Three reasons why stablecoins are thriving globally – Will the US follow suit?

Author: David Feliba, CoinTelegraph; Translated by: Bai Shui, Jinse Caijing

Although the Trump administration laid the groundwork for the regulation of the U.S. cryptocurrency industry (with the expectation that the White House's new crypto czar will set the direction in the coming months), these digital assets have already been thriving in emerging markets.

Stablecoins are pegged to fiat currencies and are becoming an important financial tool for many developing countries, facilitating remittances and cross-border trade, bridging the gap in financial inclusion, and providing inflation hedging in countries where traditional banking services are often lacking, and millions are nearly unable to access financial services.

Stablecoins (primarily pegged to the US dollar) have seen explosive growth in recent years, with their practical use cases rapidly expanding to Africa, Latin America, and some developing countries in Asia. While the US is still exploring how to apply this technology outside the realm of cryptocurrency, emerging markets have already demonstrated the significance of stablecoins.

In these regions, they are not just a financial experiment, but a solution.

Stablecoins as a Hedge Against Inflation in South America

In inflation-stricken economies such as Argentina and Venezuela, stablecoins provide a dollar-pegged safe haven to avoid domestic currency depreciation, especially when foreign exchange channels are under strict control. Throughout Africa and Central America, they serve as a cost-effective remittance and cross-border payment tool, while in places like Indonesia, they offer an alternative that is more accessible than traditional dollar banking, which may involve complicated requirements.

Eswar Prasad, a professor of trade policy at Cornell University, stated that while stablecoins are primarily used in decentralized finance in wealthier and more developed economies, serving as a bridge between traditional banking and DeFi, their role is more fundamental yet essential in emerging markets with limited financial infrastructure.

In low- and middle-income economies with underdeveloped financial systems, they can play a beneficial role by providing citizens and businesses with convenient, widespread, low-cost digital payment systems.

The US dollar is widely regarded as a global store of value, and acquiring dollars is a key driving factor for emerging markets to adopt stablecoins. Compared to the volatility of early cryptocurrencies like Bitcoin, stablecoins aim to provide stability, with most stablecoins pegged to the US dollar. USDT Tether holds nearly 60% of the global market share, followed by another dollar-backed asset, USDC.

Stablecoin provided by the issuer. Source: Castle Island Ventures.

“Some problems in the world need to be solved with a cryptocurrency that doesn't constantly fluctuate in price,” said Julián Colombo, a senior executive at the Mexican cryptocurrency exchange Bitso, in an interview. Bitso has official offices in Argentina, Brazil, and Colombia.

“Stablecoins provide a way to bring all the benefits of cryptocurrencies into real-world use cases—not just the potential to get rich off Bitcoin.”

Stablecoins are the top priority for Trump, the crypto czar.

As bipartisan senators introduced legislation to establish a regulatory framework on February 4, momentum is building in the U.S. around stablecoins. White House artificial intelligence and cryptocurrency czar David Sacks ( emphasized in his first address to the industry that stablecoin regulation is a top priority for the government. The task force led by the former venture capitalist will draft key policies in the next six months.

Regardless, the growth of stablecoins is nothing short of astonishing. According to data from DelfiLlama, their market capitalization reached an incredible $100 billion in just the past year, soaring to $225 billion by February 2025. USDT still dominates, accounting for over 60% of the market share, but challengers—including those supported by financial giants like PayPal—are rapidly emerging.

“Stablecoins - the tokenized representation of fiat currency circulating on the blockchain - are undoubtedly the 'killer application' of cryptocurrency,” mentioned in a report written by Castle Island Ventures and sponsored by VISA.

“We believe stablecoins represent a payment innovation that has the potential to provide secure, reliable, and convenient payment services to more people in more places,” said Cuy Sheffield, the global cryptocurrency head of the American payment giant.

The report states: “Although they initially emerged as a type of crypto-native collateral and settlement medium for traders and exchanges, they have crossed the chasm and are widely adopted in the global mainstream economy.”

“Based on the differences between stablecoin activity and the cycles of the crypto market, it is clear that the adoption of stablecoins has surpassed merely serving the needs of crypto users and trading use cases.”

![uAkvnFfvw703sdjtDQTsAEzstlSotVuEtLSoAL13.jpeg])https://img-cdn.gateio.im/webp-social/moments-17a6534d9f8560df937e40e453c25ab5.webp “7350107”(

Spot cryptocurrency trading volume and stablecoin monthly sent addresses. Source: Castle Island Ventures.

Stablecoins are seen as a store of value, a tool for hedging against inflation, and a means for cross-border transactions, gaining significant traction in emerging markets. A recent report by Chainalysis found that the adoption rate of stablecoins in regions such as Africa, Eastern Europe, Latin America, and Asia far exceeds that of Bitcoin, accounting for nearly half of all cryptocurrency transactions in some cases.

In contrast, the adoption rate of stablecoins in the United States and North America is the lowest, although it still holds a considerable share.

