Stablecoins are boosting the dominance of the US dollar in regions with limited access to traditional banking, according to a new report from Visa.
Stablecoins Expand the Influence of the US Dollar
According to a new report from Visa , stablecoins are helping the US dollar gain popularity in places where the traditional banking system does not provide access to the coin. Blockchain-based digital coins are increasingly being used as a stable alternative to local coins in regions with limited US dollar availability, despite ongoing volatility in the cryptocurrency market.
The report, conducted by Castle Island Ventures and Brevan Howard Digital , indicates that stablecoin adoption is growing, regardless of market cycles. Rather than being used solely for speculation, stablecoins are increasingly being used in everyday financial transactions. This trend suggests that stablecoins are becoming a monetary instrument , rather than being associated solely with the trading of digital assets.
Data from Visa shows that the use of stablecoins has skyrocketed, with volume surpassing levels seen during previous crypto bull markets. These stablecoins, which are largely backed by the US dollar , allow users to leverage blockchain technology to make secure, low-cost transactions without being exposed to the volatility of cryptocurrencies like Bitcoin or Ethereum .
The Global Impact of Stablecoins
The report also highlights that 98.97% of stablecoins are backed by the US dollar, reinforcing the coin’s dominance in the stablecoin space. Tether (USDT) continues to lead the stablecoin market, accounting for the majority of the market share. This dominance reflects the growing reliance on US dollar-backed stablecoins in international markets, especially in countries where access to the US banking system is limited.
Based on these new estimates, we can more accurately determine the share of stablecoins in total blockchain volume . It is currently around 50%, down from a peak of around 70% in late 2022. Please note that this is just an estimate. pic.twitter.com/EsI64OlfNq — nic carter (@nic__carter) September 12, 2024
The report includes survey data from more than 2,500 people in Nigeria , India , Indonesia , Turkey , and Brazil —areas where traditional banking services are limited. The survey found that 69% of cryptocurrency users in these countries have converted their local currency into stablecoins, reinforcing the idea that stablecoins are being used as a de facto tool to access the US dollar.
Additionally, 39% of respondents have used stablecoins to pay for goods or services , while another 39% have used them to send money abroad . In total, 72% of respondents expect to increase their use of stablecoins in the near future. These findings suggest that stablecoins are becoming a preferred alternative to the traditional banking system, especially given their efficiency and low risk of government intervention .
Stablecoins in Nigeria
Among the countries surveyed, Nigeria showed the highest level of stablecoin adoption , with 75% of respondents having a very positive view of these Token . The report suggests that crypto-dollarization events, where people convert from local coins to digital dollars , are likely to occur in regions like Nigeria, even in the face of government opposition.
The report concludes that the growing use of stablecoins represents a continuing trend where digital USD instruments are becoming indispensable for users in regions with limited access to traditional USD banking services. This shift is driven by user demand, and as more individuals use stablecoins for everyday transactions, the US dollar continues to expand its global influence through blockchain-based assets.
