Stablecoins May Complicate Future Currency Crises, New York Fed Finds

A staff paper from the New York Federal Reserve reveals that during weeks when a country experiences a currency or banking crisis, wallets associated with that country are more likely to receive dollar‑pegged stablecoins. The findings highlight a potential new obstacle for central banks trying to enforce capital controls.

Key Findings from the Study

• Wallets tied to crisis‑affected countries were 1.8% more likely to receive stablecoins in the week a crisis began.
• Receipt volumes of stablecoins also rose significantly during those crisis weeks.
• Two weeks after a crisis onset, wallets became 1.3% more likely to send stablecoins, indicating a shift from accumulation to distribution.
• The analysis covered nine episodes across eight countries (Argentina, Egypt, Iran, Myanmar, Nigeria, Russia, Turkey, United Kingdom) between 2021 and 2025.

Methodology

The researchers linked Ethereum Name Service (ENS) registrations that contain country‑specific signals (such as language or national identifiers) with transaction histories of 19 major dollar‑stablecoins. The dataset comprises roughly 4.5 million wallet‑event‑week observations, focusing on wallets that had received stablecoins within a 53‑week window around each crisis.

Implications for Capital‑Control Policies

Traditional capital controls rely on banks and regulated intermediaries to limit foreign‑exchange purchases and cross‑border transfers. Stablecoins provide an alternative route that can bypass domestic banking channels, potentially weakening the effectiveness of such controls. While issuers like Circle (USDC) and Tether (USDT) retain the ability to freeze addresses, and regulated exchanges remain subject to oversight, transfers between self‑custodied wallets reduce immediate domestic chokepoints.

Market Size and Future Outlook

The stablecoin market has already surpassed $300 billion and is projected to reach trillions of dollars by the end of the decade. Chainalysis estimates that adjusted stablecoin transaction volume could hit $719 trillion by 2035 under organic growth, and up to $1.5 quadrillion if broader adoption accelerates.

Regulatory Perspective

Federal Reserve Vice Chair for Supervision Michael Barr has warned that U.S. stablecoin legislation leaves a vulnerability around secondary‑market transfers involving unhosted wallets. The Bank for International Settlements similarly notes that widespread stablecoin dollarisation could challenge monetary sovereignty.

Conclusion

As stablecoins become a larger component of global dollar‑payment infrastructure, they may increasingly influence the balance between fixed exchange rates, capital mobility, and independent monetary policy. Governments will need to adapt enforcement strategies to address the growing role of blockchain‑based dollar assets during periods of financial stress.