Key takeaways:
- IMF says local-currency stablecoins could accelerate adoption of dollar-pegged tokens rather than compete with them
- Stablecoins on shared blockchain infrastructure make currency conversion an on-chain transaction, reducing reliance on traditional intermediaries
- Stablecoins still just 0.31% of the global market
The International Monetary Fund (IMF) says local-currency stablecoins could end up boosting demand for dollar-denominated tokens rather than displacing them, as users increasingly gain the ability to convert between the two on the same blockchain infrastructure.
IMF’s First Deputy Managing Director Dan Katz, made the case in a speech at the University of Cape Town in South Africa.
He said that when local and dollar-denominated stablecoins share the same blockchain infrastructure, users can convert between the two through decentralized exchanges, liquidity pools or peer-to-peer swaps, a shift that could pull foreign exchange activity away from traditional banks and currency brokers.
“In this way, local-currency stablecoins might even accelerate the adoption of FX stablecoins,” Katz said.
“Once a local-currency stablecoin exists on the same blockchain infrastructure as dollar stablecoins, conversion between the two becomes an on-chain transaction, meaning that depending on the use case, there may be a diminished need for traditional financial intermediaries.”
Katz pointed to South Africa as an example of the dynamic still playing out unevenly. Dollar-pegged stablecoins have seen limited adoption in the country, he said, while rand-linked tokens have attracted even less demand.
He said it remains too early to draw firm conclusions, but suggested many users may still gravitate toward dollar tokens because of their liquidity, network effects and broad acceptance across platforms and borders.
Katz cautioned that the impact of stablecoins would vary significantly depending on local conditions. “The impact of FX stablecoins on emerging markets depends on country circumstances: the strength of macro frameworks, whether currency substitution is already prevalent and in what form, the financial market structure, and the availability of local-currency stablecoins,” he said.
He noted that stablecoins could largely replace existing dollar holdings in economies that are already heavily dollarized, but could increase demand for foreign currency in countries where dollar access is restricted and macroeconomic frameworks are weaker.
Katz called on regulators to build frameworks that support onramps, offramps and on-chain exchange mechanisms as stablecoin adoption continues to grow.
Stablecoins reach $135 billion in cross-border payments
Meanwhile, Katz’s remarks came alongside new data showing how much room stablecoins still have to grow within global payments.
An analysis by FXC Intelligence, using data from Allium, found that stablecoins were used for an estimated $135 billion in non-wholesale cross-border payments in 2025, according to a report by Asian Banking and Finance published August 10. That figure represents just 0.31% of the $44 trillion non-wholesale cross-border payments market, up from $82 billion, or 0.2% of a $40.5 trillion market, in 2024.
Business-to-business payments remained the largest use case across both stablecoins and traditional currency transactions, accounting for 79% of cross-border payments made in traditional currency and 49% of those made in stablecoins.
Consumer-facing activity showed a different pattern: consumer-to-consumer transfers made up 15% of stablecoin volumes, compared with just 5% of traditional currency payments, while consumer-to-business payments accounted for 22% of stablecoin volumes, more than double their 11% share of traditional currency flows.
Katz said the total market capitalization of stablecoins nearly tripled between 2021 and 2025 but has stayed roughly flat over the past year at around $300 billion, with more than 99% of stablecoins in circulation pegged to the U.S. dollar.
He said total stablecoin transaction volume exceeded $30 trillion in 2025, of which $6.1 trillion crossed international borders, though most of that activity remains concentrated within the crypto ecosystem itself, driven largely by trading bots and algorithmic arbitrage rather than real-world payments.
The Bank for International Settlements has separately estimated that only $390 billion of stablecoin flows in 2025 were tied to actual payment activity, underscoring how much of the sector’s headline transaction volume still reflects trading rather than commerce.