BIS Warns Stablecoins Could Erode Capital Controls in Emerging Markets

Dollar-backed stablecoins are becoming a new channel for “digital dollarization” that BIS researchers say is largely resistant to capital controls—especially in emerging markets where households and businesses already face currency and access constraints.

In a study released by the Bank for International Settlements (BIS), researchers compared foreign-currency bank deposits with inflows into dollar-pegged stablecoins across more than 130 economies. They found that both measures tend to rise during macroeconomic stress, but stablecoin flows react far less to capital controls and other FX restrictions—an asymmetry the authors attribute to stablecoins circulating “partly outside the regulatory perimeter.”

Key takeaways

• BIS research links both foreign-currency deposits and dollar-pegged stablecoin inflows to periods of macroeconomic stress.
• Stablecoin inflows appear far less sensitive to capital controls than traditional foreign-currency deposits.
• That resilience could limit policymakers’ ability to curb stablecoin adoption using tools designed for the banking system.
• BIS reports limited evidence that deposit dollarization weakens monetary policy transmission, though higher foreign-currency deposits correlate with greater inflation risk.
• The study suggests financial-stability regulation may need updating as tokenized assets expand beyond existing oversight structures.

Digital dollarization beyond traditional banking channels

BIS researchers frame stablecoins as potentially creating a parallel dollar-use ecosystem. Their analysis draws a comparison between two ways residents can move into foreign currency: by holding bank deposits denominated in foreign exchange and by holding dollar-pegged stablecoins.

According to the BIS study, both categories increase during periods of macroeconomic stress. That finding aligns with a common pattern in emerging-market finance: when local currencies weaken and uncertainty rises, demand for dollar assets often grows.

The important difference is how each channel responds to government attempts to restrict cross-border capital movement. The BIS team reports that stablecoin inflows show little reaction to capital controls or other FX restrictions, while foreign-currency deposits behave more like a traditional financial variable—tending to reflect policy measures more directly.

The authors argue this divergence is likely because stablecoins can circulate outside the regulatory perimeter. In practice, that means stablecoin adoption may not map neatly onto the same enforcement mechanisms used for bank deposits or conventional foreign-currency flows.

Why capital controls may be less effective with stablecoins

Capital controls and FX restrictions are designed to influence the movement of funds across borders and within domestic financial systems. BIS’s findings suggest that when a new, tokenized “dollar” route emerges, those tools can lose traction.

The study does not claim stablecoins are immune to every policy influence. Rather, it highlights reduced responsiveness in stablecoin flows relative to traditional foreign-currency deposits. For policymakers, that raises a practical question: how much of financial stability management still depends on the banking system being the main gateway for dollarization?

BIS also warns that stablecoins could undermine monetary sovereignty even if inflation dynamics remain similar in some cases. The concern is that households and businesses may shift into dollar exposure outside the banking system, particularly where local currencies are fragile or access to reliable financial services is limited.

Monetary policy transmission and inflation risk remain mixed

While the BIS study raises sovereignty questions, it also includes a more nuanced assessment of monetary policy effectiveness. The researchers report little evidence that dollarization via deposits weakens monetary policy transmission.

However, the study notes that countries with higher levels of foreign-currency deposits faced a somewhat greater risk of elevated inflation. That distinction matters because it suggests the impact of dollarization on macro outcomes may depend on structure and context—even if stablecoins and deposits are both dollar-linked.

For investors and risk managers, the takeaway is that “digital dollarization” may not automatically translate into immediate policy failure, but it can still complicate how central banks gauge demand for foreign-currency assets and anticipate pressure points in financial stability.

Regulators may need new tools for a tokenized financial system

BIS concludes that policymakers may need updated instruments to manage financial stability as stablecoin usage grows. The argument is not simply that stablecoins are “new,” but that existing regulations built for traditional banks and foreign-currency deposits may be less effective when the dollar exposure is tokenized and potentially distributed across channels that fall outside established compliance boundaries.

That becomes especially relevant as stablecoins are increasingly used for payments in emerging markets. In such settings, stablecoin adoption can be driven not only by speculative motives, but by operational realities—cross-border transfer speed, remittance costs, and persistent gaps in access to foreign exchange.

Stablecoin adoption is already spreading for payments and cross-border use

The BIS analysis arrives as other institutions document rising stablecoin use in the real economy. In a separate assessment focused on Nigeria, the International Monetary Fund (IMF) found that households and small businesses use US dollar-pegged stablecoins for cross-border payments, remittances, and access to dollar-denominated assets. The IMF attributed demand to factors such as inflation, currency depreciation, and limited access to foreign exchange.

In that IMF report, stablecoins were described as reducing the time and cost of moving money across borders while expanding access to financial services for users outside the traditional banking system. At the same time, the IMF warned that broader adoption of dollar-backed tokens could weaken monetary sovereignty by reducing demand for local currency and moving more financial activity outside conventional banking channels.

Beyond Africa, stablecoin payments have also accelerated in Latin America. Bitso Business, the enterprise payments arm of crypto exchange Bitso, reported an 81% year-over-year increase in stablecoin payment volume during the first half of 2026. The company also said that Circle’s USDC and Tether’s USDT made up 40% of all crypto purchases in the region in 2025, surpassing Bitcoin for the first time.

Separately, broader market data points to the scale of this shift. Stablecoin market capitalization has reportedly risen to about $309.7 billion, up from roughly $260 billion a year earlier, according to the figures cited in the original reporting and shown via DefiLlama’s stablecoin data.

For markets, the key question now is how policymakers will respond if stablecoin flows keep behaving differently than foreign-currency deposits. BIS’s evidence suggests traditional capital-control playbooks may be less effective, so the next watch items are regulatory measures that target tokenized dollar access directly—and whether stablecoin adoption continues to decouple from FX restrictions across more jurisdictions.