The payments landscape in emerging markets is changing rapidly, and global companies with relevance to or wanting to expand into these markets are turning to stablecoins to grow and remain competitive. Must be adopted. Stablecoins are a proven crypto success story, with approximately $160 billion in capital and over $10 trillion in annual payments. Its rapid adoption speaks to its important role in meeting financial challenges in a globalized economy.
Within the global economy, stablecoin adoption is most notable in emerging market countries. Local consumers are already aware of their benefits, stablecoins are an essential part of daily transactions and financial lives for many, and now international companies serving consumers also need to catch up. .
The rise of stablecoins, cryptocurrencies designed to maintain a stable value compared to traditional currencies (other assets and commodities such as the US dollar, the euro, and even gold), has led to the rise of stablecoins in emerging markets. The way domestic and domestic transactions are changing is changing. Stablecoins are useful in regions where access to traditional bank accounts is not the norm, where traditional banking infrastructure may be limited or unreliable, and where rapid inflation can destabilize local currencies. has become essential to facilitating faster, cheaper and more secure payments in some regions.
As emerging markets become an increasingly powerful force in the global economy due to GDP growth and an expanding middle class population, their consumer base is too large to be a payments blind spot. Therefore, treasury departments should include stablecoins as part of their payments strategy, as customers in emerging markets increasingly prefer stablecoins.
Understanding the rise of stablecoins in emerging markets
Access to financial services
Governments’ desire to promote financial inclusion and increasing access to fintech have combined to fuel the rapid growth of electronic payments in emerging markets. This has brought a new breed of mobile-savvy, digitally native consumers into the market. In these regions, traditional banking systems are often unreliable, and stablecoins provide a low-cost and accessible alternative for transactions and money transfers. Emerging markets often have large unbanked populations, especially in regions such as sub-Saharan Africa and Southeast Asia. Many individuals in these regions do not have access to US dollar-denominated banking services. Stablecoins bridge this gap, providing people with access to essential financial services, allowing millions of people to store value and easily transact.
Cost efficiency is also a big advantage. Emerging markets often have higher payment and foreign exchange fees. Stablecoins dramatically reduce these costs while speeding up cross-border payments. In busy corridors such as Nigeria and the United States, Mexico and the United States, and Brazil and Europe, stablecoins are facilitating cheaper remittances and enabling more efficient international trade. In this way, stablecoins facilitate participation in the global digital economy.
Hedging against volatility reflecting historical appetite for US dollar holdings
The big boost can be attributed to local currency instability. Currency fluctuations and inflation have eroded confidence in local currencies, particularly in countries such as Brazil, India, Indonesia, Turkey, the Philippines, and Nigeria. Countries such as the Philippines, Nigeria, Türkiye, and Argentina have experienced significant economic upheaval.
In the Philippines, for example, political uncertainty is contributing to fluctuations in the peso and driving people toward dollar-pegged stablecoins. Nigeria’s devaluation of multiple currencies and foreign exchange regulations are also pushing businesses towards stablecoins as a store of value. In Türkiye, the lira has experienced a significant depreciation in recent years due to high inflation and political instability. As the lira plummeted against the US dollar in 2021, exacerbating inflation and import costs, stablecoins became an increasingly attractive option for Turkish businesses seeking greater stability and lower transaction costs. Similarly, the Argentine peso has lost more than 90% of its value against the US dollar over the past five years. This extreme volatility makes stablecoins an attractive option. Stablecoins provide a digital means of accessing assets pegged to the US dollar. Stablecoins have always been popular in emerging markets as a hedge against local currency volatility, but they are typically held as paper money and are not very useful for international payments. In this context, stablecoins are increasingly being used as a hedge against local currency depreciation, but given their popularity and liquidity, stablecoins are increasingly being used to preserve value (as an investment like Global North). It is used for more than one purpose (rather than ) and is also used for trading. and participate in the economy.
Why payments are popular
Similar benefits allow stablecoins to provide a more stable alternative for sellers in such environments, avoiding the challenges of volatile local currencies. Traditional cross-border payment systems in these regions often suffer from inefficiencies, high costs, and lack of transparency. Stablecoins also simplify both accounts receivable and payables for businesses. These streamline payments from trading partners in emerging markets and allow companies to settle debts with stablecoins.
