Exploring the Rise of Stablecoins in Emerging Economies
Stablecoins have seen a surge in popularity in recent years, especially in tandem with the growth of the overall digital asset market. This trend is particularly notable in emerging economies like Brazil and other Latin American countries.
The Historical Context: Brazil and Hyperinflation
- Brazil and many Latin American nations have a history of grappling with inflation crises.
- Real estate, gold, and US dollars were favored investment options to combat high inflation in the past.
- The Real Plan in 1994 stabilized Brazil’s economy, but recent risks of hyperinflation have resurfaced.
The Role of Stablecoins in Dollarization
Stablecoins, including Dollar Tether and USD Coin, have emerged as crucial tools within the cryptocurrency market, with a combined market value surpassing US$200 billion.
- Increasing numbers of Brazilians and Latin Americans are turning to dollar-backed stablecoins.
- Data indicates a significant uptick in transactions involving stablecoins, particularly Dollar Tether, in Brazil.
- A sizable portion of Brazil’s population has ventured into the digital asset market, with a notable preference for stablecoins.
- Unique use cases of stablecoins, such as trading at São Paulo’s 25 de Março street mall, have been observed.

“In the first quarter of 2023, USDT dominated cryptocurrency and stablecoin transactions in Brazil, with a total of 37.1 billion reais, which represents 81% of the total value traded in cryptocurrencies and stablecoins through the first quarter.”
“While Brazilian banks are still trusted as safe havens for money, there is a growing market of residents using USDT for quick and easy access to the financial system. That’s why partnerships like SmartPay’s with Tether, which enables USDT access at more than 24,000 ATMs across the country, are so important for residents who prefer to use Tether tokens via Pix to pay their bills or goods and services.”
Impact on the Economy
- Stablecoin adoption in emerging markets like Brazil has positive implications for the US economy due to the backing of stablecoins with US government bonds.
- However, the continued exchange of local currency for digital dollars may impact the national currency and broader forex markets.
This content was originally featured on the Coinext blog.