Dollar-backed stablecoins are becoming a new channel for “digital dollarization” that BIS researchers say is largely resistant to capital controls—especially in emerging markets where households and businesses already face currency and access constraints.

In a study released by the Bank for International Settlements (BIS), researchers compared foreign-currency bank deposits with inflows into dollar-pegged stablecoins across more than 130 economies. They found that both measures tend to rise during macroeconomic stress, but stablecoin flows react far less to capital controls and other FX restrictions—an asymmetry the authors attribute to stablecoins circulating “partly outside the regulatory perimeter.”

Key takeaways

• BIS research links both foreign-currency deposits and dollar-pegged stablecoin inflows to periods of macroeconomic stress.
• Stablecoin inflows appear far less sensitive to capital controls than traditional foreign-currency deposits.
• That resilience could limit policymakers’ ability to curb stablecoin adoption using tools designed for the banking system.
• BIS reports limited evidence that deposit dollarization weakens monetary policy transmission, though higher foreign-currency deposits correlate with greater inflation risk.
• The study suggests financial-stability regulation may need updating as tokenized assets expand beyond existing oversight structures.

Digital dollarization beyond traditional banking channels

BIS researchers frame stablecoins as potentially creating a parallel dollar-use ecosystem. Their analysis draws a comparison between two ways residents can move into foreign currency: by holding bank deposits denominated in foreign exchange and by holding dollar-pegged stablecoins.

According to the BIS study, both categories increase during periods of macroeconomic stress. That finding aligns with a common pattern in emerging-market finance: when local currencies weaken and uncertainty rises, demand for dollar assets often grows.

The important difference is how each channel responds to government attempts to restrict cross-border capital movement. The BIS team reports that stablecoin inflows show little reaction to capital controls or other FX restrictions, while foreign-currency deposits behave more like a traditional financial variable—tending to reflect policy measures more directly.

The authors argue this divergence is likely because stablecoins can circulate outside the regulatory perimeter. In practice, that means stablecoin adoption may not map neatly onto the same enforcement mechanisms used for bank deposits or conventional foreign-currency flows.

Why capital controls may be less effective with stablecoins

Capital controls and FX restrictions are designed to influence the movement of funds across borders and within domestic financial systems. BIS’s findings suggest that when a new, tokenized “dollar” route emerges, those tools can lose traction.

The study does not claim stablecoins are immune to every policy influence. Rather, it highlights reduced responsiveness in stablecoin flows relative to traditional foreign-currency deposits. For policymakers, that raises a practical question: how much of financial stability management still depends on the banking system being the main gateway for dollarization?

BIS also warns that stablecoins could undermine monetary sovereignty even if inflation dynamics remain similar in some cases. The concern is that households and businesses may shift into dollar exposure outside the banking system, particularly where local currencies are fragile or access to reliable financial services is limited.

Monetary policy transmission and inflation risk remain mixed

While the BIS study raises sovereignty questions, it also includes a more nuanced assessment of monetary policy effectiveness. The researchers report little evidence that dollarization via deposits weakens monetary policy transmission.

However, the study notes that countries with higher levels of foreign-currency deposits faced a somewhat greater risk of elevated inflation. That distinction matters because it suggests the impact of dollarization on macro outcomes may depend on structure and context—even if stablecoins and deposits are both dollar-linked.

For investors and risk managers, the takeaway is that “digital dollarization” may not automatically translate into immediate policy failure, but it can still complicate how central banks gauge demand for foreign-currency assets and anticipate pressure points in financial stability.

Regulators may need new tools for a tokenized financial system

BIS concludes that policymakers may need updated instruments to manage financial stability as stablecoin usage grows. The argument is not simply that stablecoins are “new,” but that existing regulations built for traditional banks and foreign-currency deposits may be less effective when the dollar exposure is tokenized and potentially distributed across channels that fall outside established compliance boundaries.

That becomes especially relevant as stablecoins are increasingly used for payments in emerging markets. In such settings, stablecoin adoption can be driven not only by speculative motives, but by operational realities—cross-border transfer speed, remittance costs, and persistent gaps in access to foreign exchange.

Stablecoin adoption is already spreading for payments and cross-border use

The BIS analysis arrives as other institutions document rising stablecoin use in the real economy. In a separate assessment focused on Nigeria, the International Monetary Fund (IMF) found that households and small businesses use US dollar-pegged stablecoins for cross-border payments, remittances, and access to dollar-denominated assets. The IMF attributed demand to factors such as inflation, currency depreciation, and limited access to foreign exchange.

In that IMF report, stablecoins were described as reducing the time and cost of moving money across borders while expanding access to financial services for users outside the traditional banking system. At the same time, the IMF warned that broader adoption of dollar-backed tokens could weaken monetary sovereignty by reducing demand for local currency and moving more financial activity outside conventional banking channels.

Beyond Africa, stablecoin payments have also accelerated in Latin America. Bitso Business, the enterprise payments arm of crypto exchange Bitso, reported an 81% year-over-year increase in stablecoin payment volume during the first half of 2026. The company also said that Circle’s USDC and Tether’s USDT made up 40% of all crypto purchases in the region in 2025, surpassing Bitcoin for the first time.

Separately, broader market data points to the scale of this shift. Stablecoin market capitalization has reportedly risen to about $309.7 billion, up from roughly $260 billion a year earlier, according to the figures cited in the original reporting and shown via DefiLlama’s stablecoin data.

For markets, the key question now is how policymakers will respond if stablecoin flows keep behaving differently than foreign-currency deposits. BIS’s evidence suggests traditional capital-control playbooks may be less effective, so the next watch items are regulatory measures that target tokenized dollar access directly—and whether stablecoin adoption continues to decouple from FX restrictions across more jurisdictions.

