Emerging markets embrace stablecoins despite significant premiums

Businesses and consumers in 17 emerging markets pay an average premium of 4.7% over the standard dollar price to access stablecoins, with the figure rising to 30% in countries like Argentina.

The data was gathered in a recent analysis conducted by the Centre for Economics and Business Research (CEBR) and BVNK. The resulting report projected that these premiums will total $25.4 billion by 2027.

According to the report, stablecoins have played a significant role in global finance over the past decade and created a niche for themselves due to their ability to “unlock capital.”

With a cumulative market capitalization of $165 billion as of mid-2024, stablecoins facilitate trillions of dollars in transactions annually, providing a stable alternative to volatile cryptocurrencies like Bitcoin.

As of June 30, the two largest stablecoins are Tether (USDT) and USD Coin (USDC), with a market capitalization of approximately $83 billion and $28 billion, respectively, based on CryptoSlate data.

Stablecoins unlock capital

According to the report, stablecoins have become essential for financial transactions, especially in regions where local currencies remain unstable or where access to traditional US dollars remains limited.

The report estimates that from 1992 to 2022, currency volatility led to an average GDP loss of 9.4% across the 17 countries studied, amounting to a total loss of $1.2 trillion. However, stablecoins have helped mitigate some of the adverse effects of currency volatility in emerging markets since their inception.

In Brazil and Indonesia, where fluctuating exchange rates threaten economic stability, stablecoins have become a reliable store of value, protecting businesses and consumers from financial losses.

The report added that traditional cross-border payment systems, often slow and inefficient, trap significant amounts of working capital in transit. It revealed that at any given moment, roughly $11.6 billion remains stuck in these systems across four major B2B payment routes.

Stablecoins have unlocked much of this capital by enabling faster and more efficient settlements. The report projects that by 2027, these efficiency gains will generate an additional $2.9 billion in economic returns, enhancing liquidity and reducing borrowing costs and operational delays.

Growth in stablecoin adoption

Emerging markets like Turkey, Thailand, and Brazil lead in stablecoin adoption. In these regions, where currency devaluation persists, stablecoins play a vital role in preserving savings and conducting international trade.

The report also noted that businesses in these countries increasingly rely on stablecoins to protect their balance sheets and ensure stable pricing in long-term contracts.

Looking ahead, the report forecasted that stablecoin payment volumes will reach $15 trillion by 2030, with the market cap potentially surpassing $1 trillion.

This growth will come from the continued adoption of stablecoins in both emerging and developed markets, as well as the introduction of new interest-bearing stablecoins that will further enhance their economic impact.

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