IMF Warns Stablecoins Threaten Monetary Sovereignty in Emerging Markets

The International Monetary Fund has issued a warning that stablecoins pose a significant challenge to central bank authority, particularly in emerging markets across Africa, the Middle East, Latin America, and the Caribbean.

According to a new IMF report, stablecoins can "penetrate an economy rapidly via the internet and smartphones," enabling citizens to bypass traditional banking systems and hold foreign currencies directly on-chain. The organization expressed concern that widespread adoption of foreign currency-denominated stablecoins could lead to currency substitution and undermine monetary sovereignty, especially when combined with unhosted wallets.

The report notes that residents in these regions are increasingly choosing stablecoins over local foreign-currency bank accounts due to concerns about financial instability. The IMF also warned that central bank digital currencies (CBDCs) would struggle to compete if stablecoins become entrenched in payment systems.

The stablecoin market has reached approximately $316 billion in 2025, with US dollar-pegged tokens accounting for over 90% of the sector. Tether's USDT and Circle's USDC dominate the market with a combined capitalization exceeding $250 billion. Market growth accelerated following the passage of the GENIUS Act in the United States, which provided the first comprehensive regulatory framework for stablecoins.