The International Monetary Fund’s (IMF) December 2025 report warns that dollar-pegged stablecoins could trigger currency substitution and capital outflows into vulnerable emerging markets (EMS), undermining local currencies.
However, experts said the stablecoin market has not yet grown enough to have a real systemic impact.
The December report titled “Understanding Stablecoins” delves into stablecoin use cases, demand drivers, global regulations, and macrofinancial risks, particularly for emerging markets.
“Stablecoins could be used to bypass capital flow management (CFM) measures. The implementation of CFMs relies on established financial intermediaries. By providing a pathway for capital flows outside of the common rails, stablecoins could be used to effectively undermine the implementation of CFMs (Cardozo et al. 2024; He et al. 2022; IMF 2023),” the report says.
“In fact, some evidence suggests that cryptocurrencies, including stablecoins, are used as a market for capital flight,” the report adds.
The global monetary authority argued that the penetration of stablecoins into emerging markets with high inflation and volatile fiat currencies could trigger a “currency substitution,” in which locals abandon volatile fiat currencies for dollar-pegged tokens, eroding the central bank’s control.
Dollar equivalents
These concerns are not unfounded, as stablecoins, whose values are tied to external references 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 data from CoinDesk. That amount is almost equal to France’s foreign exchange reserves and larger than those of the United Arab Emirates, 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 US, 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 conducting currency transactions.
The result: If panic grips emerging markets, locals can now move capital across borders seamlessly and quickly through stablecoins, weakening capital flow management measures.
Let’s imagine the stablecoins that existed during the 2013 crisis, when the Federal Reserve’s signals caused sharp depreciations in emerging markets and massive capital outflows; its seamless peer-to-peer transfers could easily have worsened the crisis by accelerating currency outflows and declines.
What if emerging markets now face a similar macroeconomic panic?
not big enough
This all sounds plausible. However, the stablecoin market, despite making leaps and bounds in recent years, is still too small to have that kind of impact on the macroeconomy of emerging markets.
“It is too early for stablecoins to have a big impact on emerging market currency runs, and their total market size is still small relative to currency flows; being legalized by the GENIUS Act will not be relevant for quite some time yet (the law is passed but not active yet, perhaps January 2027), and may never be for emerging markets whose traders have to follow local legislation that would likely disapprove any use of stablecoins,” Noelle Acheson, author of Crypto is Macro Now. newsletter, he told CoinDesk.
Acheson explained that while fiat-backed stablecoins have risen from $5 billion in 2020 to nearly $300 billion today, they remain primarily cryptocurrency trading onramps used to fund cryptocurrency purchases, as evidenced by the USDT pairs dominating spot volume on major exchanges, including Binance.
Furthermore, the dollar is too big and deeply embedded in the global economy. Although it does not have a traditional “market capitalization” like stocks or cryptocurrencies, its global monetary base (physical cash + reserves) exceeds $2.5 trillion, with broader measures such as M2 of over $20 trillion and international liabilities of over $100 trillion, dwarfing stablecoins.
“About 80% is used for cryptocurrency trading, not treasury management, and the stablecoin market is still small in relative terms,” Acheson said.
David Duong, head of institutional research at Coinbase, expressed a similar view, saying that the limited scale of stablecoins and political frictions prevent systemic impact.
“Sure, stablecoins may accelerate the flight to the USD in countries where they are already popular, but their overall scale remains small relative to cross-border portfolio flows. The general mechanics of bond/stock redemptions, NDF [non-deliverable forwards] mutual fund channels and exits would continue to dominate macro movements,” he said.
Current status of flows
Emerging IMF data shows cross-border flows of stablecoins, already dwarfing those of unbacked cryptoassets (such as Bitcoin, which lack fiat backing), since early 2022, and the gap is widening despite stablecoins’ small overall cryptocurrency market share.
Asia-Pacific leads in 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 EMDE) stand out, driven by net inflows from North America that meet local demand for stability and dollar-linked payments.
EMDEs dominate these corridors, claiming the largest share of $1.5 trillion in 2024 flows, a mere fraction of the multi-trillion-dollar global payments market, but one that stands in stark contrast to SWIFT’s focus on advanced economies.
