The International Monetary Fund (IMF) December 2025 report warns that USD-pegged stablecoins could trigger currency substitution and capital outflows in vulnerable emerging markets (EMS), thereby undermining local currencies.
Experts have said, however, that the stablecoin market is not yet large enough to have a real systemic impact.
The December report titled “Understanding Stablecoins” examines stablecoin use cases, demand drivers, global regulations and macro-financial risks, particularly for emerging markets.
“Stablecoins could be used to circumvent capital flow management (CFM) measures. The implementation of CFMs relies on established financial intermediaries. By providing a pathway for capital flows outside of common rails, stablecoins could be used to effectively undermine the implementation of CFMs (Cardozo et al. 2024; Lui et al. 2022; IMF 2023),” the report said.
“Indeed, there is some evidence that crypto, including stablecoins, is being used as a market for capital flight,” the report adds.
The global monetary authority has argued that the penetration of stablecoins into emerging markets characterized by high inflation and volatile fiat currencies could trigger “currency substitution,” in which locals abandon volatile fiat currencies in favor of USD-pegged tokens, thereby eroding central bank control.
Dollar equivalents
These concerns are not unfounded, as stablecoins, whose values are linked to external benchmarks such as fiat currencies, facilitate transactions outside of traditional banking channels.
The most popular stablecoins, USDT and USD Coin (USDC), are pegged to the US dollar and have a combined market capitalization of $264 billion, according to CoinDesk data. This amount is almost equal to France’s foreign exchange reserves and higher than those of the United Arab Emirates, the United Kingdom, Israel, Thailand and many other countries.
These dollar equivalents, some of which have been accepted as authorized payment stablecoins under the GENIUS Act in the United States, can be freely traded on public blockchains, meaning that anyone, anywhere in the world, can access dollars without having to open a bank account or follow the often stubborn guidelines for engaging in foreign exchange transactions.
Result: if panic grips emerging countries, residents can now move capital from one country to another transparently and quickly via stablecoins, thus weakening measures to manage capital flows.
Imagine stablecoins existing during the 2013 taper tantrum, when Fed signals triggered sharp EM depreciations and massive capital outflows – their smooth peer-to-peer transfers could easily have worsened the crisis by accelerating capital outflows and currency declines.
What if emerging markets find themselves facing a similar macroeconomic panic?
Not big enough
This all seems plausible. However, the stablecoin market, despite meteoric growth in recent years, is still too small to have such an impact on the macroeconomy of emerging countries.
“It is far too early for stablecoins to have a big impact on emerging currencies, and their total market size is still tiny compared to FX flows – legalization through the GENIUS Act will not be relevant for some time (the law is passed but not yet in effect, perhaps January 2027), and may never be relevant for emerging markets whose traders must follow local law, which would likely frown upon any use of stablecoins,” Noelle Acheson, the author of Crypto is Macro Now. newsletter, told CoinDesk.
Acheson explained that even though fiat-backed stablecoins have grown from $5 billion in 2020 to nearly $300 billion today, they remain primarily crypto trading on-ramps used to fund crypto purchases, as evidenced by USDT pairs dominating spot volume on major exchanges, including Binance.
Furthermore, the dollar is simply too important and deeply entrenched in the global economy. While it doesn’t have a traditional “market cap” like stocks or cryptocurrencies, its global monetary base (physical cash + reserves) exceeds $2.5 trillion, with broader metrics like M2 at over $20 trillion and international liabilities of over $100 trillion, dwarfing stablecoins.
“About 80% is used for cryptocurrency trading, not cash management, and the stablecoin market is still small in relative terms,” Acheson said.
David Duong, head of institutional research at Coinbase, expressed a similar opinion, saying that the limited scale of stablecoins and political friction prevent systemic impact.
“Of course, stablecoins may accelerate the flight to USD in countries where they are already popular, but their overall scale remains small compared to cross-border wallet flows. The basic mechanisms of bond/share buybacks, NDF [non-deliverable forwards] and mutual fund outflows would continue to dominate macroeconomic movements,” he said.
Current flow status
Emerging IMF data shows cross-border flows of stablecoins – already eclipsing those of uncollateralized crypto assets (like Bitcoin, which lacks fiat backing) – since early 2022, with the gap widening despite stablecoins’ small overall crypto market share.
Asia-Pacific leads in terms of absolute volumes, followed by North America, but when measured by 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 stability and dollar-indexed payments.
EMDEs dominate these corridors, claiming the largest share of $1.5 trillion in flows in 2024, a mere fraction of the quadrillion dollar global payments market, but contrasting sharply with SWIFT’s focus on advanced economies.
