Dollar-backed stablecoins may be creating a form of dollarisation that is harder for emerging-market authorities to manage through conventional foreign-exchange controls, according to a new Bank for International Settlements working paper.
The paper compares foreign-currency bank deposits with cross-border inflows of dollar-pegged stablecoins. Its authors, Boris Hofmann, Aaron Mehrotra and Jan Paulick, find that both forms of dollar exposure are associated with macro-financial stress and tend to persist once established. The important difference is regulatory reach: restrictions that reduce conventional deposit dollarisation showed little statistically significant relationship with gross stablecoin inflows.
What the researchers measured
The analysis combines historical foreign-currency deposit data covering more than 130 economies with country-level estimates of USDT and USDC inflows. The stablecoin dataset, supplied by Chainalysis, covers 184 countries from 2017 through 2024. The two tokens represented more than 80% of stablecoin market capitalisation in the researchers’ dataset.
Because blockchain transfers do not carry reliable country labels, the estimates allocate flows to countries using associations between blockchain addresses and entities, then the web-traffic distribution of transacting entities such as large exchanges. The authors explicitly describe this as an approximation: virtual private networks and more complex transaction paths can distort country attribution.
That caveat matters. The study does not directly observe every household or business payment, and it does not prove that a particular control was deliberately evaded. It finds that, at an aggregate level, broad capital-flow restrictions and specific restrictions on cross-border stablecoin use did not have a statistically significant effect on gross stablecoin inflows in the model.
A different perimeter for dollar access
The findings suggest that stablecoins and foreign-currency deposits can respond to similar demand. Higher exchange-rate pass-through and sovereign or banking crises were associated with greater dollarisation, while banking crises were especially relevant to stablecoin flows. The researchers also found both deposit and stablecoin dollarisation to be persistent.
Yet the two channels do not appear to be simple substitutes. The paper reports limited evidence that rising stablecoin demand comes directly out of existing dollar deposits. One interpretation offered by the authors is market segmentation: the users and access channels for bank deposits and stablecoins may differ even when the underlying demand for dollar exposure is similar.
For payments companies, that distinction shifts the compliance question from the token alone to the access network around it. Controls applied through domestic bank accounts may not capture activity routed through offshore exchanges, self-custodied wallets or other entities outside the local banking perimeter. Payment providers serving emerging markets should therefore expect greater attention to on- and off-ramp monitoring, transaction attribution and cross-border reporting.
Implications without overstating the evidence
The working paper’s result is more specific than a claim that stablecoins defeat all capital controls. It concerns estimated gross inflows of USDT and USDC across countries, and the authors caution that stablecoin-flow measurement lacks ground truth. The paper is also research by BIS economists; it states that the views are those of the authors and do not necessarily represent the BIS or its member central banks.
The historical comparison nevertheless highlights a policy problem. Deposit controls operate through regulated intermediaries, while token transfers can circulate partly outside that perimeter. If stablecoin use becomes entrenched during periods of currency or banking stress, reversing that shift may be difficult even after conditions improve.
The authors find that moderate deposit dollarisation has historically been associated with somewhat higher inflation risk, but they report little evidence of a significant effect on monetary-policy transmission. Those results concern deposit dollarisation rather than a direct estimate of stablecoins’ future macroeconomic effects. For regulators and payment operators, the immediate takeaway is narrower: existing foreign-exchange controls may provide an incomplete picture of dollar demand when value can move through token networks.