International Monetary Fund First Deputy Managing Director Dan Katz says local currency-linked stablecoins, designed to counter dollarization, are instead accelerating it. Users are swapping into dollars on-chain, bypassing traditional bank capital controls—and central banks in emerging economies are watching their monetary tools erode in real time.
Katz cited South Africa specifically: Rand-linked stablecoins have seen even less adoption than the country's limited dollar stablecoin usage, signaling that users in local digital markets still prefer dollar-pegged assets over domestic alternatives.
Total stablecoin transaction volume hit $30 trillion in 2025. Only $390 billion of that represented real-world payments, according to Bank for International Settlements data Katz referenced. That gap—roughly 1.3 percent of total volume tied to actual commerce—is the clearest signal yet that stablecoins remain a speculative trading instrument far more than a payments rail.
The IMF warns dollar-based stablecoins can intensify existing currency crises and trigger digital bank runs in vulnerable economies. They may expand access to foreign exchange, but the risks to monetary sovereignty are real and immediate.
Katz urged central banks to prioritize data collection on stablecoin transactions without waiting for perfect regulatory frameworks. He also pointed to artificial intelligence as a potential accelerant for stablecoin uptake, requiring faster policy responses.
The GENIUS Act, signed in 2025, established a federal framework for payment stablecoin issuers in the United States, covering reserves and audits. That clarity contrasts with the fragmented approaches seen across jurisdictions operating under capital control regimes.
Development continues regardless of the warnings. Projects like Ethena, with its ENA token, are building synthetic dollar protocols across multiple blockchain ecosystems—direct evidence that market demand for stable-value assets is not waiting on regulators.
Bitcoin trades at $64,925, up 0.8 percent over 24 hours. Ethereum stands at $1,918, up 0.5 percent.
Without clear oversight of stablecoin activity, the capacity of these assets to facilitate capital flight remains a live concern for global financial institutions.
