Stablecoins and the Internet Monetary Standard (Part 1 of 2)

Stablecoins – Part 1 of 2 Part Series – See Part 2 (Here)

The Internet Is Developing a Currency

The internet is global, but money remains largely national. A business can communicate instantly with a supplier on another continent, sell almost anywhere, and move data across borders without changing its basic format. Money still passes through national currencies, banking systems, exchange rates, and settlement networks.

Stablecoins are beginning to bridge that divide. Their importance extends beyond faster digital payments because they give otherwise separate financial systems something the internet economy has lacked: a uniform, relatively stable, borderless monetary asset they can use in common.

Rather than displacing fintech, this role extends it. Fintech digitized banking and accelerated payments. Crypto introduced internet-native ownership, programmable transactions, and assets that can serve as collateral. Bitcoin proved that valuable assets could move entirely through digital infrastructure, but its volatility limits its usefulness as a predictable settlement unit. Stablecoins retain that portability while anchoring value to conventional money.

Stability is central to the model. Major stablecoins are pegged to the U.S. dollar and generally supported by reserve and redemption structures intended to maintain that value. They can still depeg or fail, but they ordinarily avoid the price swings associated with Bitcoin and many other crypto assets, making them more practical for routine settlement.

By early April 2026, global stablecoin market capitalization had reached about $315 billion, while aggregate transaction volume approached $35 trillion during 2025. Roughly 98 percent of the market was dollar-denominated. Much of that activity still occurs inside crypto markets, but the scale gives the infrastructure economic weight beyond a niche payment experiment.

Functionally, stablecoins are beginning to resemble a monetary standard. The comparison is not a return to gold but one of coordination. Local currency can be converted into the same dollar-linked digital asset used by a counterparty elsewhere, transferred through internet infrastructure, and converted again at the destination. National monetary systems remain separate while the settlement asset is shared.

The internet is therefore not inventing an entirely new monetary unit. It is building a digital settlement layer around the currency already at the center of global finance.

Sources: Visa

A Common Standard for Cross Border Commerce

International commerce has always faced a monetary coordination problem. A buyer may earn one currency while a seller prices in another, leaving financial intermediaries to bridge the difference. Traditional finance performs that function through foreign-exchange markets, correspondent banking, and payment networks.

A common digital settlement asset simplifies part of the process because counterparties no longer need identical banking relationships. They can meet at a shared dollar-linked unit, allowing stablecoins to operate as digital vehicle currencies between otherwise separate financial systems.

More than 70 percent of fiat-to-stablecoin conversions examined by the BIS originated in currencies other than the U.S. dollar. The dataset tracked four major dollar-pegged stablecoins against 27 fiat currencies on 64 exchanges between 2021 and 2025. A local-currency purchase of a dollar stablecoin is therefore also a foreign-exchange transaction, even when it occurs outside conventional banking channels.

The cross-border scale is already substantial. Estimates cited by the IMF place stablecoin transaction volume above $30 trillion in 2025, including about $6.1 trillion of cross-border activity. Crypto trading and arbitrage still account for much of the total, but the flows show how quickly a common digital unit can circulate once jurisdictions share the underlying infrastructure.

Unlike many traditional cross-border arrangements, the stablecoin does not need to change monetary identity at each border. Legal treatment and redemption access may vary by jurisdiction, yet the transferable asset remains the same. Internet commerce gains a degree of monetary uniformity that conventional settlement often lacks.

Dollar denomination reinforces that advantage. Businesses are not being asked to adopt an unfamiliar unit that must first establish global credibility. They are using a digital representation of a currency already embedded in international trade and finance, joining the network reach of the internet to that of the dollar.

Sources: World Bank, Visa

One Standard Three Economic Environments

The economic effect changes with the financial system receiving the technology. In advanced economies, stablecoins compete with mature payment systems where consumers and firms already have reliable banking, real-time payments, and foreign exchange. Their case therefore rests mainly on improvements in settlement speed, programmability, interoperability, or cost.