![CnQgmjtvwu4djlizBV9bjFZhT4x5ykyg32iCqXRu.jpeg])https://img-cdn.gateio.im/webp-social/moments-3de432c9cfc512a27fd6d389e603162e.webp “7350108”(

Regional trading activity share: stablecoins and Bitcoin. Source: Chainalysis.

Gabriel Galipodo, the president of the Central Bank of Brazil, stated that the use of stablecoins has seen significant growth in recent years in Brazil and other regions. Brazil is a major power in Latin America, with a population of 216 million and a GDP of 2.2 trillion dollars. The economist mentioned at an event of the Bank for International Settlements in Mexico City on February 6 that up to 90% of the entire cryptocurrency circulation is related to stablecoins.

“Most of it is about buying things and shopping from abroad,” Galipolous said, emphasizing that this new trend has brought severe regulatory challenges in terms of taxation.

However, Julián Colombo, who leads the local operations of the regional exchange Bitso, stated that there is no place in Latin America where stablecoins are more popular than in Argentina. In the context of long-term inflation and economic instability in the country, they provide citizens with an important financial refuge.

Colombo stated: “In Argentina, as in other high-inflation countries, stablecoins have become a solution to a very real and urgent problem.”

“Argentinians do not trust the local currency and prefer to save in US dollars, but the exchange controls and restrictions imposed by the government make it difficult to obtain dollars. Stablecoins fill this gap, providing a way to hold and trade US dollars.”

He said that in Argentina, about two-thirds of the cryptocurrencies purchased through exchanges are done with assets pegged to the US dollar. Although Argentina's financial indicators have improved under the market-driven government led by pro-cryptocurrency President Javier Milei ), the inflation rate remains as high as 84.5%.

Although recent monthly data shows a downward trend, rebuilding trust in the local currency in a country long plagued by triple-digit inflation and severe currency devaluation takes time to ensure sustained demand for stablecoins pegged to the US dollar.

Similarly, the adoption of such digital assets is significant for Venezuela, which has been suffering from long-term inflation and heavy regulation, making it very complicated to obtain foreign currencies like the US dollar. In emerging markets with more stable currencies, such as Brazil or Mexico, they can play a different but equally important role: enabling fast, low-cost remittances without the volatility associated with traditional cryptocurrencies.

Companies use them to pay for international service fees, hire remote employees, send dividends, and facilitate remittances, making cross-border transactions more efficient and convenient.

“Compared to other crypto assets, stablecoins offer the promise of stability,” said the Bank for International Settlements in a report on stablecoins. “Due to this potential, they are increasingly entering mainstream finance, and many jurisdictions have already developed regulatory approaches for issuers of stablecoins pegged to a single fiat currency.”

Stablecoins Drive Remittances in Central America and Africa

One of the most powerful use cases for stablecoins is cross-border payments and remittances, particularly in Central America and Africa, where these digital assets provide a cheaper and faster alternative for cross-border capital flow. Immigrants working in the United States often find stablecoins a more convenient tool for remitting money back to their families in their home countries.

“Stablecoins have gained some attention in domestic and cross-border payments,” said Prasad, a professor of trade policy at Cornell University in the U.S., to Cointelegraph. “They have played a particularly useful role in overcoming the inefficiencies, high costs, and slow processing times associated with cross-border transactions through traditional payment channels.”

Speaking about the popularity of stablecoins in remittances, Colombo said, “Before the emergence of cryptocurrencies, remittance services could charge fees of up to 10% just to transfer money from one country to another. With cryptocurrencies, you might have some extra money to send to Mexico, and the transfer could cost just a penny—arriving in a few minutes instead of several hours or days.”

The Increasing Cases of Stablecoins for Non-Cryptocurrency Uses

In a report sponsored by Visa, researchers surveyed around 500 cryptocurrency users in Nigeria, Indonesia, Turkey, Brazil, and India, totaling 2,541 adults. While acquiring cryptocurrency remains the most popular motivation for using it, non-cryptocurrency uses such as acquiring dollars, generating income, or trading purposes are also very popular.

Results of the stablecoin survey. Source: Castle Island Ventures.

Surveys show that compared to other surveyed countries, Nigerian users have the strongest affinity for stablecoins. Nigerians trade with stablecoins most frequently, have the largest share of stablecoins in their portfolios, use them for the widest range of non-crypto purposes, and report the highest level of understanding of stablecoins. Saving in dollars is their top priority.

Zekarias Dubale, co-founder of the Africa Fintech Summit, stated that stablecoins have become the “holy grail” for cross-border trade, international remittances, and value transfer across the entire African continent. He believes these digital assets can provide the financial infrastructure necessary to facilitate global trade.

However, stablecoins are not without risks. Although the most widely used stablecoins essentially maintain their peg to the strong fiat currencies they are designed to reflect, the market is rapidly expanding, with hundreds of digital assets currently in circulation. However, many of these assets lack transparency regarding the reserves backing them, and instances of stablecoins decoupling do occur, with some even collapsing in certain cases.

Nevertheless, under the leadership of the Trump administration, the development momentum of stablecoins in the United States and emerging markets is strong, proving to be a powerful tool to help citizens overcome challenges related to financial inclusion and underdeveloped infrastructure.