Local Stablecoins May Accelerate Dollarization Instead of Preventing It

Local currency stablecoins promise a digital alternative to holding dollars. The evidence now points the other way. Where users face depreciation or capital frictions, local stablecoins tend to plug into USD liquidity, not displace it. That architecture, combined with user behavior, risks accelerating dollarization rather than preventing it.

Verified: roughly 98% of outstanding stablecoins are denominated in U.S. dollars, with a global market capitalization near $315 billion as of early April 2026 and annual on-chain transaction volumes of about $35 trillion, according to the Bank for International Settlements (BIS). In parallel, country evidence shows households and firms are already using USD stablecoins as digital dollars. The IMF’s 2026 staff report on Nigeria calls this dynamic “digital dollarization,” noting a market dominated by USDT and USDC and inflows approaching recorded remittances (IMF).

Chainalysis finds that Argentina’s share of stablecoin transaction volume reached 61.8% through June 2024, ahead of Brazil at 59.8% and well above a global average near 44.7% (Chainalysis). In Turkey, fiat to stablecoin trading equaled about 4.3% of GDP from April 2023 to March 2024, another sign that stablecoins serve as a material channel for dollar access in stressed FX environments (Axios reporting Chainalysis data). These are not marginal use cases.

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