The Stablecoin Illusion: Why Stablecoins Don’t Actually Benefit Remittance Recipient Countries
This article builds on Part 1, where we talk about the rise of stablecoins. Next in Part 3, we explore what they really are.
Let’s set the record straight on stablecoins and remittances. There is a widespread, dangerously misleading narrative in the fintech and crypto space that stablecoins are revolutionizing cross-border remittances in ways that help recipient countries. That’s flat-out false. And it needs to stop.
Here’s the truth: Stablecoins do not benefit remittance-receiving countries the way traditional remittance channels do. I’ll say it again: they do not increase foreign exchange reserves. That’s a critical, structural flaw when it comes to national economics and monetary policy.
Let’s break it down with a simple example.
Imagine $1,000 is sent from the United States to the Philippines using traditional banking rails. That $1,000 is transferred, cleared, and eventually lands with the central bank or a private commercial bank in the Philippines. In doing so, those dollars become part of the country’s official foreign exchange reserves. The recipient in the Philippines gets paid in pesos, and the nation gains $1,000 in USD liquidity. That’s a win for the country’s monetary system.
Now, let’s rerun the scenario using stablecoins.
The sender buys $1,000 worth of USDT or USDC. That value stays with the issuer of the stablecoin—Tether or Circle—backed in their own treasury. When the recipient in the Philippines wants to cash out, a local liquidity provider (an informal broker or exchange) gives them pesos in exchange for the USDT. But where is the actual USD? Still in the U.S., sitting with the stablecoin issuer. It never enters the Philippine banking system. There is no increase in foreign exchange reserves. No actual USD hits the books of the central bank. No contribution to the country’s balance of payments. Nothing.
What’s actually happening? You’re trading an IOU. That’s what a stablecoin is. It’s a claim, not a transfer. It’s a promise of value, not value itself. You can make payment rails more efficient with stablecoins, sure—but don’t confuse that with actual monetary flows.
This is not just a technicality. It’s fundamental to understanding how countries manage capital inflows, foreign debt, monetary stability, and trade. Foreign exchange reserves are real assets managed by governments and central banks. Stablecoins, by comparison, are assets held offshore, controlled by private companies, and unaccounted for in official reserve statistics.
So, when I hear tech CEOs or crypto founders claim their stablecoin solution can “fix” Treasury FX operations, balance of payments, or Nostro/Vostro liquidity—let me be blunt: that’s bullshit. It’s marketing hype masquerading as financial innovation. None of these so-called “benefits” stand up to economic scrutiny or central banking realities.
What stablecoins can do is improve settlement speed, reduce fees, and make the user experience slicker. But let’s not pretend that stablecoins are bringing real dollars into developing nations. They’re not. They never were. And they won’t until they’re backed by real cross-border cash flows and regulatory frameworks that capture them within official monetary systems.
Stop selling the illusion. Countries don’t run on IOUs. They run on real, hard currency.
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This page was last updated on March 28, 2025.
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