Dollar-backed stablecoins are creating a parallel financial channel that capital controls cannot reach, the Bank for International Settlements found in a study of more than 130 economies.
Dollar-backed stablecoins are largely unaffected by capital controls and foreign-exchange restrictions, creating a new form of "digital dollarization" that traditional banking regulations cannot easily reach, the Bank for International Settlements found.
"Stablecoins are partly circulating outside the regulatory perimeter," the BIS researchers wrote in a working paper published July 21, analyzing foreign-currency deposits and dollar-pegged stablecoin inflows across more than 130 economies.
Unlike traditional bank deposits, stablecoin flows showed little response to capital controls or other FX restrictions, the study found. Both foreign-currency deposits and stablecoin inflows tend to increase during periods of macroeconomic stress, but only the former can be curbed by existing regulatory tools. The stablecoin market has grown to about $309.7 billion, up from roughly $260 billion a year ago, DefiLlama data show.
The findings suggest policymakers may need new tools to manage financial stability as stablecoins become more widely used, with regulations designed for traditional banking proving less effective in a tokenized financial system. Countries with higher foreign-currency deposits already face a somewhat greater risk of elevated inflation, the BIS said.
Adoption Accelerates in Emerging Markets
The BIS findings come as stablecoin use expands rapidly across emerging economies. In Nigeria, the International Monetary Fund found households and small businesses are using dollar-pegged stablecoins for cross-border payments, remittances and access to dollar-denominated assets as inflation and currency depreciation drive demand. Sub-Saharan Africa received more than $205 billion in on-chain value in the year to June 2025, with stablecoins accounting for 43 percent of transactions.
In Latin America, Bitso Business reported an 81 percent year-over-year increase in stablecoin payment volume during the first half of 2026. Circle's USDC and Tether's USDT accounted for 40 percent of all crypto purchases in the region in 2025, surpassing Bitcoin for the first time.
Regulatory Frameworks Take Shape
Major economies are accelerating their oversight of stablecoins. The United States, through the GENIUS Act, has established a dual federal-state regulatory system. The European Union's Markets in Crypto-Assets Regulation sets regional entry thresholds and caps non-euro stablecoin daily transactions at 200 million euros ($230.9 million). Hong Kong's Stablecoins Ordinance commenced operations on Aug. 1, introducing a high-threshold licensing regime.
The U.S. and U.K. also released a 10-point roadmap in July to coordinate oversight of tokenized assets and cross-border stablecoin activity, signaling that both governments expect blockchain-based finance to become a larger part of mainstream capital markets.
Implications for Monetary Sovereignty
The rise of dollar stablecoins, which together capture more than 80 percent of market capitalization and trading volume, is reinforcing the greenback's status as the global reserve and settlement currency. In some high-inflation countries, households use dollar stablecoins as a store of value, eroding the role of local currencies and creating risks of "digital dollarization" that challenge monetary sovereignty.
The BIS study found little evidence that deposit dollarization weakens the transmission of monetary policy, though the researchers cautioned that stablecoins could still undermine monetary sovereignty by allowing households and businesses to shift into dollars outside the banking system.
This article is for informational purposes only and does not constitute investment advice.
