Stablecoins as a vehicle for dollarisation: Evidence from capital controls and currency crises

Stablecoins could make payments and remittances cheaper and faster, but policymakers worry they could also help residents, particularly in emerging markets, circumvent capital controls and move savings into US dollars. This column introduces estimates of stablecoin flows and holdings for 188 countries, built from public blockchain data. Emerging market and developing economies take part in 86% of cross-border stablecoin flows and hold about three quarters of stablecoins. Cross-border stablecoin activity rises by roughly 30% after countries tighten restrictions on capital outflows and shows no sign of falling back when they are lifted. Holdings rise by roughly 75% in the year after a currency crisis begins and then persist.

Since the US passed the GENIUS Act in July 2025, the stablecoin debate has moved from their role in crypto markets to their potential implications for the international monetary system. US Treasury Secretary Scott Bessent described stablecoins as giving the dollar “an internet-native payment rail that is fast, frictionless, and free of middlemen”, one that will “expand access to the dollar economy for billions across the globe” (Bessent 2025). Other policymakers see risks, particularly for emerging markets. The Bank for International Settlements warns that stablecoins could enable ‘stealth dollarisation’ and capital flight in emerging market and developing economies (EMDEs) (BIS 2025), and recent research has raised similar concerns (Frost et al. 2020, Levy Yeyati and Katz 2025, van ‘t Klooster et al. 2025, Cecchetti et al. 2026). In an August 2026 speech, IMF First Deputy Managing Director Dan Katz laid out both the promise and the risks of stablecoins. Greater competition in payments could lower remittance costs. But stablecoins could also let users sidestep capital flow management measures (CFMs) built around banks and other regulated intermediaries, potentially amplifying outflows in periods of stress. And they could intensify familiar dollarisation pressures, potentially faster and at greater scale than in the past (Katz 2026).

These concerns are hard to assess because stablecoin flows and holdings are largely unmeasured across countries. As Cecchetti et al. (2026) put it, existing balance of payments frameworks “do not capture wallet-based, pseudonymous, cross-border flows”. In this column, I present a new dataset built from blockchain data, document where stablecoins flow and where they are held, and examine how they respond to capital controls and currency crises.

Putting stablecoin flows on the map

Stablecoin transfers are pseudonymous, not anonymous. Every on-chain transfer is recorded on a public blockchain that anyone can read. What the ledger does not show is where senders and receivers are located, because it logs only wallet addresses, which are long strings of letters and numbers. Turning blockchain data into capital flow statistics is therefore a matter of attaching a country to each wallet.

In a new paper (Reuter 2026), I estimate the location of wallets in two steps. First, I build a training set of wallets whose region can be inferred directly. Some wallets carry human-readable domain names, and I use a large language model to infer their region through their linguistic and cultural markers. Other wallets transact almost exclusively with crypto exchanges that serve a single regional market. Together, the two approaches identify the region of hundreds of thousands of wallets. Second, a machine learning model learns how these wallets behave: the hours of the day they are active, whether their activity shifts when daylight saving time begins, and the exchanges and tokens they use. The model then assigns regional probabilities to any sufficiently active wallet. Within each region, I split these probabilities across countries according to where the websites of the exchanges each wallet uses draw their visitors.

Two external checks support the estimates. Brazil’s central bank – to my knowledge the only one that publishes stablecoin transactions with the rest of the world – records residents’ purchases of stablecoins from abroad through the foreign exchange payments for them. I estimate the stablecoin side of the same transactions from blockchain data alone, and the two agree within 15%. Internal figures from crypto exchanges, disclosed in enforcement proceedings, sit within a few percentage points of the shares I assign to the US and China. The resulting panel covers USDT and USDC, the two largest stablecoins, in 188 countries, with $21.4 trillion of transfers between 2018 and 2025. Because it records the issuance and redemption of stablecoins, the panel also yields estimates of holdings, not just flows. It is publicly available.

Stablecoin use: Concentrated in emerging markets

Stablecoin flows have grown rapidly. I estimate that transfers exceeded $7 trillion in 2025, up from $1.2 billion in 2018, and that about 90% of this volume crossed borders. Even so, it remains less than 1% of global cross-border payments (Cerutti et al. 2025). The median transfer is $300, closer in size to a remittance than to a wholesale financial transaction. Consistent with Auer et al. (2025), I also find that flows are larger in corridors and quarters in which traditional remittances are more expensive.

The geography of these flows is the reverse of that of traditional payments. Of the volume processed by SWIFT, 85% moves between advanced economies (Basu et al. 2026). In cross-border stablecoin flows, I estimate that only 14% moves between advanced economies, while flows between EMDEs are the largest corridor, at about a third of the total. Relative to GDP, 19 of the 20 largest recipients are EMDEs.

