Cryptocurrency adoption in emerging markets has posted risks to financial and financial sovereignty, Moody credit ratings said in a report on Thursday.
The risks are most accepted in areas where crypto use is reaching despite investing in savings and remittances, according to the report. Moody suggests that the increased penetration of stablecoins that is in the US dollar weakens financial delivery when it leads to pricing and negotiating outside the domestic currency of a market.
Stablecoins are crypto tokens that are in the value of a traditional financial possession, such as a fiat currency, with US dollar is comfortable the most widespread.
“It creates ‘cryptoization’ pressure that is similar to unofficial dolarization, but with noticeable opacity and less visibility of regulation,” Moody said.
Cryptocurrency can also provide new ways of flying capital, through pseudonymous wallets and offshore exchanges, allowing individuals to move wealth abroad carefully, disturbing the stability of the exchange rate, according to the report.
Moody also highlighted how the cryptocurrency ownership has increased in concentration in emerging markets, especially in Southeast Asia, Africa and parts of Latin America. Here, adoption is often driven by inflationary pressure, money -forced and limited access to banking services. In contrast, adopting more advanced economies, adoption is encouraged by institutional integration and regulation clarity.
Crypto ownership expanded to approximately 562 million people by 2024, an increase of 33% from 2023, the report said.
Read more: Stablecoin Adoption Set to Surge After Genius Act, Press $ 4T on Cross-Border Volume: EY SURVEY
