Stablecoins digital currencies pegged to fiat such as the U.S. dollar have quietly evolved from a niche trading tool into a lifeline for millions across emerging markets. Once used mainly for speculative trading, they’re now becoming a practical hedge against inflation and a bridge for people excluded from the banking system.
In many developing economies, the story begins with instability. When inflation eats away at savings and trust in local currencies fades, people instinctively look for assets that hold their value. Stablecoins, backed one-to-one by stronger currencies, have become that refuge. McKinsey notes that in countries historically suffering from monetary volatility, dollar-backed stablecoins provide a reliable hedge and enable secure peer-to-peer payments.
Nowhere is this transformation clearer than in Pakistan, where a new fintech startup called ZAR just raised US$12.9 million in a funding round led by Andreessen Horowitz (a16z). ZAR’s goal is simple but ambitious to build a cash-to-stablecoin network that allows everyday Pakistanis, especially the unbanked, to convert physical cash into digital dollars at local stores and kiosks. With more than 100 million adults outside the formal banking system, Pakistan offers a vast proving ground for what could become a model for emerging-market digital finance.
The attraction is straightforward: stablecoins move value instantly and cheaply across borders. In countries dependent on remittances or struggling with capital controls, they offer speed and accessibility that legacy banking rails can’t match. This phenomenon, sometimes called “digital dollarization,” is spreading fast from Nigeria to Argentina, from Turkey to Kenya as people embrace crypto not for speculation but for survival.
Younger, mobile-first populations accelerate the trend. With smartphones in hand and limited ties to traditional banking, millions are ready to leapfrog into new financial systems. As Forbes recently noted, stablecoins are delivering their biggest benefits in markets that need to move value and store wealth beyond weak fiat systems.
Yet the shift isn’t without risk. Analysts warn that the rise of stablecoins in developing economies could challenge local monetary policy, reduce bank deposits, and complicate capital-flow regulation. A recent Chatham House commentary cautioned that while stablecoins expand access, they also pose systemic questions about sovereignty and control.
Still, the direction of travel is unmistakable. As Pakistan experiments with ZAR’s cash-to-stablecoin model and nations like Nigeria continue to embrace digital dollars, stablecoins are becoming more than a financial product they’re turning into infrastructure. For millions across the Global South, this is not about chasing crypto profits; it’s about finding a safer, faster, and more inclusive way to participate in the world economy.
