How Stablecoins Are Reshaping Finance in Emerging Markets | Airdrop Alert Pro

in economically developed areas volatility and currency devaluation, stablecoins provide a lifeline. This stability makes them an attractive option for individuals and businesses in countries whose wealth has been affected inflation.

Unlike traditional currencies, which can experience rapid fluctuations, stablecoins maintain consistent prices by being pegged to assets such as the U.S. dollar or commodities. This price stability is driving their increasing adoption in regions such as sub-Saharan Africa and Latin America.

The role of stablecoins in local economies

Different financial institutions, businesses and individuals Use stablecoins to simplify processes such as international payments and liquidity management, and use them to mitigate the effects of currency fluctuations.

In an interview with BeInCrypto, Kash Razzaghi, chief commercial officer of Circle, explained that these examples are driving global development Stablecoin Adoption by facilitating faster, more cost-effective transactions than traditional financial systems.

“The regulatory environment for cryptocurrencies and stablecoins is constantly evolving in emerging markets,” he said.

The launch of stablecoins in 2014 effectively combined the technical advantages of blockchain with the financial stability needed for widespread adoption.

although Blockchain technology Promoting transparency and efficiency, stablecoins themselves solve the problem of cryptocurrency price volatility. Therefore, stablecoins attract an audience that is not limited to financial transactions and speculative investors, but also reaches the retail and institutional sectors.

Razaj added that the adoption of stablecoins will further expand in the coming years.

He said: “Over time, as policymakers seek to balance innovation with financial stability and compliance, we expect that more formal licensing regimes, strong KYC/AML frameworks, and compliance with regulatory requirements may emerge. Potential integration into broader CBDC strategies.”

Razaji specifically mentioned Sub-Saharan African countries as driving force Behind the adoption of stablecoins.

As of 2021, the World Bank Index reports that less than half of the region’s adult population has a bank account. As a result, cryptocurrencies are extremely attractive to countries such as Nigeria, Ethiopia, Kenya, and South Africa.

DeFi Adoption in Africa

In addition to the rise of stablecoins, local Decentralized Finance Initiatives by African countries such as Nigeria, a leading force in global cryptocurrency adoption, are gaining huge traction. Nigeria exemplifies this trend, with DeFi services garnering over $30 billion in value last year, according to a recent Chainanalysis report.

“As the DeFi ecosystem expands, stablecoin-based lending, savings products, and remittance solutions are becoming increasingly accessible to users in emerging markets. This is particularly enabling access to financial products for individuals who have historically been excluded from the traditional banking system and services, promoting inclusion and allowing them to participate in the global economy,” Razaji stressed.

indivualyellow cardIt is a stablecoin entry/exit channel born in Nigeria. It actively provides customers in the greater African region with access to safe, liquid and cost-effective stablecoins (such as USDT and USDC) and tokens (such as BTC and ETH), allowing Direct transactions using local currencies just got easier

Other countries in the region have also created phone-friendly services for users without Internet access. In 2020, Kenya’s leading mobile network operator Safaricom and communications company Vodacom Group established M-PESA Africa.

The platform allows users to access stablecoin-fiat services such as Binance. It has also expanded into other African countries, including Tanzania, Mozambique, Ethiopia, Egypt and Ghana.

“Stablecoin solutions are adapting to the challenges of limited internet access and infrastructure by developing mobile-friendly platforms and additional transaction features. For example, some projects are exploring the use of SMS-based transactions and collaboration with local telecommunications providers to bring Its reach extends to underserved communities,” Razzaghi told BeInCrypto.

These efforts aim to increase access to stablecoin services for underserved communities in rural areas, thereby promoting financial inclusion.

Stablecoins for countries with high inflation

In Argentina, where hyperinflation exceeds 100%, citizens use U.S. dollar-pegged stablecoins such as USDT and USDC to protect their savings from devaluation. Whenever the peso weakens or governments impose new currency controls, demand for stablecoins surges on local exchanges.

According to 2024 Chainaanalysis representohroom temperatureWhen the value of the Argentine peso fell below $0.004 in July 2023, monthly stablecoin trading volume surged to over $1 million the following month. The same thing happened in December 2023, when President Milai announced a 50% devaluation of the currency as part of his initial austerity plan. That month, the Argentine peso fell below US$0.002, and the stablecoin trading volume exceeded US$10 million the following month.

