Three reasons why stablecoins are flourishing globally - Will the United States follow suit?

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

Although the Trump administration laid a preliminary foundation for the regulation of the U.S. crypto industry (it is expected that the White House's new crypto czar will outline 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 in 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, leaving millions with little to no access to financial services.

Stablecoins (mainly pegged to the US dollar) have seen explosive growth in recent years, with their actual 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 beyond 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 such as Argentina and Venezuela, stablecoins provide a dollar-pegged safe haven to avoid local currency depreciation, especially 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.

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

"In underdeveloped financial systems of middle and low-income economies, 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 are designed to provide stability, with most stablecoins pegged to the US dollar, among which USDT Tether occupies nearly 60% of the global market, 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 fluctuate in price constantly," 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 cryptocurrency into real-world use cases—not just the potential to get rich off Bitcoin."

Stablecoins are the top priority for the Trump crypto czar.

As bipartisan senators introduced legislation on February 4 to establish a regulatory framework, the 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 within the next six months.

Regardless, the growth of stablecoins has been 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, 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 currencies that circulate on the blockchain - are undoubtedly the 'killer application' of cryptocurrencies," 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 provide safe, 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."

"Given the differences between stablecoin activity and the cryptocurrency market cycle, it is clear that the adoption of stablecoins has surpassed merely serving cryptocurrency users and trading use cases."

Spot cryptocurrency trading volume and monthly sent addresses of stablecoins. Data 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 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 holds a considerable share.

Share of regional trading activity: stablecoins and Bitcoin. Source: Chainalysis.

Gabriel Galipodo, the president of the Central Bank of Brazil, stated that the use of stablecoins has significantly increased in recent years in Brazil and other places. Brazil is a strong country in Latin America, with a population of 216 million and a GDP of 2.2 trillion dollars. This economist mentioned at an event organized by 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 for buying things and shopping from abroad," Galipolo said, emphasizing that this new trend has brought severe regulatory challenges in terms of taxation.

However, Julián Colombo, who leads the regional exchange Bitso's local business, stated that in Latin America, no place has stablecoins that 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 USD, but the foreign exchange controls and restrictions implemented by the government make it difficult to obtain USD. Stablecoins fill this gap, providing a way to hold and trade USD."

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-crypto President Javier Milei (, the inflation rate remains as high as 84.5%.

Despite 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 devaluation takes time to ensure sustained demand for stablecoins pegged to the US dollar.

Similarly, the adoption of such digital assets is of great significance for Venezuela, a country suffering from prolonged inflation and heavy regulation, making it very complex to obtain foreign currencies like the 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," the Bank for International Settlements stated 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 Driving Remittances in Central America and Africa

One of the most powerful 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 movement. Immigrants working in the United States often find stablecoins to be a more convenient tool for remitting money to their families back home.

"Stablecoins have gained some attention for 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 as high as 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 might cost only one cent — it can arrive in minutes instead of hours or days."

The Increase of Stablecoin Cases for Non-Cryptocurrency Purposes

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 motivation for using it, non-cryptocurrency uses such as obtaining dollars, generating profits, or trading purposes 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 the 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 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, and there are currently hundreds of digital assets in circulation. However, many of these assets lack transparency regarding the reserves that support them, and instances of stablecoin de-pegging 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. They have proven to be a powerful tool in helping citizens overcome challenges related to financial inclusion and underdeveloped infrastructure.