BIS warns stablecoins could weaken capital controls in emerging markets

The Bank for International Settlements (BIS) has released a study highlighting how dollar-backed stablecoins are fostering a new phenomenon termed “digital dollarization,” particularly impacting emerging markets. Researchers found that these stablecoins increase in usage during macroeconomic stress periods, similar to foreign-currency bank deposits, but unlike traditional deposits, stablecoin flows appear largely unaffected by capital controls or foreign exchange restrictions. The BIS attributes this resilience to stablecoins operating partly outside standard regulatory frameworks.

The study raises concerns that stablecoins could erode monetary sovereignty by enabling individuals and businesses to shift holdings into U.S. dollars without relying on the conventional banking system. This dynamic is especially pronounced in emerging economies with fragile local currencies or limited financial infrastructure. Despite these risks, the research found limited evidence that deposit dollarization hampers monetary policy transmission, although countries with more foreign-currency deposits did face a somewhat higher risk of inflation.

The BIS suggests that existing regulatory tools designed for traditional banking and foreign-currency deposits may be insufficient to manage financial stability in an increasingly tokenized financial environment. As stablecoins gain traction, policymakers might need to develop new approaches to effectively oversee their use.

This analysis aligns with findings from the International Monetary Fund (IMF) regarding Nigeria, where stablecoins pegged to the dollar facilitate cross-border payments, remittances, and access to dollar-denominated assets amid inflation and currency depreciation. The IMF noted that stablecoins reduce transaction costs and improve financial access outside traditional systems but warned about potential declines in local currency demand and increased financial activity beyond regulated channels.

In Latin America, stablecoin adoption is also surging. The crypto exchange Bitso Business reported an 81% year-over-year rise in stablecoin payment volumes during the first half of 2026. Circle’s USDC and Tether’s USDT together accounted for 40% of all crypto purchases in the region in 2025, surpassing Bitcoin for the first time. The total stablecoin market capitalization has grown to approximately $309.7 billion, up from about $260 billion the previous year, underscoring the rapid expansion of this segment in emerging economies.