Stablecoins Boost U.S. Dollar Dominance Worldwide
Stablecoins are increasing U.S. dollar dominance in regions with limited access to traditional banking, according to a new report by Visa.
Stablecoins Extend the Reach of the U.S. Dollar
According to a new report by Visa, stablecoins are helping the U.S. dollar gain dominance in regions where traditional banking systems don't offer access to the currency. These blockchain-based digital currencies are increasingly being used as a stable alternative to local currencies in areas with limited dollar availability, despite the ongoing volatility in the cryptocurrency market.
The report, created by Castle Island Ventures and Brevan Howard Digital, highlights that the adoption of stablecoins is on the rise, regardless of market cycles. Rather than being used purely for speculation, stablecoins are increasingly being used for everyday monetary transactions. This t
rend demonstrates that stablecoins are gaining traction as a monetary instrument, rather than being solely tied to digital asset trading.
Visa’s data shows that stablecoin usage has surged, with volumes surpassing levels from previous cryptocurrency bull markets. These stablecoins, mostly backed by U.S. dollars, allow users to take advantage of blockchain technology for secure, low-cost transactions without being exposed to the volatility of cryptocurrencies like Bitcoin or Ethereum.
Global Impact of Stablecoins
The report further underscores the fact that 98.97% of stablecoins are backed by U.S. dollars, reinforcing the dollar’s dominance in this space. Tether (USDT) remains the leader in the stablecoin market, accounting for the majority of market share. This dominance reflects the increasing reliance on U.S. dollar-backed stablecoins in international markets, particularly in countries where access to the U.S. banking system is restricted.
Based on these new estimates, we are able to determine more accurately the stablecoin share of all transaction volume on blockchains. Today, it's around 50%, down from a peak of around 70% in late 2022. Keep in mind these are estimates. pic.twitter.com/EsI64OlfNq — nic carter (@nic__carter) September 12, 2024
The report includes survey data from over 2,500 people across Nigeria, India, Indonesia, Turkey, and Brazil—regions where traditional banking services are limited. The survey revealed that 69% of crypto users in these countries had converted their local currency into stablecoins, further solidifying the idea that stablecoins are being used as a practical tool to access the U.S. dollar.
In addition, 39% of respondents had used stablecoins to pay for goods or services, while another 39% had used them for sending money abroad. Overall, 72% of the respondents expect to increase their use of stablecoins in the near future. These findings suggest that stablecoins are becoming a preferred alternative to traditional banking systems, particularly for their efficiency and lower risk of government interference.
Stablecoins in Nigeria
Among the countries surveyed, Nigeria showed the highest levels of stablecoin adoption, with 75% of respondents having a highly favorable opinion of these tokens. The report suggests that crypto-dollarization events, where people shift from local currencies to digital dollars, are likely to happen in regions like Nigeria, even amid government opposition.
As the report concludes, the growing use of stablecoins points to an ongoing trend where digital dollar instruments are becoming indispensable for users in regions with limited access to traditional dollar banking services. This shift is being driven by user demand, and as more individuals adopt stablecoins for daily transactions, the U.S. dollar continues to extend its global influence through the use of these blockchain-based assets.
