A December 2025 report from the International Monetary Fund (IMF) warned that stablecoins pegged to the U.S. dollar could trigger currency substitution and capital outflows in fragile emerging markets (EMS), weakening local currencies.
However, experts say the stablecoin market has not developed enough to have a real systemic impact.
The December report, titled “Understanding Stablecoins,” provides an in-depth look at stablecoin use cases, demand drivers, global regulatory and macro-financial risks, particularly in emerging markets.
The report states: “Stablecoins can be used to circumvent capital flow management measures (CFMs). The implementation of CFMs relies on existing financial intermediaries. Stablecoins can be used to effectively undermine the implementation of CFMs by providing a pathway for capital flows outside the common rail (Cardozo et al. 2024; He et al. 2022; IMF 2023).”
“In fact, there is some evidence that cryptocurrencies, including stablecoins, are used as markets for capital flight,” the report added.
Monetary authorities around the world believe that the penetration of stablecoins in emerging markets with high inflation and volatile fiat currencies could trigger “currency substitution,” in which locals abandon volatile fiat currencies in favor of dollar-pegged tokens, thereby weakening the control of central banks.
U.S. dollar equivalent
These concerns are not unfounded, as the value of stablecoins is pegged to external references such as fiat currencies, facilitating transactions outside traditional banking channels.
The most popular stablecoins USDT and USD Coin (USDC) are pegged to the U.S. dollar and have a combined market capitalization of $264 billion, according to CoinDesk. This amount is almost equal to France’s foreign exchange reserves and higher than those of the United Arab Emirates, the United Kingdom, Israel, Thailand and many other countries.
These U.S. dollar equivalents, some of which have been accepted as permitted payment stablecoins under the U.S. Genius Act, can be freely traded on public blockchains, meaning anyone anywhere in the world can access U.S. dollars without having to open a bank account or follow the often strict guidelines for foreign exchange trading.
The result: If emerging markets panic, locals can now move capital seamlessly and quickly across borders via stablecoins, undermining capital flow management measures.
Imagine stablecoins existing during the 2013 taper tantrum, when Fed signals triggered sharp devaluations and massive outflows from emerging markets – their seamless peer-to-peer transfers could easily exacerbate the crisis by accelerating outflows and currency devaluation.
What if emerging markets now fall into a similar macro panic?
not big enough
This all sounds reasonable. However, while the stablecoin market has grown by leaps and bounds over the past few years, it is still too small to have such an impact on the macroeconomics of emerging markets.
Noelle Acheson, author of the book “Cryptocurrency” said: “It is still too early for stablecoins to have a major impact on the operation of emerging market currencies, and their total market size is still small relative to FX flows – the legalization of the Genius Act will not have an impact for quite some time (the law has been passed but has not yet entered into force, probably in 2027 1 ), and may never have an impact on emerging markets, where traders must comply with local legislation that may disfavor any use of stablecoins at all,” Macro Now newsletter told CoinDesk.
Acheson explained that while fiat-backed stablecoins have soared from $5 billion in 2020 to nearly $300 billion today, they are still primarily used on cryptocurrency trading entrances to fund cryptocurrency purchases, as evidenced by the USDT pair dominating spot trading volumes on major exchanges including Binance.
Furthermore, the dollar is too big and too entrenched in the global economy. Although it does not have a traditional “market cap” like stocks or cryptocurrencies, its global monetary base (physical cash + reserves) exceeds $2.5 trillion, broader indicators such as M2 exceed $20 trillion, and international liabilities exceed $100 trillion, dwarfing stablecoins.
“About 80% is used for cryptocurrency trading, not money management, and the stablecoin market is still relatively small,” Acheson said.
David Duong, director of institutional research at Coinbase, expressed a similar view, saying that the limited scale and policy frictions of stablecoins hinder systemic impact.
“Certainly, stablecoins can accelerate investment in USD in countries where they are already popular, but their overall size remains small relative to cross-border portfolio flows. Main mechanism for bond/equity redemptions, NDF [non-deliverable forwards] channel, mutual fund outflows will still dominate macro trends,” he said.
Traffic status
Emerging data from the International Monetary Fund shows that cross-border flows of stablecoins have surpassed unbacked crypto assets (such as Bitcoin, which lacks fiat backing) since the beginning of 2022, and even though stablecoins have a smaller overall crypto market share, the gap is still widening.
Asia-Pacific leads in absolute numbers, followed by North America, but when measured by GDP, Africa, the Middle East, Latin America and the Caribbean (emerging and developing economies, or EMDEs) stand out as net inflows from North America satisfy local demand for dollar-pegged stability and payments.
Emerging market and developing economies dominate these corridors, accounting for the lion’s share of flows in 2024 at $1.5 trillion, a fraction of the $100 billion global payments market but in sharp contrast to SWIFT’s advanced economy focus.