Stablecoins are a form of crypto money that can be easily exchanged for the traditional currency at a fixed rate. Originally, they allowed users to easily convert currencies into crypto.

Stablecoins now account for a greater share of the trading volume on the crypto market than Bitcoin and Ethereum combined, being used to hold savings or make international payments.

99% of stablecoins are linked to the dollar.

To ensure that they can guarantee the 1:1 value to the US dollar, issuers of stablecoins buy a lot of US government debt, and are now the 18th largest holders of US debt in the world.

Four G7 countries – Japan, France, Germany, and Italy – have implemented regulations to secure the legal status of stablecoins.

In developing regions like Sub-Saharan Africa, stablecoins make up 43% of the crypto transaction volume.

In Argentina, many are turning to Tether and Bitcoin instead of the US dollar and the local peso to protect their savings from inflation. Bitcoin’s 2024 rise in value made it even more attractive than the dollar which has been a safety net for Argentina for decades. 

Cryptocurrencies' decentralised structure makes them less affected by geopolitical shocks. This was shown in 2021 when China banned crypto, causing mining to relocate to other countries without destabilising the global crypto ecosystem. 

Digital currency (CBDC)

Whereas crypto and digital currency share some technologies like blockchain, CBDCs are not cryptocurrencies.

Developing CBDCs is seen as the first step towards enabling overall regulation of digital currencies, including crypto.

Currently, 134 countries are exploring CBDC projects. 14 out of G20 countries are in the active pilot stage.

Brazil and Russia are planning the rollout of their digital currencies by mid-2025, while the US, the UK and Canada are still at a pre-pilot stage. 

The first three countries to fully introduce a CBDC are the Bahamas, Nigeria and Jamaica. The motivation of these countries includes improving financial access and banking gap, reducing money laundering and optimising cash usage.

Illegal activities

Local and international terrorist groups are increasingly using cryptocurrencies to raise money, often through social media campaigns.

Hamas used cryptocurrency for fundraising to support its military operations. Between 2019 and 2023, Israeli authorities captured $41 million in crypto wallets linked to Hamas.

ISIS recently started using Monero, a privacy-focused cryptocurrency with stronger secrecy features, over more trackable options like Bitcoin and Tether. 

Information on a regular blockchain is public, so anyone can see the amount paid and the “addresses” of the crypto-wallets used, but does not include any real names or geographical locations.

To track those, investigators use sources like exchange platforms, which are regulated by local governments and required to collect personal registration data.

Cryptocurrencies are also used to bypass international sanctions - since they do not rely on regular banking infrastructure.

In Georgia, an estimated 5-10% of crypto transactions are related to sanctions bypassing.

Iran legalised crypto mining in 2019, supporting it with cheap energy and subsidies, as one of the steps to counteract US sanctions.

Iran requires Bitcoin miners to obtain licenses and sell mined crypto coins directly to its central bank, which uses them to fund imports without dollars. 

Russia legalised crypto mining in July 2024 and is considering launching a cross-border CBDC. This is a policy reversal from the 2022 crypto ban, driven by a need to reduce dollar dependence and support trade during sanctions, while the initial ban was to prevent capital flight from the country.

While domestic crypto payments remain banned, Russia considers stablecoins tied to the yuan or BRICS currencies. Russia also aims to develop crypto and AI data centers across BRICS, reducing reliance on Western systems.

In 2018, Venezuela was one of the first countries that tried to bypass US sanctions by state-supported crypto – the Petro -- claiming to be backed by the country’s oil reserves. Petro was neither a CBDC nor stablecoin. 

Between 2018 and 2023, it had limited uses inside the country, and its 2024 crash was connected to a corruption scandal.

North Korea is a unique example of a state relying on stealing digital assets and money laundering for a significant portion of its income, with $3 billion in hacked cryptocurrency taken between 2017 and 2023. It was used to fund around 50% of the country’s foreign currency needs, including for importing weapons.