CoinW Research Institute
summary
This article uses the Venezuelan crisis as a starting point to point out that the reason stablecoins are repeatedly mentioned is not due to speculative narratives, but because in an environment where the credibility of local currencies is damaged, the banking system is failing, and cross-border capital flows are restricted, they have become a financial tool that ordinary people can still "use." Stablecoins do not offer higher returns, but rather an alternative channel that does not rely on the domestic financial system, used for payments, settlements, and temporary value storage.
Looking further, while stablecoins present centralized and compliance risks, in the context of systemic failure, "manageable stablecoins" are often still superior to "fiat currencies that are bound to depreciate." Their proliferation has also objectively extended the influence of the US dollar, and in situations where the sovereign currency system fails, they are gradually assuming some informal global clearing functions. As real-world usage continues to accumulate, regulatory attitudes are shifting from simple prevention to rule-based management, and the payment and settlement infrastructure surrounding stablecoins is moving from narrative to actual operation.
Stablecoins are transforming from an asset class into a form of financial infrastructure. Their growth is not driven by market sentiment but by real-world problems, and is repeatedly validated through continuous use. The true value of stablecoins lies not in white papers or narratives, but in the repeated demonstrations of financial failure in the real world.
1. When national credit fails, what people truly need is not a "price increase".
Venezuela has repeatedly become a focus of discussion not only because of this sudden political conflict, but also because it has long been in a state of "repeated damage to its national credit." This damage is not only reflected in inflation data or exchange rate fluctuations, but also in whether its currency, banking, and payment systems can still function properly.
When the system itself lacks stable expectations, financial problems escalate from the "investment level" to the "survival level." For ordinary people, the real concern isn't whether to allocate assets to a particular sector, but rather a series of more fundamental questions: Can wages still be safely saved? Will money remitted from overseas relatives arrive smoothly? Will bank transfers be suddenly frozen? Will assets quickly become worthless due to capital controls, policy changes, or rapid currency devaluation? These issues directly impact the daily economic lives of individuals and families.
It is in this environment that the meaning of "hedging" itself has changed. Hedging no longer means pursuing higher returns or outpacing inflation, but rather finding a form of money that can still be used normally: whether it can preserve value, make payments, transfer funds, and move across borders is often more important than price fluctuations themselves.
2. The logic behind the use of stablecoins under a crisis of national credit.
Why are stablecoins repeatedly mentioned in environments of credit breakdown?
When the creditworthiness of a local currency weakens, the efficiency of the banking system declines, and even functional failures occur at certain stages, stablecoins often naturally become a viable option. This is not because they are inherently cutting-edge or radical, but because they occupy the intersection between the traditional financial system and real-world survival needs. At this point, stablecoins are not a better investment, but rather an alternative path that does not rely on the domestic banking clearing system. They allow funds to still perform their most basic functions: preserving value, making payments, and facilitating cross-border flows, without being entirely dependent on the operation of the local currency system and the domestic financial infrastructure. In cases like Venezuela, stablecoins have appeared frequently because they are indeed used in people's daily lives and, to some extent, have taken on roles that should have been performed by the local currency and the banking system.
"Failed states" are not isolated cases, but rather a highly concentrated sample.
Globally, Venezuela is not an isolated case of widespread adoption of stablecoins; Iran also serves as a highly typical real-world example. For a long time, Iran has faced persistent depreciation of the rial, high inflation, and financial blockades imposed by international sanctions. Its access to foreign exchange and cross-border settlement channels have been restricted, making it difficult for its banking system to effectively fulfill its functions of value preservation and capital flow. Recently, with escalating economic pressures and social unrest, Iran has further tightened its financial and capital controls, restricting foreign exchange access, reducing the freedom of capital flows, and continuously weakening public confidence in the stability and predictability of its financial system.
