Moody’s Warns of Crypto Risks to Financial Stability in Emerging Markets

Cryptocurrency adoption in emerging markets threatens monetary sovereignty and financial resilience, according to a new Moody's Ratings report. The risks intensify when digital assets MOVE beyond speculative investment into everyday use cases like savings and remittances.

Stablecoins pegged to the U.S. dollar create particular vulnerabilities, weakening local monetary policy transmission as dollar-denominated transactions bypass domestic currencies. This 'cryptoization' mirrors traditional dollarization but operates with reduced regulatory visibility.

Emerging markets in Southeast Asia, Africa, and Latin America show the highest crypto adoption rates—often driven by inflationary pressures and limited banking access. These regions now face new channels for capital flight through pseudonymous wallets and offshore exchanges, potentially destabilizing local currencies.