related to monetary policy sovereignty are addressed, as discussed in the challenges section. Already, 73% of intra-Asian business-to-business (B2B) payments use dollars as an intermediary currency, with dollar-pegged stablecoins used as a “stable-value transfer rail” that does not require a traditional U.S. bank relationship. 

Financial inclusion and access

Stablecoins can also address a structural gap in emerging markets related to unbanked populations. Fifty-one percent of adults in sub-Saharan Africa do not own a bank account, reflecting in part the fact that most employment is in the informal economy. The expansion of mobile money has been found to positively influence financial inclusion, with mobile-first economies growing rapidly. In sub-Saharan Africa, 40% of adults have mobile money accounts as of 2024, and receiving wages through mobile phones is more common than through traditional bank accounts. Stablecoins can build on this momentum toward financial inclusion as they enable access to USD (or whichever currency the stablecoin is pegged to) without a bank account and to a wider range of services like lending or insurance. One projection estimates that stablecoins used for savings will increase from $173 billion today to $1.22 trillion by the end of 2028 in emerging markets. While stablecoins overcome the barrier of needing a bank account, whether or not stablecoins can meaningfully contribute to greater financial inclusion overall will certainly depend on a system-wide approach including universal internet access.

Trade, SMEs, and capital efficiency

Small and medium enterprises (SMEs) face foreign exchange volatility, payment delays, and high transaction costs, making them a prime and interesting target for stablecoins to improve cash flow via quicker settlement and reduce foreign exchange exposure. With faster payments comes more efficient capital. In India’s B2B IT sector, for example, 67% of executives reported faster cash flow in stablecoin transactions when receiving money from U.S. clients, while 77% of all executives surveyed see supplier payments as the top use for stablecoins. Their ease of use could help unlock intra-regional trade and reduce working capital constraints. Nigeria is a leader in stablecoin use for cross-border payments and protection against currency devaluation. Companies like Yellow Card have partnered with Nigeria’s largest food producer to pay suppliers quicker and with lower costs. 

However, select risks do exist.

Monetary sovereignty and dollarization

About two-thirds of stablecoins, representing 98% of the market’s value, are pegged to the U.S. dollar. While digital dollarization provides promising opportunities, stablecoins also present significant risks when it comes to their impact on accelerating currency substitution and external monetary influence. Central banks could lose the power of their monetary tools if stablecoins backed by foreign assets, rather than local currency, become the norm, while stablecoins could worsen the dollarization problem that reduces monetary sovereignty and increases dependency on U.S. regulatory decisions. 

Financial stability risks

Stablecoins bring risks of financial instability if deposit flight occurs at scale when people diversify away from banks. Yet a recent study found that approximately $1 trillion is expected to exit emerging market banks in the next three years. This represents around 2% of aggregate deposits in the study’s 16 economies that scored the most vulnerable to deposit outflows. Many stablecoins also lack deposit insurance or full protections which would make deposit flight an even greater risk for users. In addition, stablecoin issuer concentration, where the majority of the market supply is controlled by a few entities, adds significant risks related to deposit flight and to the outsized ramifications of any operational or legal failure at one of those entities. 

Illicit finance and compliance

Since they serve as entry and exit ramps to other crypto markets, stablecoins run the risk of being used for money laundering, terrorist financing, and other illicit activities. One investigation found that stablecoins were used for $25 billion in illicit transactions in 2024. Cybersecurity is critical, as hackers targeting stablecoin issuer systems pose significant risks both for stealing reserves and for issuing unauthorized stablecoins, while third-party custodians of reserve assets introduce separate risks related to operational failures. While the 24/7 instant payment system is beneficial, it can also introduce new risks when it comes to scams, as consumers might not have much recourse to reverse a payment once it is made.

Regulatory fragmentation

The regulatory environments among emerging markets are fragmented, from more progressive approaches to more restrictive ones. For example, the United Arab Emirates and Singapore have the most advanced and innovation-oriented regulatory frameworks, with the UAE Central Bank requiring 100% asset backing and payment token licenses. In India, there are restrictions on private stablecoins as it undergoes its digital rupee Central Bank Digital Currency (CBDC) pilot, yet it ranks first globally in crypto adoption. Others, including Indonesia, have launched regulatory sandboxes. The fragmented regulatory landscapes make it difficult to navigate markets and reduces the interoperability across jurisdictions, leading to an increase in operational complexity and challenges to scaling cross-border transactions. 

