A new working paper from the Bank for International Settlements (BIS) reveals that dollar-pegged stablecoins are systematically circumventing capital controls across more than 130 economies, creating an unregulated offshore dollar liquidity channel that conventional foreign exchange restrictions cannot easily close. The study, authored by BIS economists Boris Hofmann, Aaron Mehrotra and Jan Paulick, compares “stablecoin dollarisation” with traditional deposit dollarisation and finds that the two share similar triggers—such as high exchange rate pass‑through and banking or sovereign crises—but diverge sharply in their susceptibility to policy measures.
While economies with deposit restrictions saw their foreign‑currency deposit share run 29 percentage points lower (and 32 points lower in emerging markets) than unrestricted ones, capital controls show no statistically significant relationship with stablecoin inflows. The authors note that “FX restrictions and capital controls are less effective for stablecoins, as the size of stablecoin inflows remains similar across regulatory regimes.” Banking crises amplify the divergence: a one‑standard‑deviation increase in banking‑crisis frequency is associated with additional stablecoin inflows worth roughly 0.8% of GDP, against an emerging‑market average of about 1.7% of GDP during 2017–2024. This occurs because capital controls bind on regulated banks, while stablecoins move over permissionless blockchains and reside in unhosted wallets beyond supervisory reach.
The BIS warns that growing stablecoin adoption could reverse two decades of de‑dollarisation in regions like Latin America, where the median share of bank deposits held in dollars has already halved to about 20%. Both deposit and stablecoin dollarisation are highly persistent once established, with autoregressive estimates placing persistence near 0.8. The study finds little substitution between the two forms, meaning stablecoin demand mainly adds to overall dollar exposure rather than displacing bank deposits. This could weaken monetary control and force emerging‑market authorities to rethink existing capital‑control frameworks.
The warnings come as the total supply of U.S. dollar‑backed stablecoins reached about $292.6 billion, up from $253 billion a year earlier. The two dominant tokens, USDT and USDC, together command more than 80% of the market. The BIS’s June 2026 annual report had already argued that stablecoins fall short on essential monetary qualities such as singleness, elasticity, interoperability and integrity. While regulators in the U.S., the EU, Japan and other jurisdictions are introducing legal frameworks, the working paper underscores that current capital‑control tools are largely ineffective against these digital dollar assets.
