A new report sponsored by global payment giant Visa has revealed that stablecoins are playing a significant role in expanding the reach of the U.S. dollar, particularly in countries where traditional dollar banking services are limited.
Authored by Castle Island Ventures and Brevan Howard Digital, the report found that the adoption of stablecoins is on the rise, irrespective of crypto’s market cycles. These blockchain-based currencies, backed by a stable asset like the U.S. dollar, offer cost-efficient and flexible payments without the volatility associated with cryptocurrencies like Bitcoin or Ethereum.
Data from Visa and Allium Labs showed that stablecoin volumes reached a staggering $461 billion in August alone, adjusted to exclude inorganic activity from blockchain bots. This figure surpasses any point from the 2021 bull market, despite the recent downturn in the crypto market.
Nic Carter, general partner at Castle Island Ventures, noted on Twitter that stablecoins are extending the reach of the dollar, especially in countries where USD is scarce. “Even though they are small still, they are extending the reach of the dollar—especially in countries where USD is scarcely available,” he wrote.
A survey of 2,541 individuals across Nigeria, India, Indonesia, Turkey, and Brazil, conducted by Castle Island Ventures and Brevan Howard Digital, found that 69% of crypto users had converted their local currency to stablecoins. The report concluded that these conversions represent net flows into dollars, rather than simply a substitution of dollar balance sheets from one dollar instrument to another.
Furthermore, 39% of respondents had used stablecoins to pay for goods or services, and 39% had used them to send money to relatives in other countries. Overall, 72% said they expected to increase their use of stablecoins in the future.
The report highlighted that stablecoins are preferred to traditional USD banking due to factors such as yield, efficiency, and a lower likelihood of government interference. Among the five countries surveyed, Nigeria exhibited the highest adoption of stablecoins, with 75% of respondents expressing a “very favorable” opinion of the tokens.
Carter suggested that “crypto-dollarization events” are likely to occur, and he believes one such event is actively happening in Nigeria, despite government hostility. “End users want digital dollar instruments, and currency substitution will happen regardless,” he wrote.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
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