The International Monetary Fund (IMF) report from December 2025 cautions that USD-pegged stablecoins might lead to currency substitution and capital outflows in fragile emerging markets (EMs), jeopardizing local currencies.
However, experts suggest that the stablecoin market has not yet reached a scale sufficient for a significant systemic impact.
The December report titled “Understanding Stablecoins” explores stablecoin applications, factors driving demand, global regulations, and macroeconomic risks, especially for emerging markets.
“Stablecoins could be a means to bypass capital flow management measures (CFMs). The functioning of CFMs is dependent on recognized financial intermediaries. By providing a route for capital flows outside the established frameworks, stablecoins could effectively challenge the enforcement of CFMs (Cardozo et al. 2024; He et al. 2022; IMF 2023),” the report states.
“Certainly, some evidence indicates that cryptocurrencies, including stablecoins, are being utilized as a means for capital flight,” it adds.
The global monetary authority emphasized that the prevalence of stablecoins in emerging markets characterized by high inflation and unstable fiat currencies could lead to “currency substitution,” where locals abandon unstable fiat in favor of USD-pegged tokens, weakening central bank authority.
Dollar equivalents
These worries are not without merit, as stablecoins, pegged to external references like fiat currencies, enable transactions outside conventional banking systems.
The leading stablecoins, USDT and USD Coin (USDC), are anchored to the U.S. dollar, boasting a combined market capitalization of $264 billion, as reported by CoinDesk. This sum approaches France’s foreign exchange reserves and surpasses those of the UAE, the UK, Israel, Thailand, and several other countries.
These dollar equivalents, some recognized as authorized payment stablecoins under the GENIUS Act in the U.S., can be freely traded on public blockchains, allowing anyone globally to access dollars without needing to establish a bank account or navigate the often-complex regulations for forex transactions.
The outcome: In a crisis, individuals in EMs can swiftly and easily transfer capital across borders using stablecoins, undermining capital flow management efforts.
Consider if stablecoins had been available during the 2013 taper tantrum, when signals from the Fed instigated sharp depreciations in EMs and massive outflows – their seamless peer-to-peer transfers could have exacerbated the situation by heightening outflows and currency declines.
What if EMs were to experience a similar macro panic today?
Not big enough
While these scenarios sound credible, the stablecoin market, despite its rapid growth in recent years, remains too small to exert such an effect on EMs’ macroeconomic conditions.
“It’s far too early for stablecoins to significantly impact currency crises in EMs, and their total market size is still negligible compared to FX flows – the recent legalization by the GENIUS Act will not be relevant for a considerable time (the law is passed but not yet active, potentially by January 2027), and may never be applicable for emerging markets where local regulations are likely to oppose any use of stablecoins,” Noelle Acheson, the author of the Crypto is Macro Now newsletter, stated to CoinDesk.
Acheson noted that while fiat-backed stablecoins have risen from $5 billion in 2020 to nearly $300 billion today, they predominantly serve as on-ramps for crypto trading, as evidenced by USDT pairs dominating spot volumes in major exchanges like Binance.
Additionally, the dollar’s influence is immense and firmly established in the global economy. Although it lacks a conventional “market cap” like stocks or cryptocurrencies, its global monetary base (physical cash + reserves) exceeds $2.5 trillion, with broader metrics like M2 surpassing $20 trillion and international liabilities exceeding $100 trillion, rendering stablecoins insignificant.
“Approximately 80% of stablecoins are utilized for crypto trading, not treasury management, and the market remains relatively small,” Acheson added.
David Duong, Coinbase’s head of institutional research, expressed a similar sentiment, highlighting that the limited scale of stablecoins and regulatory obstacles hinder any systemic impact.
“Certainly, stablecoins could expedite capital flight to the USD in countries where they already have traction, but their total scale remains small compared to cross-border portfolio flows. The principal factors affecting macro movements would still be bond/equity redemptions, non-deliverable forward (NDF) channels, and mutual fund outflows,” he said.
Present state of flows
Emerging IMF data indicates that stablecoin cross-border flows have surpassed those of unbacked cryptocurrencies (such as Bitcoin) since early 2022, with the gap widening despite stablecoins’ modest overall share of the crypto market.
The Asia-Pacific region leads in absolute volumes, followed by North America, but when measured against GDP, Africa, the Middle East, Latin America, and the Caribbean (emerging and developing economies, or EMDEs) emerge prominently, driven by net inflows from North America meeting local demand for dollar-pegged stability and transactions.
EMDEs account for a significant portion of the $1.5 trillion projected flows in 2024, a small piece of the quadrillion-dollar global payments market, yet sharply contrasting with SWIFT’s focus on advanced economies.
