While the Trump administration is busy laying the groundwork for crypto industry regulations in the US, these digital assets are already thriving in emerging markets. And for good reason, darling!
Pegged to fiat currencies, stablecoins are becoming an important financial tool for many in the developing world. They’re fueling remittances and cross-border trade, bridging financial inclusion gaps, and offering a hedge against inflation in countries where traditional banking often falls short.
Stablecoins, mostly pegged to the US dollar, have seen explosive growth in recent years, with real-world use cases expanding rapidly across Africa, Latin America, and parts of developing Asia. While the US is still figuring out how to apply this technology beyond the crypto space, emerging markets are already proving why stablecoins matter.
In these regions, they’re not just a financial experiment—they’re a solution!
Stablecoins as a hedge against inflation in South America
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“Stablecoins offer a way to bring all the benefits of crypto to real-world use cases—not just the potential to get rich off Bitcoin.”
Stablecoins are a priority for Trump’s crypto czar
Momentum is growing in the United States around stablecoins, as a bipartisan group of senators introduced legislation on Feb. 4 to establish a regulatory framework. In his first address to the industry, White House AI and crypto czar David Sacks emphasized that stablecoin regulation is a top priority for the administration, with the former venture capitalist leading a task force set to draft key policies over the next six months.
At any rate, stablecoin growth has been nothing short of spectacular. In the past year alone, they’ve tacked on a staggering $100 billion in market value, soaring to a total of $225 billion as of February 2025, according to DelfiLlama. USDT still reigns supreme, commanding over 60% of the market, but challengers—including those backed by financial powerhouses like PayPal—are rapidly gaining ground.
“Stablecoins – tokenized representations of fiat currencies circulating on blockchains 1 – are unambiguously the “killer app” of crypto so far,” a report authored by Castle Island Ventures and sponsored by VISA mentioned.
“We believe stablecoins represent a payment innovation that has the potential to expand access to secure, reliable, and convenient payments to more people in more places,” Cuy Sheffield, Global Head of Crypto at the US payments giant, said.
“While they initially emerged as a crypto-native collateral type and settlement medium for traders and exchanges, they have crossed the chasm and have found wide adoption globally in the ordinary economy,“ it was argued in the report.
“Based on the divergence between stablecoin activity and crypto market cycles, it is evident that stablecoin adoption has moved beyond merely serving crypto users and trading use cases.”
Seen as a store of value, a hedge against inflation, and a tool for cross-border transactions, stablecoins have gained significant traction in emerging markets. A recent Chainalysis report found that in regions like Africa, Eastern Europe, Latin America, and Asia, stablecoin adoption far outpaces that of Bitcoin, accounting for nearly half of all crypto transactions in some cases.
In contrast, the US and North America have the lowest adoption rate for stablecoins in North America, though it still holds a notable share.
In places like Brazil, a Latin American powerhouse with a population of 216 million and a $2.2 trillion GDP, the use of stablecoins has surged wildly in recent years, its central bank governor Gabriel Galipodo said. As much as 90% of the entire crypto flow is linked to stablecoins, the economist said while speaking at a Bank for International Settlements event in Mexico City on Feb. 6.
But nowhere in Latin America have stablecoins found greater adoption than in Argentina, Julián Colombo, who leads the local operation at regional exchange Bitso, said. Amid the country’s chronic inflation and economic instability, they offer a vital financial refuge for citizens.
“In Argentina, as in other high-inflation countries, stablecoins have emerged as a solution to a very real and pressing problem,” Colombo said. “Argentines don’t trust the local currency and prefer to save in dollars, but government-imposed exchange controls and restrictions make access difficult. Stablecoins have filled that gap, providing a way to hold and transact in USD.”
In Argentina, he says, roughly two out of every three crypto purchases through the exchange are made in dollar-pegged assets. While Argentina’s financial indicators have improved under pro-crypto President Javier Milei’s market-driven administration, inflation remains high at 84.5% year-over-year.
Though recent monthly data shows a downward trend, rebuilding trust in the local currency will take time in a country long plagued by triple-digit inflation and severe currency devaluations, ensuring sustained demand for stablecoins pegged to the US dollar.
Similarly, the adoption of such digital assets has been significant as well in Venezuela, which suffers from chronicle inflation as well as a myriad of regulations that make access to foreign currency like the USD highly convoluted. In emerging markets with somewhat more stable currencies like Brazil or Mexico, they can serve a different but equally important purpose: enabling fast, low-cost money transfers without the volatility of traditional cryptocurrencies.
“In contrast to other crypto assets, stablecoins come with a promise of stability,” the Bank of International Settlements said in a report about stablecoins. “Due to this potential, they are increasingly entering mainstream finance, and a number of jurisdictions have developed regulatory approaches for issuers of stablecoins pegged to a single fiat currency.”
Stablecoins fuel remittances in Central America and Africa
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The survey revealed that Nigerian users have the strongest affinity for stablecoins compared to other countries surveyed. Nigerians transact 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 self-reported knowledge of stablecoins. Saving money in dollars was their top priority.
Across Africa, stablecoins have become the “holy grail” for cross-border trade, international remittances, and value transfer across the continent, according to Zekarias Dubale, co-founder of the Africa Fintech Summit. He argued that these digital assets could offer the necessary financial infrastructure to facilitate global trade.
The case for stablecoins, however, is not without risks. While the most widely used stablecoins have largely maintained their peg to the strong fiat currencies they are designed to mirror, the market is expanding rapidly, with hundreds of digital assets now in circulation. Many of these assets, however, lack transparency about the reserves backing them, and instances of stablecoins depegging and, in some cases, collapsing have occurred.
Despite this, stablecoins are gaining momentum in the United States under the Trump administration and across emerging markets, where they are proving to be powerful tools that can help citizens overcome challenges related to financial inclusion and underdeveloped infrastructure.
This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of CryptoMoon.
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2025-02-19 01:05