Regulation increasingly treats that competition as financial infrastructure rather than experimental crypto activity. An April 2026 FDIC proposal implementing parts of the GENIUS Act would generally require covered payment stablecoins to be redeemable within two business days while imposing prudential requirements covering reserves, capital, custody, and risk management.

Emerging economies face a different equation. Gross cross-border flows in USDT and USDC rose from roughly $12 billion in the first quarter of 2020 to $316 billion in the first quarter of 2025. In several emerging economies, including Ukraine, Vietnam, and Belarus, gross stablecoin flows reached double-digit shares of annual GDP, although net flows for even the largest recipients remained below 1 percent.

For businesses with limited access to efficient dollar banking, that infrastructure can open another route to international suppliers. Households can also receive dollar-linked value without relying on every intermediary in a conventional remittance chain. Yet easier access to dollars can encourage currency substitution where inflation, depreciation, or foreign-exchange shortages have already weakened demand for domestic money.

The tension sharpens in financially constrained economies. Stablecoins can enable financial leapfrogging by bypassing weak payment infrastructure or limited correspondent banking. The same process can also bypass domestic institutions, expanding access to global commerce while shifting some monetary activity toward financial infrastructure centered abroad.

Sources: World Bank

Nigeria Shows Both Sides

Nigeria makes the tradeoff concrete. The country received about $59 billion in crypto-asset inflows between July 2023 and June 2024. Stablecoins accounted for more than 65 percent of its cross-border crypto inflows in 2024, while Nigeria represented roughly 60 percent of stablecoin inflows into sub-Saharan Africa from late 2019 through early 2025.

For households and small businesses, the attraction is practical. A smartphone and digital wallet can provide access to a relatively stable dollar-linked asset without requiring every layer of correspondent banking. International transactions can reach suppliers, customers, or recipients through channels that may be cheaper or more accessible.

Domestic conditions help explain the appeal. Nigerian consumer-price inflation averaged 33.2 percent in 2024, while personal remittances received were equivalent to 8.4 percent of GDP. Neither figure proves stablecoin adoption, but together they show why access to cross-border transfers and dollar-linked assets can carry greater economic significance than in countries with stable currencies and frictionless banking access.

Settlement use, however, differs from balance-sheet dollarization. A Nigerian importer can acquire a stablecoin, pay an overseas supplier, and return the remaining funds to naira. The token has served as a settlement vehicle. If households and firms instead hold savings, price goods, pay wages, or retain working capital in dollar stablecoins, the economic effect moves closer to conventional dollarization.

Nigeria therefore captures the central distinction. Stablecoins can improve cross-border financial access without automatically replacing domestic money, but the same infrastructure lowers the barriers to doing so.

Sources: International Monetary Fund

The Development Paradox

The qualities that make stablecoins useful also create their central development tension. Uniformity lowers coordination costs, the dollar peg provides relative stability, and borderless transfer allows one settlement asset to move across national monetary systems.

Together, those characteristics can make stablecoins part of the financial backbone of the internet. Merchants, exchanges, wallets, software applications, and counterparties do not need identical national banking systems when they can interact through one transferable monetary asset. Greater acceptance increases the usefulness of that common standard, reinforcing its network effect.

Infrastructure potential nevertheless exceeds present commercial use. The BIS estimates that only about $390 billion of stablecoin flows in 2025 were payment-related, compared with a global cross-border payments market of roughly $1 quadrillion annually. Stablecoins therefore remain small beside conventional payment infrastructure even as the underlying network expands rapidly.

Their development value can still be significant where conventional channels remain expensive. Sending $200 to sub-Saharan Africa cost an average of 7.9 percent in 2023. Reducing even part of that friction can matter economically, particularly for smaller transfers, while also widening access to foreign currency outside domestic banking systems.

