Stablecoins: The Emerging Market Story (From Castle Island Ventures, Brevan Howard Digital, Artemis and Visa Crypto)

Written by Castle Island Ventures and Brevan Howard Digital, with data from Artemis. Brought to you by Visa Crypto. Access the full report here: https://castleisland.vc/writing/stablecoins-the-emerging-market-story/

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Stablecoins—digital tokens pegged to the value of a fiat currency—have seen remarkable growth in the last few years. From humble beginnings, with only a few billion dollars in circulation as recently as 2020, stablecoins now command a market in the hundreds of billions of dollars, settling trillions’ worth of value annually. What makes them so compelling, especially in emerging markets, and how are everyday people actually using them? A recent study sponsored by Castle Island Ventures, Brevan Howard Digital, Visa, and Artemis set out to answer these questions through both on-chain analytics and a large-scale user survey across five major emerging economies.

Below is a summary of the research and its key findings.

1. A Rapidly Expanding Market

From a few billion to over $160 billion in supply:
Just a few years ago, stablecoins were a niche product catering mainly to cryptocurrency traders. Today, they have blossomed into a global medium of exchange, with over $160 billion in circulation at the time of the study and a peak of nearly $200 billion in 2022.

Trillions settled on-chain:
When measured via carefully “de-noised” on-chain transaction data (i.e., removing duplicative exchange movement, automated trading bots, and other artifacts), stablecoins settled over $3.7 trillion in 2023 and appear on track to exceed $5 trillion this year. The fact that this growth continued even when cryptocurrency markets were in a bear cycle suggests that stablecoins have real-world use cases—beyond just trading on exchanges.

Dominance of the U.S. dollar:
Over 99% of today’s stablecoins track the U.S. dollar rather than other currencies. While Euro- and Yen-linked stablecoins exist, they remain vanishingly small by comparison. For people in emerging economies, the ability to hold and transact in a widely accepted foreign currency—often out of reach via local banks—has clear appeal.

2. Shifting Toward Real-World Usage

Not just for crypto trading anymore:
Stablecoins first gained traction as a way for traders to move quickly in and out of cryptocurrency positions. But on-chain data shows settlement volumes continuing to rise even in periods of low crypto market activity, suggesting robust non-speculative demand.

Broader use across payments and remittances:
Early adopters have long pointed to stablecoins as a cheap and fast option for cross-border payments. Now, with more user-friendly wallets and integrations, people in emerging markets are employing stablecoins for day-to-day needs such as purchasing goods, receiving salaries, paying freelancers, and managing household savings.

3. Survey Insights: Five Key Emerging Markets

A central piece of the study was a survey of more than 2,500 self-described crypto users in Brazil, India, Indonesia, Nigeria, and Turkey. While these findings don’t reflect every single resident of those countries, they offer a view into the behaviors and motivations of highly engaged users. Key takeaways:

1. Popularity Across Age Groups

   • Younger users (18–24) tend to hold more of their overall portfolio in stablecoins and transact more frequently than older cohorts. They also cite “saving money in dollars” and “gaining access to yield” as top reasons to use stablecoins.

2. Non-Trading Activities Take Center Stage

   • Respondents still list “access to crypto exchanges” as a primary goal. Yet nearly half also highlight “saving money in dollars,” “earning yield,” and “efficient currency conversion” as equally important reasons to hold stablecoins.

3. High Adoption in Nigeria

   • Among the five countries surveyed, Nigeria stands out for especially high stablecoin usage. Nigerian respondents typically hold a larger portion of their portfolios in stablecoins, transact more frequently, and mention currency substitution (i.e., shifting from local currency to U.S. dollars via stablecoins) at some of the highest rates in the study.

4. Tether Leads the Pack

   • Tether (USDT) remains the most recognized and widely used stablecoin. When asked why they prefer Tether, users mention its popularity (“everyone around me uses it”), liquidity, and lengthy track record. Many say they would only switch if a new stablecoin proved more liquid, more trusted by their networks, or offered better yield opportunities.

5. Ethereum for Value, Tron for Speed, and Exchange Apps for Convenience

   • Despite higher transaction fees, Ethereum ranks as the top blockchain that survey participants have used to send stablecoins. A sizable share also use Binance Smart Chain, Tron, and Solana.

   • Interestingly, 18% of respondents say they do not transact on-chain at all. Instead, they send stablecoins on exchanges’ internal ledgers—underscoring that some users prioritize convenience over direct self-custody.

   • In terms of wallets, Binance’s exchange wallet is used by half the sample, followed by Trust Wallet, MetaMask, and Coinbase Wallet.

4. Motivations and Benefits

Shielding from local currency instability:
Many participants in Nigeria and Turkey indicated that inflation concerns were a top reason to convert local currency into stablecoins. The study’s data shows that people in countries with higher inflationary pressures or limited access to dollar banking are especially attracted to stablecoins for day-to-day financial management.

Generating yield:
With global interest rates having risen in both traditional markets (e.g., short-term U.S. Treasurys) and crypto markets (e.g., decentralized finance protocols), an increasing number of stablecoin issuers now offer or pass through yield. Survey respondents across all five countries ranked “earning yield” as a key motivation—sometimes even outpacing standard trading activities.

Accessible alternatives to bank accounts:
Many people in emerging markets cannot easily open a U.S. dollar bank account—often due to regulatory restrictions, high account minimums, or simply living outside major financial corridors. Stablecoins let them hold digital dollars and move them 24/7 across borders without the usual friction of international wire transfers.

5. Challenges and Future Outlook

Regulatory uncertainty:
While several jurisdictions (the EU, Singapore, Dubai, Hong Kong, Bermuda) have taken steps to clarify stablecoin regulation, adoption in emerging markets could still be hindered by unpredictability. Some national authorities worry about the “dollarization” effect undermining local currencies.

Infrastructure and user experience:
Despite continued progress, some users still find blockchain transactions too complex. Many rely on centralized exchanges or local fintech apps that wrap stablecoins in a user-friendly interface. Going forward, better wallet design and more robust on/off-ramps could spur even wider adoption.

Market consolidation and new entrants:
Tether remains top dog, but new stablecoins—especially yield-bearing varieties—are starting to gain traction. If they develop enough liquidity and trust, they might chip away at Tether’s dominance, particularly among businesses that want to earn interest on idle balances.

Conclusion

This research makes one thing clear: stablecoins have transcended their initial role as a tool for crypto traders. Across Brazil, India, Indonesia, Nigeria, and Turkey, users are leveraging them to store value in dollars, send remittances, pay for goods and services, earn yield, and more. On-chain data showing trillions of dollars in annual settlement volume reaffirms the real-world momentum behind stablecoins—even in quieter periods for the broader crypto market.

Policymakers and financial institutions now face a pivotal question: how to regulate and integrate stablecoins so that emerging markets can benefit from seamless global dollar access, while balancing local monetary and consumer-protection concerns. As the space continues to evolve, stablecoins may open doors for billions of people worldwide—giving them new ways to save, invest, and transact in an increasingly digital global economy.

Want to Learn More?

• Access the new Visa Onchain Analytics Dashboard for updated stablecoin data: visaonchainanalytics.com

• Keep an eye on further research from Castle Island Ventures, Brevan Howard Digital, and Artemis.

Stablecoins are still in their early days, but the findings suggest that for many users—particularly those in emerging economies—they are already a valuable financial lifeline. Whether for day-to-day purchases, cross-border payments, or a store of dollar value, stablecoins are redefining how money can move in today’s interconnected world.