Despite promising instant, cheap cross-border payments, stablecoins lack features critical for corporate treasurers. The absence of FDIC insurance, a single standard ("singleness of money"), and interoperability between blockchains makes them too risky and fragmented for wholesale use.
Contrary to the popular narrative, the dominant use case for stablecoins in emerging markets is not remittances or savings. Survey data suggests overwhelmingly (88% in one study) that they are used as an entry and exit point for the broader cryptocurrency ecosystem, reframing their role in EM finance.
While stablecoins gain attention, tokenized deposits offer similar benefits—like on-chain transactions—but operate within the existing, trusted regulatory banking framework. As they are simply bank liabilities on a blockchain, they may become a more palatable alternative for corporates seeking efficiency without regulatory uncertainty.
The cost to convert local currencies into dollar-backed stablecoins often includes a premium over the official FX rate. This "stablecoin access premium" is highly correlated with FX volatility, suggesting the newer stablecoin market is already taking pricing cues from the larger, more mature FX market.
Stablecoin market growth isn't driven by a single factor. Analysis reveals it has been fastest during periods when both Bitcoin prices and the broad US dollar index are appreciating simultaneously. This dual correlation points to a specific macro environment that is most conducive to stablecoin adoption.
Data showing average stablecoin transaction sizes of only $11,000 to $14,000 indicates that current usage in emerging markets is not dominated by large-scale corporate payments. This points to a user base more focused on retail, smaller B2B, or crypto trading activities, rather than wholesale cross-border finance.
Stablecoin adoption by U.S. entities merely shifts existing dollar assets from bank deposits or money market funds. True new demand for the U.S. dollar only materializes when foreign households or corporates convert their local currencies into dollar-backed stablecoins for the first time, creating a net FX conversion.