Standard Chartered, a multinational bank, has predicted that over $1 trillion could flow out of emerging market banks into stablecoins by 2028, driven by increased demand for US dollar-pegged crypto assets.
In a report released on Monday, the Global Research department of Standard Chartered stated that it expects a surge in global stablecoin adoption as traditional payment networks and core banking functions transition to the non-bank sector.
As stablecoins gain popularity in emerging markets (EM), Standard Chartered observed that users may leverage stablecoins to essentially access US dollar-backed accounts. “The prevalence of stablecoin ownership in EM is greater than in DM, indicating that such diversification is more probable in EM,” stated Standard Chartered.
The bank forecasted that stablecoins utilized for savings in emerging markets could rise from $173 billion to $1.22 trillion by 2028, suggesting an outflow of approximately $1 trillion from emerging market banks within the next three years.
Two-thirds of stablecoin supply already in emerging markets
Standard Chartered indicated that the most significant disruption from stablecoins will likely originate in emerging markets, where access to US dollars has traditionally been limited.
Stablecoins provide users with digital, round-the-clock access to a USD account, offering lower credit risks compared to deposits in local banks, as mandated by the United States’ GENIUS Act which requires them to be fully dollar-backed.
This situation heightens the risk of deposit flight from EM banking systems to crypto alternatives, according to Standard Chartered.
The bank estimated that approximately two-thirds of the current stablecoin supply is already held in savings wallets in emerging markets.
Standard Chartered also noted that nations with high inflation, limited reserves, and significant remittance inflows are particularly susceptible to deposit flight into stablecoins.
Related: GENIUS Act could mark end of banking rip-off: Multicoin exec
Stablecoins to combat inflation amid failing local currencies
Venezuela is frequently highlighted as an example of this trend as citizens shift from banking to stablecoins. With annual inflation rates soaring between 200% and 300% and the bolivar’s value plummeting, many have turned to stablecoins for both transactions and value storage. Merchants commonly list prices in USDt (USDT), locally referred to as “Binance dollars,” showcasing how stablecoins have replaced the bolivar in everyday commerce amid hyperinflation.
According to Chainalysis’ 2024 crypto adoption report, Venezuela ranked 13th with a 110% year-over-year increase in crypto usage. Numerous small family businesses, large retail chains, and shows across the nation now accept crypto through platforms such as Binance and Airtm.
In 2023, crypto transactions accounted for 9% of the $5.4 billion in remittances sent to Venezuela.
Beyond Venezuela, countries like Argentina and Brazil are also increasingly shifting savings into USDC (USDC) and USDT to mitigate inflation. Several businesses in these countries have begun accepting stablecoins as payment.
Fireblocks reports that stablecoins account for 60% of crypto transactions in Brazil and Argentina.
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