The December 2025 International Monetary Fund (IMF) report warns that USD-pegged stablecoins could trigger currency substitution and capital outflows in vulnerable emerging markets (EMS), undermining local currencies.
However, experts said the stablecoin market is not yet growing large 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 is dependent on established financial intermediaries. By providing an opportunity for capital flows outside the common rails, stablecoins could be used to effectively undermine the implementation of CFMs (Cardozo and others 2024; He and others 202023 IMF report).
“In fact, 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 entry of stablecoins into emerging markets with high inflation and volatile fiat currencies could trigger “currency substitution”, where locals ditch unstable fiat for USD-pegged tokens, eroding central bank control.
Dollar equivalents
These concerns are not unfounded, as stablecoins, whose values are linked 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 boast a combined market capitalization of $264 billion, according to CoinDesk data. This amount is almost equal to the foreign exchange reserves of France and larger than 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 United States, are freely tradable on public blockchains, meaning that anyone, anywhere in the world, can access dollars without having to open a bank account or follow the often onerous guidelines for engaging in currency transactions.
The result: if panic grips EMs, locals can now move capital across borders seamlessly and quickly via stablecoins, weakening capital flow control measures.
Imagine stablecoins that existed during the 2013 tantrum, when Fed signals triggered sharp EM depreciations and massive outflows – their seamless peer-to-peer transfers could have easily exacerbated the crisis by accelerating outflows and currency declines.
What if EMs run into a similar macro panic now?
Not big enough
All of this sounds plausible. However, despite growing by leaps and bounds over the past few years, the stablecoin market is still too small to have that kind of impact on EMs’ macroeconomics.
“It’s way too early for stablecoins to have a big impact on EM currency races, and their overall market size is still small relative to currency flows – being legalized by the GENIUS Act won’t be relevant for a while yet (the law is passed but not yet active, maybe January 2027), and may never be for emerging markets, whose legalization of local coins would probably follow. all,” Noelle Acheson, the author of Crypto is Macro Now newsletter, told CoinDesk.
Acheson explained that while fiat-backed stablecoins have risen from $5 billion in 2020 to nearly $300 billion today, they remain primarily crypto trading on ramps used to finance crypto purchases, as evidenced by USDT pairs dominating spot volume on major exchanges, including Binance.
Besides, the dollar is just too big and deeply embedded in the global economy. While 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 over $20 trillion and international liabilities over $100 trillion, dwarfing stablecoins.
“About 80% is used for crypto trading, not financial management, and the stablecoin market is still small in relative terms,” Acheson said.
David Duong, Coinbase’s head of institutional research, expressed a similar sentiment, saying stablecoins’ limited scale and political friction prevent systemic impact.
“Of course, stablecoins can accelerate the flight to the USD in countries where they are already popular, but their overall scale remains small compared to cross-border portfolio flows. The main mechanics of bond/equity redemptions, NDF [non-deliverable forwards] channels and mutual fund outflows will still dominate macro moves,” he said.
Current flow state
New IMF data shows stablecoins’ cross-border flows – already eclipsing those of non-backed cryptoassets (like Bitcoin, which lacks fiat backing) – since early 2022, with the gap widening despite stablecoins’ small overall crypto market share.
Asia-Pacific leads in absolute terms, 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 meeting local demand for dollar-pegged stability and payments.
EMDEs dominate these corridors, claiming the lion’s share of $1.5 trillion in flows by 2024, just a fraction of the quadrillion-dollar global payments market, yet in stark contrast to SWIFT’s focus on advanced finance.
