Stablecoins In Practice: Why Their Use Outside The Crypto Ecosystem Remains Limited

The rise of cryptocurrencies over the last decade has seen some form of digital monetary assets surface, with stablecoins receiving a massive following. Contrary to other popular traditional cryptocurrencies, stablecoins are purely digital tokens that make an effort to maintain constant value by being collateralized with regular fiat currencies like the US Dollar, Euro, or Japanese Yen. Some of the well-known examples are USDT, EURC, and JPYC, representing the US Dollar, Euro, and Japanese Yen values respectively. Stablecoins in cryptocurrency are mostly utilized as a store or an exchange and serve as a middleman between the myriad number of crypto assets without allowing the volatility inherent in conventional cryptocurrencies like Bitcoin or Ethereum.

However, stablecoins use outside the crypto environment is very limited. An explanation for this is presented in a Bank for International Settlements (BIS) report released in August 2025. The 2024 survey collected data from 93 central banks across the world, equating to 78% of the world's population and 94% of economic activity in the world. Notably, 28 of those who responded came from developed economies and 65 were central emerging markets and developing economies. The survey findings point out that despite the fact that stablecoins are widely used in crypto trading communities, they have very minimal use in overall payment systems.

Most of the central banks reported low payment use of stablecoins in their jurisdiction, the survey found. Stablecoins are utilized by special communities for a particular use other than cryptoasset trading and decentralized finance platforms in 20% of local retail payments, 21% of remittances, and 20% of cross-border retail payments. A number of central banks reported limited adoption in domestic wholesale payments (1%), local retail payments (1%), cross-border payments (3%), and remittances (4%). This implies that while the idea of stablecoins has raised considerable interest, adoption in day-to-day financial transactions remains low.

There are a number of reasons why such limited adoption persists. First, legal uncertainty is a major factor. While interest builds up, stablecoins languish in a mostly emerging legal framework. Nonetheless, the BIS survey notes a favorable direction here. Approximately 45% of the jurisdictions surveyed have enacted clear regulations for stablecoins and other cryptoassets, an increase from 35% of jurisdictions in 2023. Further, 22% of jurisdictions are currently preparing or planning to prepare regulatory frameworks. In total, well over two-thirds of jurisdictions globally already regulate stablecoins or will regulate them in the near future.

As would be expected, the overwhelming majority of jurisdictions are leaning towards custom regulation specifically for stablecoins or cryptoassets, as opposed to applying existing generic financial regulations. This is due to the need to offset the peculiar risk and operating nature of such digital products. For example, nations such as the United States, Singapore, Hong Kong, and the United Kingdom have already adopted or are in the process of formulating special regulations for some stablecoins. However, Argentina, Australia, Brazil, Mexico, and the European Union are some of the jurisdictions that are also considering broader regulation of cryptoassets. Changing regulation will most likely serve to create a more stable environment from which to usher in the use of stablecoins, though they have not yet gone mainstream for anything beyond trading cryptocurrencies.

The survey further reflects the limited involvement of commercial banks in stablecoin issuance. Only 8% of the central bank respondents indicated that commercial banks under their supervision had issued stablecoins. They include ANZ in Australia, KBC in Belgium, BTG Pactual in Brazil, and Société Général in France. In the majority of instances, application of stablecoins as collateral, investment vehicle, or payment tool in conventional financial systems is nonexistent.

An additional interesting fact is growing experimentation with asset tokenization. Almost 48% of the jurisdictions surveyed indicated that private or public actors performed research or proof-of-concept activities in tokenizing real-world or financial assets through the end of 2024. Of these, 38% have tokenized assets issued or are live piloting issuance, though such efforts are largely centered in developed economies. Tokenization can increase liquidity, transparency, and efficiency in the financial markets but is currently at the embryonic stage of adoption and regulatory interest.

The report highlights that timely and harmonized international standardization is crucial to prevent arbitrage by regulation, bearing in mind that stablecoins and cryptoasset business are borderless. Harmonized regulation can foster sustainable innovation, protect consumers, and offer financial stability. Without harmonized regulatory policies, stablecoin penetration into mainstream financial markets may still be restricted, with financial institutions and consumers not being interested in accessing unregulated digital products.

Economically speaking, the limited application of stablecoins beyond the crypto world is a reflection of the current maturity and market demand level of technology. Stablecoins are the perfect middlemen of crypto exchanges because they are stable in relation to extremely volatile cryptocurrencies but are not yet accumulating in mainstream retail or wholesale payments. Interoperability with current payment networks, consumer trust, merchant acceptance, and infrastructure readiness all affect the rate of adoption. Where these are still pending in such markets, stablecoins remain a niche product and are yet to be mainstream financial products.

To developing economies such as India, the BIS survey gives a guide in tapping the promise of stablecoins, central bank digital currencies (CBDCs), and tokenization of assets. Pilot adoption of these vehicles in pilot domains enables policymakers and regulators to refine the optimal framework for stimulating innovation while ensuring economic stability. Pilot programs, sandboxing, and collaborative research can speed up closing the experimental acceptance to mass public adoption gap.

Lastly, although stablecoins have been highly promising in the cryptosphere, their real use in the real world in the physical world for purposes other than cryptocurrency transactions to this day remains zero. Regulatory clarity, banking involvement, infrastructure technology, and consumer acceptance are strong drivers fueling increased adoption. The BIS survey provides state-of-the-art commentary on subject and trends across the globe, suggesting that while stablecoins have a potential future in next-generation payment systems, it will require careful planning, coordination, and regulatory synchrony in order to bring mass adoption within reach beyond niche use. With increasingly advanced digital financial innovations, stablecoins could become less crypto-focused and more a mainstream part of mainstream financial markets.