The International Monetary Fund has warned that stablecoins issued in local currencies may not automatically strengthen domestic money use in emerging markets. According to IMF First Deputy Managing Director Dan Katz, those tokens could instead make it easier for users to move into dollar-linked assets when both operate on the same blockchain networks.
The concern is tied to the structure of the market itself. The IMF says almost 99% of stablecoins are denominated in U.S. dollars, leaving dollar tokens with much stronger liquidity and broader acceptance than local-currency alternatives are likely to achieve.
Shared infrastructure could ease shifts into digital dollars
Katz said the risk comes from interoperability. If a domestic stablecoin and a dollar stablecoin are available on the same on-chain infrastructure, users may be able to convert between them more easily, lowering practical barriers to moving from local digital money into digital dollars.
For economies already vulnerable to dollarization, that could matter. The IMF argues that simpler access to dollar stablecoins may increase demand for foreign currency, especially where macroeconomic fundamentals are weaker.
Market depth remains heavily tilted toward dollar stablecoins
The IMF’s warning rests partly on the current balance of the stablecoin market. With nearly all stablecoins linked to the U.S. dollar, those products benefit from deeper liquidity and wider usability across crypto markets and payments activity.
That gives dollar-denominated tokens an advantage that domestic stablecoins may find hard to overcome, even when local regulators or policymakers see national-currency tokens as a way to support local payment systems or preserve monetary relevance in digital finance.
South Africa example shows uneven demand
The IMF pointed to South Africa as an example of how adoption can differ across currencies. There, dollar stablecoins have gained only limited traction, while rand-denominated tokens have attracted even weaker demand.
The policy challenge, in the IMF’s view, is not limited to the token issuers themselves. Authorities may need to ensure that onramps, offramps and on-chain exchange points are regulated, and may also have to consider how existing foreign-exchange and capital-flow rules apply to those activities.
IMF favors targeted controls over blanket bans
The Fund said countries should not rely on a one-size-fits-all prohibition. Instead, it argues for policies tailored to the specific risks faced by each economy, balancing financial stability and currency-substitution concerns against the possible benefits of stablecoins.
Those benefits include the potential to lower payment costs and make transfers cheaper. But the IMF also noted that enforcement may be difficult in practice. Research by the Bank for International Settlements indicates that stablecoin inflows are broadly similar in countries with and without cross-border usage restrictions, while self-hosted wallets may make controls harder to apply.
Next steps center on data and coordination
Rather than proposing binding global rules, the IMF said it is focusing on better data collection and stronger regulatory alignment through international cooperation.
That approach suggests the immediate next step is not a universal standard, but closer monitoring of how stablecoins are used across jurisdictions and more coordination on how national rules are applied at entry, exit and exchange points in the market.
Source: crypto.news