BIS latest research: USD stablecoins bypass capital controls across multiple countries, threatening the currency sovereignty of emerging markets

The latest research from the Bank for International Settlements (BIS) indicates that dollar stablecoins are seeping into 130-plus economic jurisdictions in the form of “digital dollarization,” and are not constrained by traditional capital controls. The study analyzed cross-border deposit and stablecoin inflow data, finding that stablecoins are expanding in emerging markets faster than expected, which could weaken countries’ monetary policy sovereignty.
(Background summary: The double-edged sword of stablecoins: may cause capital outflows from developing countries and disrupt financial stability)
(Background note: BIS report》Stablecoins can’t meet the standards of money; their overall scale is too small, and the pros and cons depend on regulatory design)

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• How stablecoins bypass capital controls
• Real-world cases in emerging markets
• Stablecoin market cap surpasses $31 billion

BIS’s research team released a new working paper and found that dollar stablecoins are spreading across emerging markets through a “digital dollarization” mechanism, with this path being affected by government capital controls only marginally.

BIS analyzed data on foreign currency deposits and inflows of USD-pegged stablecoins from more than 130 economic jurisdictions, and found that both types of inflows increase during periods of macroeconomic stress. However, stablecoin inflows showed almost no reaction to capital controls and foreign exchange constraints. The researchers said this is because “part of stablecoin circulation takes place outside the regulatory perimeter.”

How stablecoins bypass capital controls

The study’s core finding is that traditional foreign currency deposits flow in through banking channels, allowing governments to control them via exchange-rate restrictions or foreign-exchange quotas. But stablecoins also move via on-chain transfers and digital wallets, enabling households and businesses to hold dollar assets directly outside the banking system.

In working paper No. 1370, BIS researcher explained that this kind of “digital dollarization” means governments’ ability to control stablecoins may be weaker than their control over traditional foreign currency deposits. When the domestic currency depreciates or inflation rises, residents can convert funds into USDT or USDC in seconds, without going through bank foreign-exchange counters.

Although the expansion speed of stablecoins is astonishing, the study also found that deposit dollarization itself has little impact on monetary policy transmission. However, countries with higher foreign currency deposits do face higher inflation risks.

Real-world cases in emerging markets

Recent analysis by the International Monetary Fund (IMF) on Nigeria shows that local households and small businesses widely use USD-pegged stablecoins for cross-border payments, remittances, and dollar asset allocation. The IMF noted that stablecoins reduce the cost and time of cross-border transfers while shifting more financial activity out of traditional banking channels.

Adoption is accelerating more clearly in Latin America. Bitso’s corporate payments unit, Bitso Business, reported that in the first half of 2026, the transaction volume of stablecoin payments grew 81% year over year. Circle’s USDC and Tether’s USDT account for 40% of all crypto purchases in the region, surpassing Bitcoin for the first time.

Stablecoin market cap surpasses $31 billion

According to DefiLlama data, the global stablecoin market capitalization has risen to about $309.7 billion, up nearly 20% from $260 billion a year earlier. This means stablecoins are no longer just a trading medium within the crypto world—they are becoming part of the daily financial infrastructure in emerging markets.

BIS warns policymakers that the regulatory framework for traditional banks and foreign currency deposits may have diminishing effectiveness in tokenized financial systems. New tools may be needed to manage financial stability in the future, including on-chain liquidity monitoring, transparent reserve mechanisms for stablecoin issuers, and cross-border regulatory coordination.

For Taiwan, although capital controls are relatively limited, BIS research also reveals a trend: as stablecoins become an “invisible second foreign-exchange reserve,” the efficiency of monetary policy transmission by the central bank may face new challenges. Of particular interest is whether, under Taiwan’s currently floating exchange-rate regime, stablecoins have already begun to affect the price discovery mechanism of the Taiwan dollar exchange rate—this still requires further tracking.