Across the Global South, digital currencies are reshaping how individuals and institutions save, transact, and preserve wealth. From small vendors in Lagos to remittance corridors in the Philippines, new forms of money promise both transformative benefits and daunting challenges.

As innovation collides with macroeconomic vulnerability and political complexity, stakeholders must balance enthusiasm with caution. This article examines the definitions, adoption trends, core use cases, risks, and policy debates driving the digital money revolution in emerging markets.

Definitions and Taxonomy

To frame this discussion, we adopt a clear typology of “new digital money” that captures the spectrum of assets and liabilities in circulation.

• Public, permissionless crypto-assets: Bitcoin, Ethereum, and alternative coins used for investment, remittances, and censorship-resistant capital flight.
• Stablecoins: Digital tokens pegged to fiat currencies, providing dollar-denominated value with fast, often near-instant settlement.
• Central Bank Digital Currencies (CBDCs): Digital central bank liabilities, issued either for retail users or wholesale institutions to enhance payment efficiency and monetary sovereignty.

This classification, endorsed by major institutions like the World Bank, anchors our analysis of how each form interacts with emerging-market dynamics.

Adoption Landscape and Key Numbers

Recent data reveal a striking shift: digital currency adoption is accelerating fastest in the Global South, driven by retail users confronting economic volatility and high remittance costs.

Around one-fifth of global crypto transaction volume now originates from emerging markets. According to Chainalysis, between mid-2024 and mid-2025, APAC saw a 69% year-over-year increase in crypto value received, while Latin America, Sub-Saharan Africa, and MENA posted gains of 63%, 52%, and 33%, respectively.

Top-ranking countries in retail adoption include:

• India (#1), Pakistan (#3), Philippines (#4), Brazil (#5)
• Indonesia (#6), Vietnam (#7), Venezuela (#11), Nigeria (#12)

Meanwhile, CBDC exploration covers 98% of global GDP: over 40 countries have live pilots, more than 30 are in development, and research continues in dozens of others. Yet only four retail CBDCs have fully launched—Bahamas’ Sand Dollar, Nigeria’s e-Naira, Jamaica’s JAM-DEX, and Zimbabwe’s ZiG—highlighting the gap between ambition and implementation.

Major Opportunities in Emerging Markets

New digital currencies present several compelling use cases where traditional systems struggle to deliver.

Financial inclusion and payment efficiency can leap forward when unbanked populations access CBDCs or stablecoin wallets on basic smartphones. By reducing transaction frictions and lowering remittance fees, digital money can bring millions of people into formal financial systems.

Remittances and cross-border payments benefit from near-instant, low-cost transfers via stablecoins or crypto rails. This is particularly critical in regions where remittance fees exceed 7% of sent amounts and correspondents are unreliable. Pilot experiments with interoperable CBDC corridors show promise but remain nascent.

Inflation hedging and store of value emerges as a lifeline in hyperinflationary economies like Argentina and Venezuela. Retail users increasingly hold stablecoins as a proxy for hard currency exposure, mitigating currency depreciation and providing a digital escape valve from capital controls.

Finally, tokenization and programmable finance can unlock new asset classes—from real estate to green bonds—by embedding smart contracts into tokens, improving liquidity and transparency in markets that are often opaque and illiquid.

Risks, Failures, and Unintended Consequences

Despite the promise, the rapid rise of digital currencies carries significant perils. Volatility in public crypto-assets can lead to sudden losses for retail investors unfamiliar with market swings. This risk is magnified where consumer protection frameworks are weak or nonexistent.

Inclusion-driven CBDCs like Nigeria’s e-Naira have underperformed expectations, with low uptake reflecting trust deficits, limited incentives, and the persistence of mobile-money incumbents. Similarly, algorithmic stablecoins have collapsed under stress, triggering contagion fears in local markets.

Perhaps most concerning is the acceleration of informal dollarization under digital rails. As households flock to USD-pegged tokens, monetary authorities may lose transmission power, complicating inflation targeting and fiscal stability.

CBDCs in Emerging Markets: Status, Motives, and Outcomes

Central banks pursue CBDCs to modernize payments, enhance financial oversight, and protect monetary sovereignty from crypto and Big Tech encroachment. Yet real-world deployments reveal mixed results, often hinging on design choices and ecosystem partnerships.

This comparative lens underscores that motives—be they inclusion, efficiency, or sovereignty—must align with local market structures and user needs to succeed.

Stablecoins and Dollarization Dynamics

Stablecoins have surged to represent nearly 30% of global crypto transaction volume by 2025, reflecting their central role in payments and value preservation. In emerging markets, they serve as quasi-official conduits for digital dollarization, enabling users to circumvent capital controls and safeguard savings.

However, reliance on privately issued stablecoins raises regulatory and systemic risks. Reserve opacity, counterparty exposure, and potential runs demand robust oversight. Some central banks worry that uncontrolled stablecoin proliferation could undermine local currencies and circumvent monetary policy channels.

Regulatory, Geopolitical, and Institutional Considerations

Policymakers navigate a complex terrain where financial innovation intersects with geopolitical competition. The entry of major tech firms into payments, cross-border CBDC experiments among BRICS nations, and US sanctions on digital assets all shape emerging-market strategies.

Effective regulation must balance consumer protection, anti-money laundering standards, and innovation incentives. Institutions like the IMF and BIS advocate for multilateral frameworks to ensure interoperability and mitigate fragmentation risks.

Themes, Tensions, and Future Questions

As digital currencies gain traction, core tensions emerge: inclusion versus surveillance, sovereignty versus integration, and stability versus innovation. Will CBDCs coexist with private cryptocurrencies, or will one model dominate? Can stablecoins be harnessed responsibly to enhance remittances without eroding local monetary control?

Addressing these questions requires rigorous experimentation, transparent data sharing, and adaptive policy frameworks. Emerging markets stand at the forefront of this transformation, where bold innovation and prudent risk management must go hand in hand.

Ultimately, digital currencies in emerging markets represent both a powerful opportunity to accelerate financial inclusion and growth, and a profound challenge to established monetary systems. Stakeholders must engage thoughtfully, using evidence-based insights to navigate this evolving landscape and unlock lasting benefits for societies worldwide.