The International Monetary Fund’s (IMF) December 2025 report warns that USD-pegged stablecoins could spark currency substitution and capital outflows in vulnerable emerging markets (EMS), undermining local currencies.
Experts, however, said that the stablecoin market is yet to grow big enough to have a real systemic impact.
The December report titled “Understanding Stablecoins” delves into stablecoin use cases, demand drivers, global regulations, and macro financial risks, particularly for emerging markets.
“Stablecoins could be used to circumvent capital flow management measures (CFMs). The implementation of CFMs relies on established financial intermediaries. By providing an avenue for capital flows outside of the common rails, stablecoins could be used to effectively undermine the implementation of CFMs (Cardozo and others 2024; He and others 2022; IMF 2023),” the report said.
“Indeed, some evidence points to crypto, including stablecoins, being used as a marketplace for capital flight,” the report added.
The global monetary authority argued that the penetration of stablecoins in emerging markets with high inflation and volatile fiat currencies could trigger “currency substitution,” in which locals ditch volatile fiat for USD-pegged tokens, eroding central bank control.
Dollar equivalents
These concerns are not unfounded, as stablecoins, whose values are pegged to external references such as fiat currencies, facilitate transactions outside traditional banking channels.
The most popular stablecoins, USDT and USD Coin (USDC), are pegged to the U.S. dollar and boast a combined market cap of $264 billion, according to CoinDesk data. That amount is almost equal to France’s FX reserves and larger than those of the UAE, the United Kingdom, Israel, Thailand, and many other nations.
These dollar equivalents, some of which have been accepted as permitted payment stablecoins under the GENIUS Act in the U.S., can be freely traded on public blockchains, meaning anyone, anywhere in the world, can access dollars without having to open a bank account or follow the often-tenacious guidelines for engaging in forex transactions.
The result: If panic grips EMs, locals can now move capital across borders seamlessly and swiftly via stablecoins, weakening capital flow management measures.
Imagine stablecoins existing during the 2013 taper tantrum, when Fed signals triggered sharp EM depreciations and massive outflows – their seamless peer-to-peer transfers could have easily worsened the crisis by accelerating outflows and currency declines.
What if EMs run into a similar macro panic now?
Not big enough
All this sounds plausible. However, the stablecoin market, despite growing leaps and bounds over the past few years, is still too small to have that kind of an impact on EMs’ macroeconomics.
“It’s way too soon for stablecoins to have much of an impact on EM currency runs, and their total market size is still tiny relative to FX flows – being legalized by the GENIUS Act won’t be relevant for quite a while yet (the law is passed but not yet active, maybe Jan 2027), and may never be for emerging markets whose traders have to follow local legislation which would probably frown on any use of stablecoins at all,” Noelle Acheson, the author of the Crypto is Macro Now newsletter, told CoinDesk.
Acheson explained that while fiat-backed stablecoins have surged from $5 billion in 2020 to nearly $300 billion today, they remain chiefly crypto trading on-ramps used to fund crypto purchases, as evidenced by USDT pairs dominating spot volume on major exchanges, including Binance.
Besides, the dollar is just too big and deeply entrenched in the global economy. Though it doesn’t have a traditional “market cap” like stocks or crypto, its global monetary base (physical cash + reserves) exceeds $2.5 trillion, with broader measures like M2 at over $20 trillion and international liabilities of over $100 trillion, dwarfing stablecoins.
“Around 80% is used for crypto trading, not treasury management, and the stablecoin market is still small in relative terms,” Acheson said.
David Duong, Coinbase’s head of institutional research, voiced a similar opinion, saying stablecoins’ limited scale and policy frictions prevent systemic impact.
“Sure, stablecoins can accelerate flight‑to‑USD in countries where they’re already popular, but their overall scale remains small relative to cross‑border portfolio flows. The bulk mechanics of bond/equity redemptions, NDF [non-deliverable forwards] channels, and mutual fund outflows would still dominate macro moves,” he said.
Present state of flows
Emerging IMF data shows stablecoin cross-border flows—already eclipsing those of unbacked crypto assets (like Bitcoin, which lack fiat backing)—since early 2022, with the gap widening despite stablecoins’ small overall crypto market share.
Asia-Pacific leads absolute volumes, followed by North America, but when scaled to GDP, Africa, the Middle East, Latin America, and the Caribbean (emerging and developing economies, or EMDEs) stand out, driven by net inflows from North America satisfying local demand for dollar-pegged stability and payments.
EMDEs dominate these corridors, claiming the largest slice of $1.5 trillion in 2024 flows, a mere fraction of the quadrillion-dollar global payments market, yet contrasting sharply with SWIFT’s advanced-economy focus.
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