A recent report from the Bank for International Settlements (BIS) sheds light on the trends and drivers behind cross-border cryptocurrency and stablecoin flows. The study, titled “Breaking the Gravity? An Empirical Analysis of Cross-Border Bitcoin, Ether, and Stablecoin Flows,” was published on May 8, 2025. The paper assesses the flow patterns of Bitcoin, Ether, and two leading stablecoins, Tether and USD Coin, over the period from 2017 to 2024 across 184 countries.
The report points out that the value of cryptocurrencies fluctuates according to market forces and is not tied to any specific asset. Stablecoins, on the other hand, are digital currencies designed to maintain a stable value by pegging their market price to an external reference, often a fiat currency. The increasing prevalence of stablecoins has drawn the attention of governments and regulatory bodies worldwide, raising concerns about their potential impact on financial stability.
The authors of the paper, Raphael Auer, Ulf Lewrick, and Jan Paulick from BIS, emphasize that speculative motives and global financing conditions play significant roles in driving the flows of native cryptocurrencies. They found that transaction motives were particularly influential in the cross-border flow of stablecoins and low-value Bitcoin transactions, with high remittance costs being a contributing factor.
The report also reveals substantial cross-border flows of cryptocurrencies and stablecoins, with peak transaction volumes reaching $2.6 trillion in 2021, with stablecoins accounting for nearly half of that total. By 2023, total transaction volumes fell to $1.8 trillion but are showing signs of recovery. The authors note that geographical distance plays a much smaller role in limiting crypto flows than it does in traditional financial movements. This indicates that decentralized crypto assets largely overcome traditional barriers in capital flows.
Additionally, the paper explores the use of stablecoins and low-value Bitcoin payments for remittances. This highlights the diverse use cases of crypto assets, especially in regions with high remittance costs, where stablecoins offer a cheaper alternative.
The authors conclude that capital flow management measures (CFMs) intended to regulate traditional financial flows appear to have little effect on cross-border crypto activities. In some cases, such measures may even spur greater cross-border crypto flows, suggesting that market participants may seek to circumvent such controls.
As cryptocurrencies become more integrated with mainstream finance, understanding the systemic risks and potential contagion effects between crypto markets and traditional finance will become crucial for policymakers and market participants. The report also calls for a deeper exploration of the socio-economic impacts of crypto adoption, particularly in emerging markets, as it could affect financial inclusion, economic stability, and the potential for crypto to serve as a hedge against local currency volatility.
The BIS report comes at a time when the growing adoption of crypto assets has raised concerns about their macroeconomic implications and the risks they pose during times of market turmoil. While crypto markets are evolving rapidly, the risks associated with their integration into the broader financial system remain under-explored, and policy responses are still developing.
This analysis also touches on the role of new intermediaries in the crypto space, which differ from traditional financial institutions. The US, UK, and major emerging markets are identified as key hubs in the crypto ecosystem, with significant shifts in cross-border activity observed, particularly as regulatory measures in China have prompted a movement of crypto flows to countries like India, Indonesia, and Turkey.
In conclusion, the BIS report stresses that as crypto assets become more intertwined with traditional finance, understanding the potential risks and regulatory challenges will be essential for both market participants and policymakers. The paper highlights the need for a more comprehensive examination of the implications of crypto adoption in emerging markets and the broader financial system.
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