Why Stablecoins Are Booming In Emerging Markets

Stablecoins, a type of cryptocurrency backed by traditional assets like the US dollar or gold, are gaining attention globally. In the United States, lawmakers are preparing to vote on a new law that would regulate these digital tokens. But while stablecoins move closer to becoming part of everyday finance, experts say poor regulation could create risks for both investors and the economy.

What Are Stablecoins?
Stablecoins are important in the crypto world because they help people trade digital currencies without depending on banks. They run on blockchain technology, which is a decentralized digital record. Unlike cryptocurrencies like Bitcoin that often change in value, stablecoins are tied to more stable things like the dollar.

For example, Tether and USDC are two well-known stablecoins that match the value of the US dollar and are backed by real money held by the companies that issue them.

“These coins help with fast, low-cost international payments,” said Dessislava Aubert, an analyst from a crypto research firm. She added, “This is especially valuable in emerging markets where access to hard currency and traditional banking services is often limited.”

Countries like Nigeria, Argentina, and Turkey are seeing more people use stablecoins for this reason.

The total value of stablecoins jumped from \$20 billion in 2020 to \$246 billion by May 2025, according to Deutsche Bank. In 2024, more stablecoin transactions were made than with Visa and Mastercard. USDC’s issuing company, Circle, even got listed on the New York Stock Exchange this month.

Why Is the U.S. Trying to Regulate Them?
To keep stablecoins reliable, U.S. lawmakers want companies that issue them to hold enough safe and easy-to-sell assets, like cash or government bonds. This rule would help protect investors and could also increase demand for U.S. dollars and Treasury bills.

The proposed law would also make companies go through regular audits and make it harder for new stablecoins to be created. These safety measures became more urgent after Terra, a popular stablecoin, collapsed in 2022 when it lost its link to the dollar.

“There’s a risk that an organisation may not be trustworthy or could be hacked,” said Murat Kantarcioglu, a computer science professor. “That’s why audits and checks are important.”

A loss of confidence in a stablecoin could affect not only the crypto world but also the real-world assets backing it.

Are These Rules Enough?
“The new rules could make it harder for start-ups to issue stablecoins, creating a risk that a few big companies — such as tech giants — could dominate the market,” Aubert said in an email.

There are reports that companies like Amazon and Walmart are thinking of launching their own stablecoins for their customers to use.

Some lawmakers don’t think the bill does enough. They believe it fails to tackle serious issues like market speculation, money laundering, and political bias. One example is that former President Donald Trump’s family helped launch a stablecoin called USD1, backed by a fund in the UAE.

Even with new laws, people who lose money from a stablecoin collapse may not get their money back. “Stablecoin losses are not explicitly covered by government insurance programs,” Aubert explained, “unlike bank deposits, which are insured up to \$250,000.”

How Are Other Countries Handling It?
In Europe, a law called MiCA now sets rules for cryptocurrencies, including stablecoins. The UK, Brazil, and South Korea are also making progress on their regulations. China, however, banned cryptocurrencies in 2021 and is instead working on its own digital currency, the e-yuan. Russia is considering creating a stablecoin linked to the ruble or friendly currencies like China’s yuan.
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