For companies operating around the world, stablecoins offer several important benefits. These digital assets can significantly reduce costs and fees, as stablecoin transactions often have lower fees than traditional wire transfers. Additionally, transaction speeds are significantly increased, with most transfers completed in minutes instead of days. Unlike traditional banking systems, blockchain networks operate 24 hours a day, providing 24/7 transaction availability. The transparency of blockchain technology ensures an immutable record of all transactions, enhancing trust and accountability.
When businesses consider paying with stablecoins, it is important to choose the right stablecoin and blockchain infrastructure to maximize efficiency. Merchants adopting stablecoins are taking advantage of this trend. Today’s stablecoin market offers an easy path for merchants to enter emerging markets, rather than servicing a variety of time- and resource-intensive alternative payment methods and local wallets in each market. There is another element. This dwarfs Tether (USDT), which occupies the position of the largest stablecoin issuer with a market capitalization of $112 billion, accounting for over 75% of stablecoins, and over 50% of issuance on the TRON blockchain. It is an advantage.
USDT is widely used in emerging markets, especially for cross-border transactions and as a safeguard against local currency fluctuations. It is commonly traded on the TRON blockchain due to its lower transaction fees and faster processing times compared to Ethereum. TRON’s low-cost infrastructure is attractive to users in regions with limited access to traditional financial systems. Evidence of this trend is reflected in the large amount of USDT on TRON in countries such as Nigeria, Venezuela, and Turkey, where economic instability is driving demand for stablecoins.
Recent data paints a compelling picture of stablecoin adoption in emerging markets. Riseworks, a financial services company specializing in payment processing for contractor services, reports that 25% of businesses worldwide already accept stablecoins as payment. However, by consolidating a single payment rail that covers multiple emerging markets, businesses can reduce fees, eliminate chargebacks, and benefit from instant payments. This not only improves cash flow but also reduces operational complexity across a diverse financial ecosystem.
Stablecoin payment integration can be achieved through payment platforms like Orbital, which provide APIs that streamline the process while maintaining security and compliance with regulatory frameworks.
Is stablecoin adoption universal?
Stablecoins have significant advantages, but their adoption is uneven across all markets. Developed economies have less widespread adoption of stablecoins than emerging economies, thanks to stable currencies and efficient banking systems. For example, the use of USDT has been widely adopted by consumers (20-50%) in many emerging markets. The usage of stablecoins in developed markets, especially USDT, remains relatively low compared to emerging markets, mainly due to the stability of local currencies and the reliability of banking systems. However, regulatory improvements such as the MiCA regulation in the EU and increased clarity in the US suggest broader adoption in the long term.
Proactive early regulatory efforts by legislators in developed countries demonstrate that major companies are taking their dominant market positions very seriously and are leveraging their scale to bring about positive change and reduce financial crime. It will definitely be strengthened by the fact that we are fighting against. Tron, Tether, and TRM Labs joined forces earlier this year to take charge and fight financial crime. As the use of stablecoins increases, it is imperative that key industry players advance efforts to combat illegal activity, money laundering, and fraud, and maintain a secure ecosystem.
This is exemplified by recent collaborations, and the fact that both Tron and Tether, two of the biggest names in the field, are involved means that important measures are being pushed at the highest levels. While demand in developed regions remains modest, these regulatory advances are laying the foundations for future growth, especially as financial institutions become more comfortable with stablecoins such as USDC and Paxos.
In conclusion, implementing stablecoins is no longer an option for companies operating in these high-growth emerging markets. It is strategically necessary to remain competitive and meet evolving consumer needs. The growing importance of emerging markets cannot be ignored. Collectively, these emerging market economies, from India to Vietnam, are projected to contribute 75% of global growth in 2024, according to the IMF. Therefore, even companies operating primarily in developed markets should consider a stablecoin strategy to effectively tackle these emerging markets. High growth area.
This approach not only caters to current preferences but also predicts future financial behavior in these rapidly evolving economies. However, by embracing this technological fusion of the utility of stablecoins and the popularity of USDT and TRON, companies can increase their economic participation in growing regions. As the global economy continues to digitize and decentralize, companies that recognize and act on these trends will gain significant competitive advantages and be poised to thrive in the evolving global commerce landscape. you will notice.
