According to a new report from credit rating agency Moody's, the growing adoption of cryptocurrency in emerging markets presents significant threats to monetary sovereignty and overall financial stability. The risks are particularly high in regions where crypto moves beyond speculative investment to become a tool for savings and cross-border remittances.
Moody's analysis indicates that the widespread use of USD-pegged stablecoins can weaken a country's monetary policy. This occurs when more pricing and transactions are settled outside the local currency, disrupting traditional financial controls.
Stablecoins, which are cryptocurrencies tied to traditional assets like the U.S. dollar, are at the center of this concern. The report warns that this trend creates "cryptoization" pressures, similar to unofficial dollarization but with reduced transparency and regulatory oversight.
Furthermore, cryptocurrencies enable new methods for capital flight through pseudonymous wallets and offshore exchanges. This allows wealth to be moved discreetly abroad, potentially undermining exchange rate stability.
The report highlights that cryptocurrency ownership is concentrated in emerging markets like Southeast Asia, Africa, and Latin America. In these regions, adoption is often driven by high inflation, weak local currencies, and limited access to banking. In contrast, developed markets see crypto growth fueled by institutional investment and clearer regulations.
Globally, crypto ownership is estimated to have reached 562 million people by 2024, a 33% increase from the previous year.