S&P Global indicates wealth preservation, remittances, and digital assets are driving stablecoin adoption
Foreign currency stablecoin uptake across a representative group of 45 emerging market (EM) nations may span from $250 billion to $730 billion, a recent report revealed. According to credit rating agency S&P Global, this expansion is primarily propelled by wealth preservation needs, followed by remittances, international trade, and a general interest in digital assets. Even under the most aggressive adoption scenarios, the report does not anticipate a significant disruption to the intermediation role of banks or the efficacy of monetary policy. However, if adoption surpasses these high-end estimates, banking system funding costs could rise and monetary policy mechanisms could falter, likely prompting local regulators to introduce restrictive growth policies.
Expanding influence of digital dollars
The integration of stablecoins into the global financial framework is progressing in tandem with their accelerating supply, which reached $318 billion as of January 18, 2026. These assets engineered to track the value of fiat currencies or specific asset classes streamline cross-border liquidity, anchor decentralized finance, and connect conventional banking with digital innovation. This utility makes them highly appealing in emerging markets, where rapid USD stablecoin adoption is becoming a notable trend. This shift warrants close scrutiny due to its capacity to reshape financial structures, bank liquidity, and the sovereign power of governments to manage economies via monetary levers.
Primary use cases in emerging economies
The paper identifies three core functions for stablecoins in EMs. First, they serve as a liquidity bridge for the acquisition and trade of broader cryptocurrencies. Second, they facilitate cross-border movement, particularly for remittances, by offering a lower-cost alternative to traditional banking rails. Finally, they act as a defensive store of value in nations struggling with high inflation or volatile domestic currencies. While granular data remains scarce, on-chain activity suggests robust adoption; according to TRM Labs, 24 of the 30 leading countries for crypto and stablecoin usage are classified as EMs.
Methodology and simulation framework
To gauge growth potential, S&P identified countries positioned for higher adoption based on established use cases. In the realm of wealth preservation, the report ranked nations by three-year average inflation from 2023 to 2025, viewing high inflation as a primary incentive to hold foreign-currency instruments. Regarding remittances, the paper assessed the two-year average of remittances to GDP for 2023 and 2024, noting that stablecoins can circumvent the high costs associated with traditional transfers, which averaged 6.5 percent in late 2024. Furthermore, the analysis prioritized markets with established digital asset footprints based on the TRM Country Crypto Adoption Index 2025.
By isolating the top 15 EMs in these categories, the report applied three adoption scenarios low, moderate, and high using bank deposits as a baseline for potential liquidity migration. S&P assumes adoption could reach 10 percent to 20 percent of deposits in wealth-preservation markets, 5 percent to 10 percent in remittance-heavy zones, and 1 percent to 5 percent in tech-centric EMs. The analysis excludes China to avoid statistical distortion caused by its massive deposit base and restrictive regulatory stance.
Limited macro-financial risks
The report expects the overall effect on EM banking sectors to remain manageable. Even at $730 billion, adoption represents less than 8 percent of total banking system deposits, a figure often mitigated by existing low loan-to-deposit ratios. Tech-forward banks may actually find opportunities here, capturing remittance revenues by providing digital wallets. However, risks persist; should outflows accelerate, banks might face higher wholesale funding costs and reduced credit capacity.
Regarding “digital dollarization,” the macroeconomic threat appears contained. The EMs most susceptible to stablecoin-driven policy weakening are those that already suffer from high dollarization and fragile monetary frameworks. Within the monetary base channel, while currency substitution could reduce the demand for local money and pressure interest rates, the most affected countries, such as Argentina, already possess weak monetary credibility scores. Similarly, for the financial intermediation channel, in regions with naturally low financial depth such as parts of Africa and Asia further disintermediation via stablecoins is likely to have only a marginal incremental impact on policy transmission.
Economic risks and regulation
Higher stablecoin usage could intensify economic shocks by pressuring balance of payments and central bank reserves. It may also expand the informal economy, potentially shrinking the tax base. Regulators face significant hurdles, including data gaps and the difficulty of applying traditional capital controls to decentralized assets. Furthermore, weak sovereign governance may slow the implementation of necessary compliance frameworks.
Globally, regulatory strategies vary widely according to the report. In restrictive environments, China maintains a total ban, while nations like Bangladesh and Egypt have sought to prohibit usage through legal interpretations, though underground activity often persists. Other countries take a moderate approach, such as India, which permits trading but utilizes unfavorable tax policies and bars banks from processing crypto-related transactions to protect the local currency. Selective models, such as that of Türkiye, allow holdings as an inflation hedge but prohibit the use of crypto for daily payments. Finally, permissive frameworks are seen in the UAE, which has established a comprehensive system to blend traditional banking with digital payment tokens, signaling a path toward full integration.
Source: economymiddleeast