Holdings are also concentrated in EMDEs. I estimate that their holdings more than tripled since the end of 2021, to about $150 billion, raising their share of the roughly $200 billion in stablecoins the panel covers from about half to three quarters (Figure 1). This is consistent with stablecoins serving as a store of value in EMDEs (Adrian et al. 2025, Basu et al. 2026). All twenty of the largest holdings relative to GDP are in EMDEs, led by Venezuela at 5.6% and Ukraine at 4.1%, against 0.04% in the US.

Figure 1 Estimated stablecoin holdings in advanced economies and EMDEs, billions of US dollars

Notes: Holdings are approximated by cumulative net flows, including flows from and to stablecoin issuers, split by the estimated location of the holder. The dashed line plots the EMDE share of total holdings (right axis). It briefly exceeds 100% in late 2023, when estimated holdings in advanced economies turn slightly negative. Small negative values reflect coverage gaps and measurement error rather than negative positions.
Source: Reuter (2026).

Capital controls: Activity rises and persists

Policymakers have worried for several years that crypto assets let residents bypass capital flow management measures (He et al. 2022). The evidence has pulled in two directions. Studies of Bitcoin markets find that crypto is used for capital flight and to evade controls (Hu et al. 2021, Graf von Luckner et al. 2023, 2024). The two studies that look directly at stablecoin flows, however, find little response to restrictions (Auer et al. 2025, Hofmann et al. 2026).

Using the dataset of Bergant et al. (2026a, 2026b), I track 217 activations of capital flow management measures. For each one, I compare the restricting country’s cross-border stablecoin activity² with that of countries that activate no restriction of their own in the surrounding months. Relative to these countries, activity rises by about 4% in the month the measure takes effect and by roughly 20% within six months (Figure 2, panel a). The response is largest after tightenings of restrictions on capital outflows. It builds to roughly 30% within six months and stays there through the twelfth month (panel b). For the median country, this amounts to about $200 million per month of additional cross-border stablecoin activity. When restrictions are later removed, activity does not detectably fall back, and the data reject the hypothesis that removals undo the initial increase.

Figure 2 Stablecoin activity around new capital flow management measures

Notes: Stacked event-study estimates of the change in the restricting country’s cross-border stablecoin activity, in log points, relative to the month before the measure takes effect. The comparison group is countries that activate no measure in the surrounding months. Panel (a) pools all 217 activations; panel (b) shows tightenings of outflow restrictions. Shaded areas are 68% and 95% confidence intervals.
Source: Reuter (2026).

Currency crises: Holdings rise and persist

The second concern is dollarisation. Holding dollars has long been a hedge against depreciation at home, and the dollarisation of bank deposits that crises set off has proved persistent (Reinhart et al. 2014, Valev 2010, Levy Yeyati 2021). I compare 21 countries that entered a currency crisis between 2021 and 2025, dated with the criterion of Laeven and Valencia (2020), with similar EMDEs that did not. Over the year following onset, the crisis countries’ combined stablecoin holdings rise by about $7.9 billion relative to the comparison countries, roughly 75% of the $10.4 billion they held before the crisis. Relative to the comparison group, holdings show no significant movement before the crisis, build steadily after onset, and appear to level off after the first year rather than revert (Figure 3). Most of this total comes from the larger crisis economies, and the increase for the median crisis economy is roughly $59 million.

Figure 3 Stablecoin holdings around the onset of currency crises

Notes: Stacked event-study estimates of stablecoin holdings in crisis countries, in percentage points of pre-crisis GDP, relative to the month before onset. 21 crises, compared with 86 matched EMDE control countries. Shaded areas are 68% and 95% randomization confidence intervals.
Source: Reuter (2026).

What the evidence implies

The findings are consistent with both concerns raised in the policy debate. The persistence of both responses also echoes the history of deposit dollarization, which has proved hard to reverse once a crisis set it off (Valev 2010, Levy Yeyati 2021). I find the same pattern for stablecoin holdings after crises, and for stablecoin activity after capital flow restrictions are lifted.

Two qualifications apply. First, the dollar amounts are still moderate. Most of the crises occurred in 2021 and 2022, when the stablecoin market was about half its end-2025 size, and how large the same responses would be in today’s larger market is an open question. Second, the estimates show where stablecoins move but not why. The rise in activity after new restrictions is consistent with circumvention, but it may also include other uses, such as remittances, that the data cannot separate.

Calibrating capital flow management measures requires data on the volume and direction of flows (Katz 2026), which official statistics do not yet comprehensively provide. Statistical initiatives now under way may in time bring stablecoin flows into official statistics. Until then, blockchain-based estimates such as these offer a measurement that is available today.

Conclusion

Stablecoins appear to have become a vehicle for dollarization, particularly for emerging market and developing economies. Using a new panel of estimated flows and holdings, I find that stablecoin activity rises when countries restrict capital outflows, that holdings rise when currency crises hit, and that both responses persist. These patterns resemble the long history of dollarization through bank deposits.

Source : VOXeu