The Bank for International Settlements said that dollar-backed stablecoins could bypass capital controls, raising concerns regarding foreign exchange restrictions in emerging markets.
In a study published Tuesday, the BIS analyzed stablecoin flows across more than 130 economies and found that stablecoins appear "largely unaffected by either broad or specific capital flow restrictions," as they partly circulate outside the regulatory perimeter.
Notably, the researchers suggested that foreign exchange restrictions and capital controls — traditional tools governments use to limit money flowing in or out of their countries — are "less effective" against stablecoins than against conventional foreign currency bank deposits.
According to the report, the growing adoption of stablecoins has created a new channel for accessing U.S. dollar liquidity, particularly in emerging markets and developing economies. The BIS warned that policymakers in emerging markets may need to rethink their strategies as "dollarization is hard to reverse once established."
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