In areas with major economic fluctuations and currency devaluation, stablecoins become a lifeline. This stability makes them an attractive choice for both individuals and businesses in countries where their assets are subject to inflationary pressures. Unlike traditional currencies that can fluctuate rapidly, stablecoins maintain stable prices by being priced against assets such as the USD or commodities. This price stability is driving growing adoption of stablecoins in regions such as sub-Saharan Africa and the Latin United States.
The Role of Stablecoins in the Local Economy
Various financial institutions, businesses and individuals leverage stablecoins to optimize processes such as international payments and liquidity management, while reducing the risk of currency fluctuations.
Kash Razzaghi, chief business officer of Circle, explained in an interview with TinTucBitcoin that these situations drive stablecoin adoption globally by supporting faster and more cost-effective transactions compared to traditional financial system.
“In emerging markets, the regulatory environment for cryptocurrencies and stablecoins is in an evolving stage,” he said.
The introduction of stablecoins since 2014 has effectively combined the technological advantages of blockchain with the financial stability necessary for widespread adoption. While blockchain technology brings transparency and efficiency, stablecoins themselves solve the problem of price volatility of cryptocurrencies. As a result, stablecoins attract an audience beyond the financial trading and speculative investors sectors, reaching out to the retail and institutional sectors. Razzaghi predicts that stablecoin adoption will spread further in the coming years.
“Over time, we expect more formalized licensing regimes, robust KYC/AML frameworks, and the ability to integrate broader CBDC strategies, as policymakers seek to balance innovation with financial stability and compliance,” he said.
Razzaghi specifically mentioned countries in sub-Saharan Africa as drivers of stablecoin adoption. As of 2021, a World Bank index reported that less than half of the region’s adult population had a bank account. As a result, cryptocurrencies have become very attractive to countries such as Nigeria, Ethiopia, Kenya and South Africa.
DeFi Adoption in Africa
Beyond the rise of stablecoins, local DeFi initiatives are gaining significant momentum in African countries like Nigeria, a leading force in global cryptocurrency adoption. According to a recent report by Chainanalysis, last year Nigeria received more than $30 billion in value from DeFi services.
“As the DeFi ecosystem expands, stablecoin-based lending products, savings and remittance solutions are becoming more accessible to users in emerging markets. This uniquely empowers individuals who have been excluded from the traditional banking system to access financial products and services, promoting inclusivity and allowing them to participate in the global economy,” Razzaghi emphasize.
Yellow Card, a stablecoin platform founded in Nigeria, is actively providing customers across Africa with secure, liquid and cost-effective access to stablecoins such as USDT and USDC, and tokens such as BTC and ETH, making it easier to directly trade using local currencies. Other countries in the region also create phone-friendly services for users without internet access. In 2020, Safaricom, the leading mobile network operator in Kenya, and communications company Vodacom Group established M-PESA Africa. The platform allows users to access stablecoin-fiat services like Binance. M-PESA has also expanded its operations to other African countries, including Tanzania, Mozambique, Ethiopia, Egypt and Ghana.
“Stablecoin solutions are adapting to the challenges of internet and infrastructure limitations by developing mobile-friendly platforms and other trading capabilities. For example, some projects are exploring the use of SMS-based transactions and partnerships with local telecommunications providers to expand their reach to disadvantaged communities,” Razzaghi told TinTucBitcoin.
These efforts aim to increase access to stablecoin services for marginalized communities in rural areas, thereby promoting financial inclusion.
Stablecoins in High Inflation Countries
In Argentina, where inflation exceeds 100%, people use USD-denominated stablecoins such as USDT and USDC to protect their savings from devaluation. Demand for stablecoins spikes on exchanges when the peso weakens or when governments impose new currency controls.
According to a report by Chainalysis 2024, when the value of the Argentine peso fell below $0.004 in July 2023, monthly stablecoin trading value exceeded $1 million the following month. The same thing happened in December 2023 when President Milei announced he would devalue the currency by 50% as part of his initial austerity plan. That month, the Argentine peso fell below $0.002, and stablecoin trading value exceeded $10 million the following month.
In Venezuela, stablecoins have also become the main means of exchange, replacing the hyperinflated bolivar. People often use peer-to-peer platforms to conduct everyday transactions, including purchasing goods and services, and leveraging stablecoins to maintain stability.
