Stablecoin Adoption Booms in Emerging Markets, Outpacing Bitcoin

Stablecoins, cryptocurrencies pegged 1:1 to fiat currencies, have exploded in popularity. They’ve even beaten out Bitcoin (BTC) in transactions across the globe. Specifically, regions like Latin America and Sub-Saharan Africa have embraced these fiat-pegged assets, even as BTC hit $106,000 for the first time in history.

This Chainalysis blog post explains how people in emerging markets use stablecoins to hedge against local monetary instability. They provide “a more reliable means of transacting and preserving value.” Furthermore, stablecoins have made a significant impact in Latin America and Sub-Saharan Africa due to their practicality for low-cost remittances, secure yield options, and access to DeFi services.

Read also: Yellen Pushes for Stablecoin Oversight as Financial Risks Mount

This growth is evident in the jump in stablecoin transfers under $1 million, which indicates non-institutional activity. Latin America and Sub-Saharan Africa lead this surge. Eastern Asia and Eastern Europe also show considerable growth. Meanwhile, North America and Western Europe have seen substantial but gradual growth in transfers under $1 million.

Interestingly, stablecoins and altcoins have surpassed Bitcoin and Ether in popularity across the Middle East and North Africa, especially in Türkiye, Saudi Arabia, and the UAE. These assets have attracted a larger number of investors in these countries. Notably, Türkiye leads the world in stablecoin trading volume as a percentage of GDP.

The Future of Stablecoins

According to Monica Long, President of Ripple, the future of stablecoins lies in payments. She stated that her company is ready for that future with the launch of RLUSD, Ripple’s much-anticipated stablecoin. This venture is expected to go live by the end of the year and recently received approval from the New York Department of Financial Services (NYDFS).

Chainalysis points out that the future of stablecoins hinges on legitimacy and integration with the traditional financial system. But challenges remain, such as “uncertainty in key markets, exploitation by illicit actors, and questions around reserve transparency,” the blockchain analysis firm noted.