Coherent and clear regulation

Developing consistent and clear regulation will be critical to maximize the impact of stablecoins and reduce risks such as deposit flight and illicit uses. Common themes to address in clear regulation for stablecoins include listing requirements for offshore stablecoins, facilitating technical assistance, addressing data gaps, and deploying regulatory sandboxes. The Bank for International Settlements identifies three requirements for stabilizing stablecoin architecture: 1) a defined redemption commitment in fiat money; 2) an exchange-traded fund-like arrangement to trade tokens; and 3) an asset-backing arrangement that is liquid. If institutions are strong, stablecoins can actually increase transparency due to its traceability, programmability, and auditability if the proper structures are in place.  

Singapore’s monetary policy framework is a clear regulatory pathway for institutional stablecoin use that has attracted major stablecoin issuers. It requires “100% reserve backing in high-quality liquid assets, monthly attestations, segregated reserve accounts, and Tier 1 capital ratios of at least 8%” that remove regulatory ambiguity. Similarly, the Central Bank of Georgia recently passed a set of regulations allowing registered and licensed companies to issue stablecoins that are pegged to the national currency and backed by reserve assets, outlining strict capital requirements, accountability mechanisms (quarterly audits required when reserve assets meet a specific amount), and time requirements for redemption requests to be met. If reserve backing can be held in central bank reserves or domestic government securities, rather than foreign currencies, stablecoins could actually boost domestic savings and demand for sovereign debt, but it will require a robust set of emerging market licensing banks, fintech firms, or financial market infrastructures that can issue local currency stablecoins, robust transparency and disclosure requirements, and strong, integrated regulatory systems.

Strong anti-money laundering (AML) and compliance systems

Part of coherent and clear regulation will involve addressing compliance issues. Blockchain analytics tools and real-time monitoring will be critical for AML and compliance systems. The 2025 GENIUS Act requires U.S. stablecoin issuers to have full AML compliance, representing a clear formal regulation that could be replicated in emerging markets.   

Building research and policy capacity to respond to evolving opportunities and challenges

To reap the benefits of stablecoins, countries must have the capacity for policy responses that cannot be executed with weak institutions, high inflation, macroeconomic instability, or limited financial access. Emerging market governments must work to develop macroeconomic frameworks and strong regulatory capacity, while building their own research capacity and agility. Having the policy and research capacity and foresight to examine the different functionalities of central bank digital currencies and stablecoins and how they might best work together to serve the needs of a country will be critical to avoid fragmentation and improve monetary stability.  

Public-private partnerships

Banks, fintech companies, and governments must work together to integrate stablecoins with payment systems and drive innovation, interoperability, and financial inclusion. They will also help streamline regulatory compliance, which was exemplified in Kenya’s M-Pesa’s private-sector partnership with the government. 

Regional coordination

Harmonizing standards, interoperability, and cross-border regulation will be critical for powering regional corridors in Africa, Southeast Asia, and Latin America. Cooperating with other authorities will help facilitate knowledge sharing and ensure proper coordination, adapting best practices to local contexts. Regional bodies could also strengthen the voice of emerging markets as international coordination on stablecoin regulations builds. 

Complementarity with national systems

A recent Boston Consulting Group analysis found that in 2025, larger, more regulated entities started to experience incremental growth. This pattern indicates that stablecoin users are not only seeking cheap transactions but also systems that are reliable, interoperable, and compliant with relevant laws. Integrating stablecoins within existing financial systems—alongside other enabling conditions such as sound regulatory design and user acceptance—could open up new opportunities for stablecoins beyond payment instruments. Linking stablecoins to domestic payment rails could complement local currency use and power government transfers, securities settlement, utility bill payments, or e-commerce transactions. African central banks are already recognizing the need to navigate and balance these opportunities and risks. This balancing act will only grow more important as stablecoins become more integrated into financial systems, since new opportunities and risks will continue to emerge, requiring constant monitoring and an agile approach to managing them.

Stablecoins could move from niche uses to systemic infrastructure, with emerging markets as the primary drivers. Making sure that they enable financial sovereignty and strengthen resilience instead of reinforcing dependency will depend on whether countries can build the institutions, rules, and partnerships needed to adequately govern it and steer it toward its most productive uses. If successful, emerging markets could build an efficient system that deploys capital, increases financial inclusion, and creates new pathways for lending and payment across the public and private sectors. However, whether or not this success is realized will depend on strong agile leadership and the alignment of enabling factors like regulation, institutional capacity, and infrastructure, which will shape just how integrated stablecoins will become.