Three reasons why stablecoins are thriving globally - Will the U.S. follow suit?

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

Although the Trump administration laid a preliminary foundation for the regulation of the cryptocurrency industry in the United States (with the expectation that the new crypto czar at the White House will outline the direction in the coming months), these digital assets have already flourished 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 insufficient 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 United States is still exploring how to apply this technology outside of the crypto space, emerging markets have already demonstrated the importance 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-ridden economies like Argentina and Venezuela, stablecoins provide a dollar-pegged refuge to avoid local currency depreciation, especially in cases where foreign exchange channels are strictly controlled. Across Africa and Central America, they serve as a cost-effective tool for remittances and cross-border payments, while in places like Indonesia, they offer an alternative that is more accessible than traditional dollar banking, which may involve complex requirements.

Cornell University trade policy professor Eswar Prasad stated that while stablecoins are primarily used for 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 underdeveloped financial systems of low- and middle-income economies, they can play a beneficial role by providing convenient, widespread, low-cost digital payment systems for citizens and businesses."

The US dollar is widely regarded as a global store of value, and the acquisition of USD is a key driving factor for the adoption of stablecoins in emerging markets. In contrast to the volatility of early cryptocurrencies like Bitcoin, stablecoins are designed to provide stability, with most stablecoins pegged to the US dollar, of which USDT Tether holds nearly 60% of the global market share, followed by another USD-backed asset, USDC.

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

"Some problems in the world need to be solved with a cryptocurrency whose price does not fluctuate constantly," said Julián Colombo, 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 cryptocurrency into real-world use cases - not just the potential to get rich from Bitcoin."

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

As bipartisan senators introduced legislation on February 4 to establish a regulatory framework, momentum around stablecoins in the U.S. is increasing. White House artificial intelligence and cryptocurrency czar David Sacks (David Sacks) emphasized during his first address to the industry that stablecoin regulation is a top priority for the government, and the working group 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 DelfiLlama data, their market capitalization reached an incredible $100 billion in just the past year, soaring to $225 billion by February 2025. USDT still dominates, holding over 60% of the market share, but challengers—including those backed 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 a report written by Castle Island Ventures and sponsored by VISA.

"We believe that stablecoins represent a payment innovation that has the potential to give more people in more places access to secure, reliable, and convenient payment services," said Cuy Sheffield, the global cryptocurrency head of this 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."

"Given the differences between stablecoin activity and the cycles of the crypto market, it is clear that the adoption of stablecoins has transcended the scope of merely serving crypto users and trading use cases."

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

Stablecoins are seen as a tool for value storage, a hedge against inflation, and a means for cross-border transactions, gaining significant appeal 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 occupies a considerable share.

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

Gabriel Galipodo, the Governor of the Central Bank of Brazil, stated that the use of stablecoins has surged in recent years in Brazil and other regions. Brazil is a major country in Latin America, with a population of 216 million and a GDP of $2.2 trillion. This economist remarked at an event of the Bank for International Settlements held in Mexico City on February 6 that up to 90% of the total cryptocurrency circulation is related to stablecoins.

"Most of it is for purchasing goods and shopping from abroad," Galipolo said, emphasizing that this new trend poses serious regulatory challenges in terms of taxation.

However, Julián Colombo, the head of the local operations of the Bitso exchange, stated that in Latin America, no place has stablecoins more popular than 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, just like 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 dollars, but government-imposed foreign exchange controls and restrictions make it difficult to obtain dollars. Stablecoins fill this gap, providing a way to hold and trade dollars."

He said that in Argentina, about two-thirds of the cryptocurrencies purchased through exchanges are done with dollar-pegged assets. 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%.

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

Similarly, the adoption of such digital assets is significant for Venezuela, a country suffering from prolonged inflation and extensive regulations that make 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.

"Stablecoins promise stability compared to other crypto assets," 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 stablecoin issuers linked to a single fiat currency."

Stablecoins Drive Remittances in Central America and Africa

One of the strongest use cases for stablecoins is cross-border transfers and remittances, especially in Central America and Africa, where these digital assets provide a cheaper and faster alternative for cross-border capital flows. Immigrants working in the United States often find stablecoins to be a more convenient tool for sending money back home to their families.

"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 been particularly useful in overcoming the inefficiencies, high costs, and slow processing times associated with cross-border transactions conducted through traditional payment channels."

Speaking about the popularity of stablecoins in remittances, Colombo said, "Before the advent of cryptocurrencies, remittance services could charge 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 minutes instead of hours or days."

The number of stablecoin cases for non-cryptocurrency purposes is increasing

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

![Z4BsxtyMxUbe8QIchEQhyRE88sS4LVw8txd6yG3m.jpeg])https://img.jinse.cn/7350106_watermarknone.png "7350106"(

Stablecoin Survey Results. 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 African continent. He believes that these digital assets can provide the financial infrastructure needed to facilitate global trade.

However, stablecoins are not without risks. While 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 that support them, and instances of stablecoins decoupling occur from time to time, 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 for helping citizens overcome challenges related to financial inclusion and underdeveloped infrastructure.