Stablecoins Split Global Markets: Regulation vs. Survival

Stablecoins are increasingly serving as a critical financial tool for both institutional and individual users in volatile markets, with their role diverging significantly between developed and emerging economies. In the United States, the enactment of the GENIUS Act in July 2025 marked a pivotal step in bringing regulatory clarity to the stablecoin market, establishing a framework that mandates full backing of stablecoins by short-term assets such as U.S. Treasury bills and deposits. This development has enhanced trust in USD-backed stablecoins, particularly for institutional use and cross-border transactions [1]. Meanwhile, in emerging markets, stablecoins are being adopted not as speculative assets but as practical solutions to inflation, currency devaluation, and costly remittances [4].

In Latin America, Southeast Asia, and Africa, businesses and individuals are increasingly turning to stablecoins to bypass traditional financial systems that lack the speed and cost efficiency required in high-inflation environments. Yellow Card, a leading stablecoin infrastructure provider, has expanded into Argentina, Brazil, Bangladesh, India, Mexico, Pakistan, and Colombia, reporting that stablecoin transactions have surpassed those of Visa and Mastercard in 2024. For instance, in Argentina, 61.8% of crypto transactions involved stablecoins, reflecting a direct response to inflationary pressures [2]. Nigeria, for example, processed nearly $22 billion in stablecoin transactions between July 2023 and June 2024, demonstrating how stablecoins are becoming a foundational part of financial infrastructure in these markets [2].

Despite the benefits, stablecoins also come with systemic risks, particularly when issued outside of traditional banking oversight. The U.S. Federal Reserve and other global regulators have raised concerns that without robust supervision, stablecoins could trigger liquidity crises and challenge the role of central banks. George Gallwey, a geopolitical risk analyst, notes that the Trump administration’s support for private stablecoins reflects a broader strategy to privatize monetary issuance and project U.S. financial influence globally. While this approach may foster innovation and maintain U.S. leadership in digital assets, it also raises concerns about the potential for market instability and the erosion of public trust in national currencies [3].

In the U.S., the regulatory environment is shaping a distinct stablecoin model centered around institutional adoption and yield-bearing instruments. However, the GENIUS Act restricts the sharing of interest revenue earned from Treasury assets with retail users, keeping the benefits largely within the balance sheets of issuers and banks. This has led to a bifurcation in the use cases of stablecoins, with U.S. users benefiting from regulated infrastructure and emerging markets relying on stablecoins for basic financial stability. BitGo’s Ben Reynolds highlights that in the U.S., USDC is predominantly used for institutional applications and DeFi, while in South America, USDT has seen explosive growth driven by demand for digital dollars [4].

The future of stablecoin adoption appears to be shaped by both regulatory developments and market dynamics. While the U.S. model emphasizes compliance and controlled innovation, emerging markets are leveraging stablecoins as essential tools for cross-border trade, remittances, and corporate treasury management. As both models evolve, the role of stablecoins may converge, with institutions in developing economies beginning to explore yield-based products similar to those in the Global North. However, the risks remain, particularly in unregulated markets, where counterparty risk and lack of transparency could undermine confidence in stablecoin systems [4].

Source: [1] Stablecoin maturity, regulation opens crypto adoption gate (https://www.cfodive.com/news/stablecoin-maturity-regulation-opens-crypto-adoption-gate-taxbit-ceo/759545/) [2] Yellow Card expands into emerging markets as stablecoin adoption surges (https://www.intelligentcio.com/africa/2025/09/04/yellow-card-expands-into-emerging-markets-as-stablecoin-adoption-surges/) [3] Stablecoins and the Global Risks of a Privatised Dollar (https://www.globalpolicyjournal.com/blog/09/09/2025/stablecoins-and-global-risks-privatised-dollar) [4] One dollar, two worlds: How stablecoin adoption differs across the globe (https://ambcrypto.com/one-dollar-two-worlds-how-stablecoin-adoption-differs-across-the-globe/)