How Dollar-Backed Stablecoins Are Reshaping Global Finance and Emerging Markets Growth

The global financial landscape is undergoing a seismic shift as dollar-backed stablecoins emerge as a dominant force in cross-border payments, financial inclusion, and the redefinition of U.S. dollar dominance. For institutional investors, this represents a strategic inflection point: a chance to capitalize on a $250 billion asset class that is outpacing central bank digital currencies (CBDCs) and reshaping economic dynamics in emerging markets, according to a TD Securities analysis.

The Cross-Border Payment Revolution

Stablecoins are dismantling traditional barriers to global trade and remittances, particularly in regions where local currencies are unstable or banking infrastructure is underdeveloped. In sub-Saharan Africa, stablecoins like Tether (USDT) and USDC now account for 43% of crypto transaction volume, a CG Dev report notes. Nigeria alone recorded $59 billion in crypto transactions between July 2023 and June 2024, with stablecoins facilitating low-cost, near-instant cross-border transfers, according to the CG Dev report.

The efficiency gains are staggering. Traditional cross-border wire transfers often incur fees exceeding 7–10%, while stablecoin transactions now cost under 1% in 2025, a Yellowcard analysis notes. For remittance corridors like India to the Philippines or Kenya to South Africa, this translates to billions in savings annually. According to a ConduitPay report, stablecoins reduced remittance costs to 1–3% in 2024, aligning with Sustainable Development Goal (SDG) 10's target to cut remittance fees to less than 3% by 2030.

Financial Inclusion and the Rise of Digital Dollarization

Stablecoins are not just a tool for efficiency-they are a vehicle for financial inclusion. In regions where 60% of adults remain unbanked, stablecoins provide a gateway to the global economy, a ScienceDirect study observes. For instance, in Nigeria and Kenya, stablecoins are being used for payroll, B2B settlements, and e-commerce, bypassing the need for traditional banking infrastructure, as Yellowcard notes.

This trend is accelerating digital dollarization, a phenomenon where stablecoins displace local currencies as a store of value and medium of exchange. In sub-Saharan Africa, stablecoins now account for over 40% of digital asset activity, according to ConduitPay. While this reduces reliance on volatile local currencies, it also raises concerns about capital flight and eroded tax revenues, as governments lose control over monetary policy, a CG Dev report warns.

Cathie Wood of ARK Invest has acknowledged this shift, noting that stablecoins are "usurping" Bitcoin's traditional role as a medium for payments and savings in emerging markets, according to a The Block report. This has forced a redefinition of Bitcoin's value proposition, with Wood reducing her long-term price target by $300,000, reflecting the growing dominance of stablecoins in the digital-asset ecosystem, the The Block report notes.

CBDCs: The Underperformers

While stablecoins surge ahead, CBDCs remain mired in technical and regulatory challenges. As of August 2025, stablecoin assets have grown to $250 billion, with organic trading volumes reaching $1 trillion, according to TD Securities. In contrast, CBDCs are still in experimental phases in most countries, hindered by privacy concerns, cybersecurity risks, and unclear use cases, TD Securities observes.

Regulatory clarity for stablecoins, such as the U.S. Guiding and Establishing National Innovation for U.S. Stablecoins Act (GENIUS Act), has further entrenched their role in financial markets. Stablecoins are now being used as collateral in decentralized finance (DeFi) and integrated into traditional systems, while CBDCs lag behind in institutional adoption, TD Securities notes.

Strategic Implications for Institutional Investors

For institutional investors, the case for stablecoins is compelling. They offer:
1. Cross-Border Efficiency: A scalable solution for global trade and remittances, with transaction costs that are 70% lower than traditional methods, Yellowcard notes.
2. Dollar Dominance: Stablecoins reinforce the U.S. dollar's role as the world's reserve currency, even as digital alternatives emerge, according to The Block.
3. Market Access: Exposure to high-growth emerging markets where stablecoins are driving financial inclusion and economic activity, ConduitPay observes.

However, risks remain. Regulatory shifts, particularly in jurisdictions like Nigeria and South Africa, could impact adoption rates, ConduitPay warns. Investors must also weigh the potential for capital flight and macroeconomic instability in dollarized economies, a CG Dev report warns.

Conclusion

Dollar-backed stablecoins are not a passing trend-they are a foundational shift in global finance. For institutional investors, the opportunity lies in leveraging this asset class to capitalize on cross-border efficiencies, financial inclusion, and the enduring strength of the U.S. dollar. As CBDCs falter and traditional remittance systems crumble under their own inefficiencies, stablecoins stand as the most viable bridge between emerging markets and the global economy.