Dhaka, Mar 24 (V7N)– A new player is rapidly gaining prominence in the global cryptocurrency market—stablecoins, digital currencies designed to maintain a fixed value, usually pegged to traditional currencies like the US dollar.

Introduced in 2014 by Tether Limited, stablecoins aim to reduce the extreme price volatility seen in cryptocurrencies such as Bitcoin. The most widely used stablecoin, Tether (USDT), is pegged at a 1:1 ratio with the US dollar.

Following its success, major global firms such as Circle, Coinbase, and Binance have also joined the stablecoin ecosystem.

Despite steady growth in official remittance inflows—over $2.2 billion received in the first half of March, pushing reserves above $34 billion—an increasing number of expatriates are reportedly turning to stablecoins for faster transfers.

According to Chainalysis, the use of stablecoins in sending money to Bangladesh has been rising. Migrant workers are increasingly using peer-to-peer (P2P) networks to bypass traditional banking channels, allowing funds to be transferred within minutes and withdrawn locally through mobile financial services.

Another research firm, TRM Labs, noted that crypto adoption in Bangladesh grew by around 125% in the last fiscal year. The shift toward stablecoins has also reduced transaction costs by approximately 4%, making it an attractive option for remittance senders.

However, cryptocurrency transactions remain illegal in Bangladesh, raising concerns among policymakers and financial experts.

Professor Dr. Shah Mohammad Ahsan Habib of the Bangladesh Institute of Bank Management warned that while stablecoins appear stable, they still carry risks.

He emphasized that many users may not fully understand these risks and tend to blame authorities when problems arise.

In contrast, Central Bank Digital Currency (CBDC)—a regulated digital alternative—is still under consideration globally but comes with its own volatility and policy challenges.

Experts also question whether stablecoin-based remittances actually bring foreign currency into the formal financial system.

Md. Arfan Ali, Chairman of Zaitun Business Solution, said that unless transactions are conducted through official banking channels or licensed dealers, there is uncertainty about whether real foreign exchange enters the country.

Meanwhile, the International Monetary Fund has acknowledged the growing use of stablecoins in cross-border payments and even in import-export trade. However, it has recommended that countries introduce specific regulatory frameworks to manage associated risks.

Despite restrictions, Bangladesh ranks second in South Asia after India and 13th globally in crypto usage. A significant portion of users are young freelancers who rely on digital currencies for receiving payments from abroad.

Additionally, stablecoins are increasingly being used in online gaming and betting platforms, often through alternative gateways designed to bypass central bank restrictions.

As stablecoins continue to gain traction, Bangladesh faces a critical policy dilemma:

whether to tighten enforcement against unauthorized crypto use or introduce regulatory frameworks to bring these transactions under formal oversight.

With their speed, low cost, and growing popularity, stablecoins may reshape the future of remittances—but without proper regulation, they also pose significant risks to financial stability and transparency.

END/SMA/AJ