“With high demand for USD, Latin America has become a hub for digital asset applications, with people using US USD-pegged stablecoins like USDC as a store of value,” Razzaghi explained.
Nearly a million developers contribute to this growth, many working on offshore projects for US companies. This skilled workforce drives local innovation, with new fintechs and digital banks significantly improving financial access and reducing costs for U.S. Latinx consumers.
“This strong adoption comes in part from the fact that three-quarters of the region’s 30 million digital banking customers are individuals and small and medium-sized businesses that had few or no bank accounts,” Razzaghi said.
Razzaghi specifically highlighted Airtm, a fintech company that offers accounts using USDC, as an example of successful stablecoin integration. These accounts enable businesses to make low-cost payments quickly and allow recipients to easily convert USDC to their local currency.
“This can be especially useful for businesses in disadvantaged regions with high cross-border payments costs and unstable local currencies, while allowing workers to get paid quickly and reasonable in USD,” he added.
As a result, local cryptocurrency exchanges allow individuals to remain economically active amid challenging local financial conditions.
Challenges Facing Stablecoin Adoption
Despite the many benefits, several conditions can complicate widespread stablecoin adoption, especially in developing countries. While DeFi projects have made it easier to sidestep legal uncertainty in some countries, broader implementation has become difficult without an accompanying regulatory framework. Additionally, people living in rural areas often face difficulties due to limited internet access. Gaps in financial awareness in different regions also make access more difficult. As a result, informational seminars and educational resources have become indispensable in stablecoin adoption.
“Stablecoin projects and local communities are actively implementing educational initiatives such as workshops, webinars, and outreach programs to raise awareness and provide basic knowledge on how to Use digital assets safely and effectively. These educational initiatives are important in building trust and driving stablecoin adoption in areas with low financial literacy,” Razzaghi told TinTucBitcoin.
Some of these initiatives are continuing to operate. For example, Nigeria’s Yellow Card has designed an academy that offers free digital assets courses to individuals and organizations across Africa. SMS transactions through platforms like M-Pesa also help simplify transaction capabilities for underserved communities. However, additional barriers such as lack of mobile devices and computers can make these initiatives ineffective.
“Over time, clearer policy, broader connectivity, and ongoing financial literacy efforts are expected to drive broader adoption of stablecoins, thereby leveraging the inherent benefits of security and global reach that stablecoins provide,” Razzaghi added.
Further implementation of similar efforts is essential for the widespread adoption of stablecoins.
Stablecoins vs. Central Bank Digital Currency
Another aspect that increases uncertainty around stablecoin adoption is the recent integration of Central Bank Digital Currencies (CBDCs). This is a form of digital currency issued and regulated by a central bank. Not intended to replace physical cash but to coexist with it. The key difference between CBDCs and cryptocurrencies lies in the issuers. CBDCs are issued and backed by governments, ensuring their value is stable and backed by the issuing country. In contrast, cryptocurrencies are issued and managed by private entities, making their value highly affected by market fluctuations. According to the Atlantic Council’s CBDC tracker, the Bahamas, Jamaica and Nigeria are the The country has fully implemented CBDC. In Nigeria and the Bahamas, CBDC issuance has seen significant growth. All three countries are now prioritizing expanding retail adoption of CBDC in their markets.
All G20 countries are also exploring a CBDC, with 19 in advanced stages of CBDC exploration. Among them, 13 countries are already in the testing phase, including Brazil, Japan, India, Australia, Russia and Türkiye. Although CBDCs and stablecoins may compete for dominance in digital payments, each mechanism has its own advantages.
“We see many areas of synergy between compliant stablecoins such as USDC and CBDCs, with stablecoins playing an important role in supporting cross-border peer-to-peer transactions for example, a feature that has not yet been covered. included in the basic design of most CBDCs in development,” he said.
Still, Razzaghi believes the two systems can coexist rather than compete.
“USDC and other private sector innovations have achieved what a CBDC was intended to deliver. Many of the benefits of a CBDC are already being met by innovations from the private sector, through blockchain-based payment systems,” Razzaghi added.
Examining these moves helps shed light on how emerging markets are adopting stablecoins and CBDCs, highlighting their potential to reshape the global financial sector with greater inclusivity.