Meanwhile, several regions in Iran experienced temporary restrictions on communication and internet services. While not directly targeting the financial system, this objectively amplified its inherent vulnerabilities. In a world heavily reliant on online systems, bank transfers, electronic payments, account settlements, and cross-border fund transfers depend heavily on stable network connections. Once communication is disrupted, these functions often fail to operate smoothly, significantly reducing the usability of the local currency in daily transactions, fund allocation, and value transfer. The uncertainty surrounding the availability of fiat currency in critical moments further erodes public trust in the traditional financial system.
Against this backdrop, USD-pegged stablecoins, represented by USDT and USDC, are increasingly being used for pricing goods and services, temporarily storing income, and cross-border transfers. In some scenarios, they even directly replace local currencies, becoming the reference unit for daily transactions. This usage logic is not complex and is almost entirely devoid of speculative elements. Rather, it represents a "still usable" funding option repeatedly validated by reality under conditions of damaged local currency credibility, banking system failures, and restricted capital flows. The cases of Venezuela and Iran demonstrate that "failed states" are not isolated incidents, but rather structural samples of a highly concentrated genuine demand for stablecoins. Their spread stems more from gaps left by the existing financial system than from narratives within the crypto market.
It bypasses not regulation, but a failing financial system.
From a Web3 perspective, the reason stablecoins keep emerging is not because they circumvent regulations, but because they bypass the already dysfunctional domestic currency system and bank clearing system. When a country's currency continuously loses purchasing power, bank transfers become inefficient, or even at risk of being frozen at any time, stablecoins provide a practical channel that does not rely on the country's financial infrastructure.
3. Are stablecoins really safe?
Before discussing the real-world value of stablecoins, one unavoidable question arises: are stablecoins truly secure? In the Web3 context, they are often criticized for not being decentralized enough, and are even considered to simply transfer the centralized risks of traditional finance to the blockchain. This criticism is not unfounded. It must be acknowledged that mainstream stablecoins do exhibit significant centralized characteristics, managed by specific issuers, possessing the ability to freeze addresses and cooperate with compliance reviews, and are not entirely untouchable in extreme circumstances.
But in an environment like Venezuela, the question isn't whether centralization is ideal enough, but rather the more direct and real risks: the local currency could depreciate sharply in a short period, bank accounts could be frozen due to policies, foreign exchange controls, or systemic problems, and funds might not even be able to be freely transferred. Under such circumstances, security itself needs to be redefined.
It is against this backdrop that a seemingly contradictory yet extremely realistic choice emerges: a stablecoin that "may be frozen" is often still superior to a fiat currency that "almost inevitably continues to depreciate." The former remains usable at least most of the time, allowing for payments, transfers, and cross-border transactions; while the latter's risk is not just volatility, but a systemic erosion of purchasing power, and even complete loss of functionality at critical moments.
This is precisely the "decentralization paradox" of stablecoins. They are not perfect, nor do they offer absolute security, but when cracks appear in institutions and the financial system, people often choose the tool with relatively more controllable risks and more predictable outcomes. This choice is not an ignoring of centralized risks, but rather a conscious trade-off.
4. The Geopolitical Function of Stablecoins as Seen Through Venezuela
Venezuela's case clearly demonstrates that when a country's monetary system experiences structural failure, stablecoins do not simply exist passively, but gradually take over some of the functions that originally belonged to sovereign currencies.
In essence, the proliferation of stablecoins is an unofficial extension of the dollar's influence. It doesn't spread through central banks, international organizations, or formal monetary agreements, but rather leverages blockchain and encrypted networks to enter regions where local currency credibility is weak, with lower barriers to entry and at a faster pace. Stablecoins don't create new value anchors; instead, they transplant existing dollar credibility into the underserved corners of the traditional financial system in the form of on-chain assets.
For some countries, this process is not neutral. As residents begin to spontaneously use stablecoins for pricing, storing value, and settlement, the space for their own currencies to be used will be gradually squeezed. Even without formal "dollarization" policies, monetary sovereignty will be weakened in reality. This is not a reflection of political stance, but rather a result of practical choices.
