Stablecoins Rise in Emerging Markets Amid Currency Pressures

The use of stablecoins has surged in emerging markets, particularly in developing countries where residents are turning to dollar-denominated digital assets to safeguard their savings, make international payments, and protect their wealth from currency fluctuations.

Research conducted by the IMF found that 75% of stablecoin holdings come from emerging and developing countries, indicating a strong link between stablecoin adoption and times of financial distress.

A currency crisis can have a significant impact on stablecoin use, with the IMF reporting a 75% increase in stablecoin activity over the course of a year after the occurrence of a crisis.

Nigeria is a notable example of the trend, with stablecoins accounting for over 65% of the country's crypto inflows in 2024.

Central banks are taking notice of the trend, with Swiss National Bank board member Petra Tschudin warning that extensive adoption of stablecoins could hamper the effectiveness of monetary policies.