We're entering a new era for stablecoins. The wild west is over, and regulation is on the way. So who stands to gain the most from this continued trajectory? More importantly, who gets left behind? You might think it's about protecting investors in the US or maintaining the dollar's dominance. That's part of the story, sure. The sad reality is that the unnecessarily complex, disjointed regulatory environment being established as we speak is causing tremendous damage. Yet it is most weighted on communities in the Global South, particularly in South Asia.
Who really loses from fragmentation?
Think about it. Within the US context, the negotiations around the GENIUS Act and more recently the STABLE Act have been centred around creating federal standards for federally-permissioned issuers. While Europe is concerned about the implications for financial stability, it is advancing the case for CBDCs. Hong Kong is building benchmarks. At the same time, more than 80% of stablecoin transactions occur outside the United States. Who is thinking about them?
Indeed, the dialogue is largely dominated by fears surrounding US dollar supremacy and safeguarding investors in current financial structures. While important, this narrow focus ignores the life-changing potential of stablecoins in regions with unstable currencies, limited banking access, and high remittance costs.
Consider the example of a Bangladeshi migrant worker in the Gulf Coast sending remittances back home to their family. Traditional remittance services often take a big bite out of their laboriously earned salaries in charges. Stablecoins provide a faster, cheaper and more transparent alternative. If regulations are disparate and interoperability is suppressed, these important flows may be choked off.
This isn't just about convenience. It's about economic survival for families who rely on these remittances to pay for food, education, and healthcare. Prioritizing the needs of developed nations is a dangerous approach. Or worse, we risk excluding the very people who stand to gain the most from this technology. This isn’t only a financial concern, it’s a moral one.
Regulation stifling Global South innovation?
Now is the moment for the US to lead a collaborative, open process to develop international digital asset standards. Yet what occurs when those standards are crafted without significant engagement from the nations that will bear the greatest impact? It’s almost as ridiculous as making a shoe that only fits the right foot.
Consider the unbanked population in South Asia. Traditional banking systems cannot reach them because of high costs, complex requirements and the absence of infrastructure. Stablecoins, available at your fingertips on a smartphone, offer an unprecedented door to financial inclusion. They can increase the reach of savings and micro-loans and global market access.
Too often, overly burdensome regulations quash innovation in these areas. When in-practice compliance with impossible requirements is enforced, it creates a cycle of deepening financial access harm.
We want regulations that are open, cost-effective and plug-and-play interoperable. These regulations should aim to support the development of the Global South’s individuals and businesses, not merely safeguard the power of entrenched financial incumbents in the developed world.
A collaborative path forward exists
The current trajectory seems to be headed towards greater integration between these spaces and traditional finance. Banks are already exploring stablecoin integration. That’s all well and good, but we need to put our developing nation friends first. Stablecoins have the potential to democratize financial access like never before across these six continents.
The answer isn’t to throw out regulation, but rather to consider why we regulate in the first place. For that, we require international cooperation with voices from the Global South at the forefront of this work. In this debate, we have to listen to the voices of those who know best—the people who are directly impacted by these policies. As we continue to build the policy and regulatory landscape, we must ensure that regulations are inclusive, equitable, and foster financial empowerment.
Ahsan has been deeply active in connecting South Asian and nascent global crypto communities. Through that lens, he’s been able to witness firsthand the challenges and opportunities stablecoins present to the region. His unfortunate experience underscores the urgent need for a much more nuanced and collaborative approach to regulation.
The shocking truth is not only that the Global South is being ignored. It’s about the fact that we have the power to make sure this changes. Let’s continue to advocate for a more inclusive and equitable regulatory framework! If they do, there is no limit to how stablecoins can improve lives and grow economies across the globe. It’s time to move away from simplistic ideas of dollar dominance and financial stability. So let’s get inclusive — for real this time — with a vision of financial inclusion that works for all! Together, let’s make sure to hold our regulators accountable! We need to stand up and get these tables established for the lost voices of the global South. Your voice matters. Use it.