However, from the perspective of ordinary people, stablecoins have the opposite significance. They are not a political tool, but a "currency escape route." In an environment where the banking system is restricted and capital flows are strictly controlled, stablecoins preserve the possibility for individuals to preserve the fruits of their labor and complete cross-border transfers.
It is precisely within this tension that stablecoins are gradually revealing a new role: an informal global clearing layer. When the sovereign monetary system functions well, it remains on the periphery; but when cracks appear or even fail in the financial system, it passively takes over some of the functions of settlement, value storage, and cross-border flows.
5. How can stablecoins enter the real financial system?
From "forced use" to "repeated use"
In events like Venezuela, the entry of stablecoins into the real world was not a voluntary choice, but a forced outcome. When extreme situations arise, people need a usable tool for basic payments and value preservation. However, as similar scenarios repeatedly occur at different times and in different regions, stablecoins are gradually no longer seen merely as temporary alternatives in extreme environments, but rather as a reliable financial instrument. This shift is also subtly influencing how regulators, financial institutions, and the entire cross-border payment system assess them.
A shift in regulatory attitude: from "whether or not" to "how to regulate".
This shift is particularly evident at the regulatory level. Early discussions focused more on whether stablecoins should exist, but as their actual use in cross-border payments and daily settlements became clearer, the question began to shift: since they are already in use and difficult to replace in certain scenarios, how can they be incorporated into a manageable and monitorable framework? This is not a matter of ideological agreement, but rather an acknowledgment of reality. Stablecoins do not solve abstract efficiency problems, but rather address long-standing structural pain points such as slow cross-border transfers, high costs, and opaque processes, which are amplified in regions with fragile financial systems.
Underestimated survival and transboundary attributes
This is precisely why the "survival attributes" and "cross-border attributes" of stablecoins have long been underestimated. They do not depend on market sentiment, but are often adopted first when foreign exchange is restricted, or when banking channels are unstable or even disrupted. This use is not conspicuous, but it is extremely sticky; once a path is established, it is difficult to replace easily. Meanwhile, the payment and settlement infrastructure surrounding stablecoins is moving from concept to operation. Modules such as wallets, on-chain transfers, compliant custody, and cross-border interfaces are being gradually pieced together driven by real-world needs, taking on functions originally performed by traditional clearing networks in some scenarios.
Payment Stablecoin Infrastructure: A Neglected Main Theme
From this perspective, "payment stablecoin infrastructure" is likely one of the most easily overlooked underlying themes this year. It doesn't stand at the forefront of any popular narrative, yet it forms the underlying foundation upon which almost all narratives are built. Whether it's DeFi, RWA, on-chain finance, or cross-border remittances and real-world business settlements, as long as real funds are involved, most transactions inevitably involve the role of stablecoins in clearing, settlement, exchange, and compliance channels. The Venezuelan case has illustrated this point quite clearly. For real users, they only care about one thing: whether the money can reach them smoothly, safely, and promptly. And once funds actually begin to flow, it inevitably involves a whole set of invisible but indispensable infrastructure, including stablecoin issuance, custody, cross-chain functionality, exchange, and compliant deposits and withdrawals.
A shift in role from assets to infrastructure
This also determines that stablecoin payments are not an emotion-driven sector, but a problem-driven one. Demand arises from the harsh realities of uncontrolled local currencies, declining banking system efficiency, and restrictions on cross-border transactions. Therefore, the growth of stablecoin-related infrastructure is often slow and steady, rather than explosive or sensational. Once a payment method is proven to be truly usable, it will be used repeatedly and gradually become embedded in local money flow habits.
Looking at a longer time horizon, a trend is becoming clear: stablecoins are shifting from an "asset form" to a "financial infrastructure form." They are no longer just traded or allocated, but are increasingly appearing in the most basic and essential aspects of payment, settlement, cross-border flows, and value storage. By the time the market truly realizes this change, it may no longer be a new direction, but rather a widely used and irreplaceable financial infrastructure system.