In Venezuela, stablecoins have also replaced the over-inflated bolivar as the main medium of exchange. Individuals actively use peer-to-peer platforms for daily transactions, including purchasing goods and services and leveraging stablecoins for stability.

“Latin America has become a hub for digital asset use cases due to high demand for the U.S. dollar, with people using U.S. dollar-pegged stablecoins like USDC as a store of value,” Razzaghi explained.

Nearly a million developers have contributed to this growth, many of whom work on offshore projects for U.S. companies. This skilled workforce drives local innovation, with fintechs and neobanks significantly improving financial services and reducing costs latin american consumers.

“Part of the reason for this widespread adoption is that three-quarters of the region’s 30 million digital banking customers are individuals and SMEs who were previously unbanked or underbanked,” Razzaghi said.

Razzaghi highlighted Airtm, a fintech provider that offers USDC-backed accounts, as a successful example of stablecoin integration. These accounts enable businesses to make low-cost payments quickly and allow recipients to easily convert USDC into local currencies.

“This will be particularly helpful for businesses in the region facing high cross-border payment costs and unstable local currencies, while allowing workers to be paid quickly and affordably in U.S. dollars,” he added.

Local cryptocurrency exchanges therefore enable individuals to maintain economic activity amid challenging local financial conditions.

Challenges of Stablecoin Adoption

Despite the many benefits, certain conditions may complicate widespread adoption of stablecoins, especially in developing countries. Although DeFi projects make this easier Avoid regulatory uncertainty in some countrieswithout a supporting framework, wider implementation is difficult.

In addition to this, Internet access for individuals living in rural areas is also restricted. Financial literacy gaps across regions also make it more difficult to acquire financial knowledge. As a result, informational workshops and educational resources have become integral to stablecoin adoption.

“Stablecoin projects and local communities are actively developing educational initiatives such as workshops, webinars, and community outreach programs to raise awareness and provide practical knowledge on how to use digital assets safely and effectively. These educational initiatives are important for those working in finance It is crucial to build trust and promote stablecoin adoption in areas with lower knowledge levels,” Razzaghi told BeInCrypto.

Some of these initiatives are still active. For example, Nigeria’s Yellow Card designed an academy that offers free digital assets course individuals and organizations across Africa.

SMS transactions through platforms such as M-Pesa also help simplify transaction capabilities for underserved communities. However, other barriers, such as lack of access to mobile devices and computers, make these initiatives flawed.

“Over time, clearer policies, broader interconnectivity, and continued financial literacy efforts will drive wider adoption of stablecoins, leveraging the inherent benefits of stablecoins. Safety and the global access that stablecoins provide,” Razaj added.

Better implementation of like-minded efforts is critical to the widespread adoption of stablecoins.

Stablecoins and central bank digital currencies

Another aspect adding to uncertainty about stablecoin adoption is the recent inclusion of central bank digital currencies (CBDC). These currencies are A digital form of currency issued and regulated by a central bank. It’s not meant to replace physical cash, but to coexist with it.

A key difference between CBDCs and cryptocurrencies is their issuers. CBDC is issued and backed by a government, ensuring its value is stable and supported by the issuing country. In contrast, private entities issue and manage cryptocurrencies, subjecting their value to significant market fluctuations.

According to the Atlantic Council’s CBDC trackerCountries such as the Bahamas, Jamaica and Nigeria have fully launched CBDC. Nigeria and the Bahamas have seen significant growth in CBDC issuance. All three countries are currently prioritizing the expansion of retail CBDC adoption within their respective markets.

Every G20 country is also exploring CBDC, with 19 countries in advanced stages of CBDC exploration. Among them, 13 countries Already in the pilot stageincluding Brazil, Japan, India, Australia, Russia and Türkiye.

While CBDC and stablecoins can compete for dominance in the digital payments space, each mechanism has its own unique advantages.

“We see a lot of synergies between compliant stablecoins such as USDC and CBDC. For example, stablecoins play a vital role in supporting peer-to-peer cross-border transactions, a feature that is not yet included in the core design of CBDC. Most CBDCs are under development,” he said.

Nonetheless, Razaji believes the two systems can coexist rather than compete.

“USDC and other private sector innovations are already achieving what CBDC hopes to deliver. Private sector innovation is already realizing many of the benefits of CBDC through blockchain-based payment systems,” Razzaghi added.

Studying these dynamics can shed light on how emerging markets are adopting stablecoins and CBDCs, highlighting their potential to reshape the global financial industry with greater inclusion.