Stablecoin holdings in Africa and emerging markets could rise from $173 billion to $1.22 trillion by 2028, according to Standard Chartered projections, driven by demand in financially stressed economies. While this would still represent only about 2% of total bank deposits, the growth signals the rise of a parallel financial system. Stablecoins are increasingly being used for cross-border payments and as a store of value, offering speed and stability.

A global survey reveals that stablecoins are becoming embedded in everyday financial activity, from income payments to daily transactions. With adoption particularly strong in emerging markets, the shift reflects growing dissatisfaction with traditional financial systems, though risks around regulation, volatility, and infrastructure remain.

For decades, the global financial system has operated on a relatively fixed structure. Salaries are paid through banks, payments move through intermediaries, and cross-border transfers are processed slowly and often at significant cost. While digital banking has improved accessibility, the underlying infrastructure has remained largely unchanged. That structure is now being challenged.

Recent data shows that 39 percent of cryptocurrency users receive a portion of their income in stablecoins. This is not a marginal trend. It represents a fundamental shift in how money is earned, stored, and transferred across borders.

What makes this development particularly significant is not just the percentage itself, but what it implies. Stablecoins are no longer being used solely for trading or speculation. They are becoming embedded in real economic activity. This marks a transition from experimentation to utility.

To help you understand what's driving the increased use, we have to dig deeper on what they are - for those who might not be conversant with these digital tokens.

Stablecoins are a category of digital assets designed to maintain a stable value by being pegged to an underlying asset, most commonly a fiat currency such as the US dollar. Unlike traditional cryptocurrencies such as Bitcoin and Ethereum, which experience significant price volatility, stablecoins aim to provide price stability while retaining the advantages of blockchain technology.

Types of Stablecoins and Their Mechanisms

Stablecoins can generally be categorized into four main types based on the mechanisms used to maintain their price stability.

Fiat-Backed Stablecoins

Fiat-backed stablecoins are supported by reserves of traditional currency held by the issuing organization. Each stablecoin is typically pegged 1:1 to a fiat currency and backed by an equivalent amount of fiat currency, such as the US dollar or Euro, held in bank accounts or short-term financial instruments, which act as collateral. Examples include the Tether (USDT), USD Coin (USDC) and Euro Coin (EURC). This model is widely used because it provides relatively strong price stability and is easier for users to understand.

Crypto-Backed Stablecoins

Crypto-backed stablecoins are supported by cryptocurrency collateral rather than fiat currency reserves. Because cryptocurrencies can be highly volatile, these stablecoins typically require over-collateralization. This means users must deposit cryptocurrency worth more than the stablecoins they receive. A notable example is DAI which is backed by cryptocurrency such as Ethereum. This model promotes decentralization but introduces risks related to volatility in the collateral assets.

Algorithmic Stablecoins

Algorithmic stablecoins attempt to maintain price stability through automated supply and demand adjustments rather than collateral reserves. Algorithms increase or decrease the supply of tokens depending on market demand in order to maintain the target price. Because these systems do not hold enough collateral to fully back every coin in circulation, they depend heavily on accurate and reliable market price data. This data helps the system determine when the price has moved away from the intended peg and triggers the mechanisms that restore the stablecoin’s value. However, algorithmic stablecoins have proven to be more vulnerable to market instability, as demonstrated by the collapse of TerraUSD in 2022.

Commodity backed stablecoins

Commodity-backed stablecoins are a type of digital currency whose value is directly pegged to a tangible asset or commodity, such as gold, oil, or other precious metals. Unlike fiat-backed stablecoins, which are supported by government-issued currencies, commodity-backed stablecoins derive their stability and intrinsic value from the underlying physical asset, which is held in reserve by the issuer. This backing provides investors and users with a hedge against currency volatility and inflation, as the coin’s value is linked to a real-world store of value. By combining blockchain technology with the security of tangible assets, these stablecoins aim to offer price stability, transparency, and trust, enabling their use for payments, remittances, or investment purposes in both domestic and cross-border markets.

Why Stablecoins Are Gaining Traction

The rapid adoption of stablecoins is not driven by ideology. It is driven by practicality.

Users are responding to clear, measurable advantages. Transactions that would traditionally take several days can now be completed in minutes. Fees that were once considered unavoidable are being reduced significantly.

Survey data indicates that users can save up to 40 percent on international transfer costs when using stablecoins instead of conventional banking systems. This is not a minor improvement. It is a structural efficiency gain.

For individuals sending money across borders, particularly in emerging markets, these savings are meaningful. Remittances remain a critical financial lifeline, with global flows to low- and middle-income countries reaching hundreds of billions of dollars annually.

Even a modest reduction in transfer costs can translate into billions of dollars retained by families rather than intermediaries.

Speed is equally important. In traditional systems, delays are often accepted as part of the process. Stablecoins challenge that expectation by offering near-instant settlement. Together, these factors create a compelling value proposition.

One of the most striking aspects of the data is the geographic distribution of adoption. Ownership and usage are significantly higher in middle- and lower-income economies. In some regions, such as Africa, adoption rates are particularly elevated. This is not coincidental.

In many emerging markets, traditional financial systems are less efficient, more expensive, and less accessible. Stablecoins offer a practical alternative that addresses these limitations.

They enable users to bypass intermediaries, reduce costs, and access global financial networks more directly.

This positions stablecoins not just as a technological innovation, but as a financial inclusion tool.

However, this also introduces a paradox. The regions that benefit most from stablecoins are often the same regions with the least regulatory clarity and infrastructure support.

Another important shift is how stablecoins are being used. Historically, they were primarily associated with trading activity within the crypto ecosystem. Today, their use cases are expanding.

A growing number of users are relying on stablecoins for everyday payments. Others are receiving a meaningful portion of their income through them.

This changes the role of stablecoins entirely. They are no longer just a bridge between cryptocurrencies. They are becoming a form of money in their own right. This transition has significant implications for both users and regulators.

Risks and Challenges

Despite the strong growth, the rise of stablecoins is not without significant risks.

One of the most critical concerns is regulatory uncertainty. Governments and financial authorities are still determining how to classify and oversee stablecoins. This creates an unpredictable environment for both users and providers.

There is also the issue of stability itself. While stablecoins are designed to maintain a fixed value, this stability depends on the credibility of the underlying reserves and the mechanisms used to maintain the peg.

Any loss of confidence can lead to rapid market disruption.

Another challenge lies in infrastructure. While blockchain networks enable fast transactions, access to these systems still depends on reliable internet connectivity and user-friendly interfaces. In regions where infrastructure is limited, adoption may face practical constraints.

Security is another concern. Digital wallets and exchanges can be vulnerable to hacking, fraud, and operational failures. Unlike traditional banking systems, there may be limited recourse for users in the event of loss.

Finally, there is the question of scalability. As usage increases, networks must be able to handle higher transaction volumes without compromising speed or cost efficiency.

Conclusion

The growth of stablecoins is not just a technological trend—it is a reflection of deeper economic realities. It highlights the demand for stability, efficiency, and access in financial systems that are struggling to deliver these qualities. While the projected growth scale is significant, the more important story is what it represents: the emergence of a new layer of finance that operates alongside traditional systems.