The consequences extend beyond payments. Stablecoin demand can reach conventional foreign-exchange markets, affecting local exchange rates and dollar funding conditions. Emerging markets with thinner financial intermediation can be more exposed to those flows, allowing infrastructure that lowers transaction barriers to transmit monetary pressure more efficiently.

The policy question is broader than whether stablecoins should be permitted. Governments must distinguish useful settlement infrastructure from deeper currency substitution. Easier access to global digital commerce can coexist with greater dependence on a foreign-currency network.

Bitcoin asked whether the internet could create money independent of the traditional monetary system. Stablecoins represent a different stage of that evolution. The internet may not need to invent a new currency. It may instead be standardizing exchange around a borderless digital version of the dollar.

Sources: Bank for International Settlements

TL;DR Summary

• The internet is global, while money remains divided among national currencies and financial systems.
• Stablecoin market capitalization reached roughly $315 billion in early April 2026, with about 98 percent denominated in dollars.
• Stablecoins provide a uniform, relatively stable, borderless asset capable of connecting otherwise separate financial systems.
• Fintech accelerated conventional finance, while crypto introduced internet-native assets and programmable ownership.
• More than 70 percent of fiat-to-stablecoin conversions studied by the BIS originated in non-dollar currencies.
• Gross USDT and USDC cross-border flows rose from about $12 billion in early 2020 to $316 billion in early 2025.
• Stablecoins can operate as digital vehicle currencies without requiring participating countries to share a monetary system.
• Their effects differ across advanced, emerging, and financially constrained economies.
• Nigeria received about $59 billion in crypto-asset inflows in the year through June 2024, with stablecoins accounting for more than 65 percent of cross-border crypto inflows.
• Settlement use differs economically from moving savings and domestic transactions into dollar stablecoins.
• Stablecoins remain small beside conventional cross-border payments, but the infrastructure can still reduce meaningful friction in expensive corridors.
• The emerging monetary standard is not a new sovereign currency but a digital extension of the dollar network.

Sources

The Internet Is Developing a Currency

• Bank for International Settlements; Stablecoins: framing the debate; – Link
• Visa; Stablecoins and the future of onchain finance; – Link
• Visa; Stablecoins: Creating stronger customer value; – Link
• Federal Reserve Board; Stablecoins in 2025: Developments and Financial Stability Implications; – Link

A Common Standard for Cross Border Commerce

• Federal Reserve Board; Payment Stablecoins and Cross Border Payments: Benefits and Implications for Monetary Policy Implementation; – Link
• World Bank; Remittance Prices Worldwide; – Link
• Federal Reserve Board; Reflections on a Maturing Stablecoin Market; – Link

One Standard Three Economic Environments

• International Monetary Fund; Global Financial Stability Report April 2026; – Link
• World Bank; The Global Findex Database 2025; – Link
• Federal Deposit Insurance Corporation; Notice of Proposed Rulemaking to Establish GENIUS Act Requirements and Standards; – Link
• Financial Stability Board; Thematic Review on FSB Global Regulatory Framework for Crypto-asset Activities; – Link

Nigeria Shows Both Sides

• International Monetary Fund; Nigeria 2026 Article IV Consultation; – Link
• International Monetary Fund; Stablecoins in Nigeria: A Growing Cross-Border Channel; – Link
• World Bank; Nigeria Data; – Link

The Development Paradox

• Bank for International Settlements; Stablecoin Flows and Spillovers to FX Markets; – Link
• Bank for International Settlements; The Impact of Stablecoins on the International Monetary and Financial System; – Link
• International Monetary Fund; Stablecoins: Promise, Risks, and Policy Choices for Emerging Markets; – Link
• International Monetary Fund; Tokenized Finance and Money; – Link

Keywords: Cryptocurrency, Stablecoins, Digital Dollar, Cross Border Payments, Internet Monetary Standard, Financial Development, Monetary Sovereignty