Dollar stablecoins can improve access to cross-border settlement while also giving households and businesses a faster route out of local currencies and bank deposits. A new report from payment infrastructure company Sphere, co-authored with Silicon Valley Bank, frames that tension as a choice between two clocks: gradual currency substitution over years and rapid outflows during a depeg, issuer shock or banking event.
The report, published September 22, is industry analysis rather than a regulatory finding. Its central warning is nevertheless supported in part by two Bank for International Settlements working papers that examine stablecoin flows across national currencies. Together, the research shifts the operational question from whether stablecoins compete with bank money to how quickly that competition can transmit into deposit funding, foreign-exchange markets and payment controls.
Stablecoin dollarization is not just a crypto-market issue
A July BIS paper compared foreign-currency deposits and dollar-pegged stablecoin inflows across more than 130 economies. Its authors found that conventional deposit dollarization and stablecoin flows share several macro-financial drivers, including exchange-rate pass-through and sovereign or banking crises. Both forms also appeared persistent, suggesting that dollarization can be difficult to reverse once established.
The paper found an important difference: stablecoin flows appeared largely unaffected by broad or targeted capital-flow restrictions, unlike foreign-currency deposits. The authors said this likely reflects stablecoins circulating partly outside the regulatory perimeter. That finding does not establish that every stablecoin transfer breaches a local rule. It does indicate that controls designed around banks, licensed foreign-exchange dealers and scheduled settlement windows may have less influence over wallet-to-wallet transfers.
The BIS evidence also sets a useful limit on stronger claims. Its historical analysis associated moderate deposit dollarization with somewhat higher inflation risk, but found little evidence of a significant effect on monetary-policy transmission. The research therefore supports monitoring and operational preparation, not a conclusion that stablecoin use has already disabled central-bank policy.
Payment speed can become funding speed
For banks, the slow-clock risk is deposit erosion. A customer who converts a bank balance into a dollar stablecoin changes the funding mix even if the value remains inside the broader financial system. At scale, that can affect deposit stability, liquidity planning and the cost of funding credit. The destination also matters: reserve-backed stablecoins may return part of the money to banks or short-term government debt, but not necessarily to the institution that lost the original deposit.
The fast clock is a different problem. Stablecoins can trade and transfer continuously, while parts of the reserve, banking and legal infrastructure behind them still operate on conventional timetables. In a stress event, customer instructions can therefore arrive faster than banks, issuers, custodians or authorities can move reserve assets, complete fiat settlement or coordinate across jurisdictions.
This does not mean every onchain transfer represents final fiat settlement. Redemption still depends on issuer terms, banking access, liquidity and the availability of off-ramps. It means payment firms need to model several timelines separately: token transfer, customer redemption, reserve liquidation, bank settlement and any legal restriction or asset-freeze process.
Stablecoin demand can spill into conventional FX markets
A separate BIS working paper published in March studied four major dollar-pegged stablecoins traded against 27 fiat currencies on 64 exchanges from 2021 through 2025. More than 70% of the fiat-to-stablecoin conversions in its dataset originated in currencies other than the US dollar.
The authors found that stablecoin activity did not remain isolated from traditional markets. Their estimates indicated that a 1% exogenous rise in net stablecoin inflows increased the gap between the cost of obtaining dollars through stablecoins and conventional markets by 40 basis points, while also weakening the local currency and widening the dollar premium in synthetic funding markets. The effects were larger where intermediaries had less balance-sheet capacity, particularly in emerging markets.
Those are model-based estimates from a defined dataset, not a forecast for every currency or payment corridor. For payment providers, however, they identify a practical transmission channel: heavy demand for dollar tokens can affect pricing and liquidity outside crypto venues when the firms arbitraging between onchain and traditional markets reach balance-sheet limits.
What payment providers should measure
The Sphere-SVB report argues that supervision needs greater visibility at the infrastructure layer rather than relying only on checks at conversion and redemption points. Providers do not need to accept every policy prescription in the report to recognize the underlying operational gap.
Banks, issuers, exchanges and payment processors can begin by distinguishing transactional demand from sustained currency substitution; measuring the concentration of conversions by corridor, customer type and local currency; and stress-testing simultaneous token transfers and fiat redemptions. They also need to map which entity can pause, screen or freeze a transaction, under which jurisdiction, and at what stage of the payment lifecycle.
For merchants and treasury teams, a dollar stablecoin may reduce settlement friction without eliminating currency, redemption or counterparty risk. For regulators, the BIS findings suggest that bank-centered indicators alone may understate dollar exposure building in wallets and offshore venues.
The immediate industry implication is not that stablecoins will automatically drain banks or defeat capital controls. It is that 24-hour token movement changes the speed and observability of currency substitution. Payment systems built around digital dollars will need liquidity, compliance and crisis-response processes designed for that clock.