Moody's: Stablecoins Lead "Cryptofication," Crypto Aims to Seize "Monetary Sovereignty" in Emerging Markets
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Ratings agency Moody's has issued a warning that the wave of “cryptonization” driven by stablecoins is posing an increasingly severe challenge to monetary sovereignty and financial stability in emerging markets.
Recently, Moody’s pointed out in its latest report that as the adoption rate of stablecoins and other cryptocurrencies accelerates globally, emerging markets face the risk of weakened monetary sovereignty. In this trend of “cryptonization,” stablecoins pegged to fiat currencies such as the US dollar are being widely used, thereby undermining central banks’ control over interest rates and exchange rates.
The report explicitly stated that if individuals move their savings from domestic bank deposits to stablecoins or crypto wallets, the banking system could face the risk of “deposit outflows.” Moody's noted that such capital outflows not only affect bank liquidity but also pose a potential threat to overall financial stability.
Data show that in 2024, the number of global digital asset holders has reached about 562 million, a 33% increase over the previous year. Moody’s emphasized that while in developed economies, the popularity of crypto assets has mostly been driven by clear regulations and improved investment channels, in emerging markets like Latin America, Southeast Asia, and Africa, growth is fastest, mainly driven by remittance, mobile payments, and hedging against inflation.
Escalation of “Cryptonization” Risks
Moody’s believes that the core risk of “cryptonization” lies in its erosion of a country’s monetary policy independence and financial system stability.
The report stated that when a large amount of economic activity takes place via stablecoins, the central bank’s ability to manage the economy by adjusting interest rates will be undermined. At the same time, if dollar stablecoins become the mainstream medium of transaction, it will also directly impact the stability of the local currency exchange rate.
In addition, Moody’s warned that stablecoins themselves also pose systemic risks.
The report pointed out that although stablecoins are considered relatively safe, their rapid growth has also introduced systemic vulnerabilities: lack of regulation may trigger a run on reserves, and in case of a depegging event, the government may be forced to take costly bailout measures.
Imbalanced Growth and Regulatory Gap
The global adoption of crypto assets shows a clear geographical imbalance, while lagging regulation has intensified the risks facing emerging markets.
Moody’s emphasized in the report that the current regulatory landscape is extremely fragmented. Data show that less than a third of countries worldwide have implemented comprehensive digital asset rules, leaving many economies directly exposed to market volatility and systemic shocks.
This regulatory gap stands in stark contrast to differences in growth models. In developed markets, crypto adoption is more focused on investment, while in emerging markets, people use it more for practical needs such as cross-border remittances and hedging against their own currency’s inflation risk.
Moody’s believes that this divergence both demonstrates the potential of digital assets for financial inclusion and highlights the continuously accumulating risk of financial instability in the absence of adequate regulation.
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