The White House has reportedly reached an agreement on ethics language for the Digital Asset Market Clarity (CLARITY) Act, a US crypto market-structure bill currently awaiting a possible Senate vote. The development is framed as a potential pathway to secure support from at least some Democratic lawmakers—an outcome that could prove decisive in a chamber where passage may require broad consensus.

According to a Tuesday report from Punchbowl, White House officials met with Republican Senators Cynthia Lummis and Bernie Moreno to align on the bill’s ethics provisions. Neither senator has publicly detailed the terms of the understanding, but the report suggested the outcome could also influence how US President Donald Trump’s crypto-related investments are viewed politically.

Key takeaways

• The White House is reportedly working to finalize ethics language in the CLARITY Act after meetings with Sen. Cynthia Lummis and Sen. Bernie Moreno.
• Support from some Democrats would matter because the Senate is expected to face a tight decision and likely needs 60 votes for passage.
• Many Democrats have previously indicated that CLARITY would be “worthless” without ethics provisions addressing conflicts they associate with Trump’s connections to the crypto industry.
• While the House passed CLARITY in July 2025, delays tied to shutdowns and unresolved policy questions have kept the Senate process uncertain.

Why ethics language has become the gatekeeper

The CLARITY Act has been positioned as a major effort to establish market-structure rules for crypto in the United States. The House passed the bill in July 2025 as part of Republicans’ “Crypto Week” agenda, but its Senate timeline has been complicated by multiple delays. The reported sticking points have ranged from lawmakers’ concerns over ethics to questions around tokenization and stablecoin-related rewards, alongside calls to protect developers from potential enforcement actions.

The central political friction in the Senate appears to be ethics and conflict-of-interest concerns, particularly as they relate to the Trump administration. Earlier coverage from Cointelegraph noted that Trump urged the Senate to pass CLARITY “in honor of” the late Senator Lindsey Graham, who the president said was a major supporter of the bill.

Still, several Senate Democrats have been explicit that they will not treat the legislation as complete without additional safeguards. According to Cointelegraph reporting, Senators including Elizabeth Warren, Chris Murphy, Jeff Merkley, and Chris Van Hollen said that any CLARITY bill would be “worthless” without ethics provisions addressing potential conflicts they believe stem from Trump’s ties to the crypto industry, including his memecoin and the family’s World Liberty Financial business.

Unclear vote math as Senate calendar remains unsettled

Even with a reported ethics agreement, it is not yet clear whether CLARITY can secure the 60-vote threshold that typically applies to overcome Senate procedural hurdles. The bill’s prospects hinge on whether enough lawmakers—especially among Democrats—are persuaded that the ethics provisions adequately address their concerns.

As of Tuesday, the congressional calendar reportedly did not show a CLARITY vote, and the bill text had not been made public. That lack of transparency can further complicate support: lawmakers frequently need full access to the exact language before they can credibly assess whether amendments actually address the specific ethics risks they have raised.

Cointelegraph also reported that it requested details of the agreement from Lummis’ office but did not receive an immediate response, underscoring that the negotiation’s specifics remain largely undisclosed to the public.

Administration message: “comprehensive” ethics provisions

While the details of the reported deal have not been released, a White House official told Cointelegraph that the administration is committed to advancing CLARITY and said it had agreed to “the most comprehensive and wide-ranging ethics provision in history.” The official also characterized the process as highly responsive to Democratic concerns, saying the administration had “bent over backward to accommodate [Democrats’] concerns.”

At the same time, opposition has not disappeared. Many Democrats have argued that hearings are necessary to examine Trump’s crypto investments and related connections before any vote. Those calls reflect a broader concern: even if language is improved, lawmakers may still want a formal record and additional scrutiny through hearings to determine whether conflicts persist.

Coinbase vice chair Ryan VanGrack, cited in Cointelegraph reporting, suggested that Democrats have already been able to negotiate customer protection provisions into the Senate version of the bill. However, that progress on one policy area does not appear to have resolved the ethics debate, which remains a key driver of uncertainty.

Crypto market reaction tracks the political development

Bitcoin moved higher during the news cycle, climbing above $66,000 early on Tuesday and reaching a seven-week high, according to Cointelegraph’s coverage. Traders linked the move to reports of an ethics deal and to separate developments involving Trump’s plans to introduce additional 10% international trade tariffs.

In social media commentary, Michaël van de Poppe, founder and chief investment officer of MN Fund and MN Capital, attributed the rally to expectations surrounding potential approval of the CLARITY Act. The observation highlights how tightly some market participants are tying near-term price action to US regulatory and legislative progress, particularly when bills are framed as shaping how crypto markets will operate.

What to watch next

Investors and builders should focus on whether the Senate bill’s text becomes publicly available and whether lawmakers’ concerns—especially around ethics—are reflected in verifiable drafting. The next inflection point is not just whether CLARITY advances procedurally, but whether enough senators are willing to commit before any final vote amid ongoing questions about conflicts and the adequacy of proposed safeguards.

Spot market conditions have improved after months of weakness, with U.S. spot bitcoin ETFs shifting from persistent outflows to modest inflows. Still, the report cautioned that demand has yet to fully recover, with ETF flows and purchases by corporate bitcoin treasury companies such as Strategy (STR) remaining well below the levels seen earlier this year.

While bitcoin’s rebound has helped lift sentiment across the market after a difficult second quarter, Bitfinex cautioned that the recovery is “not yet healed.”

Bitcoin currently accounts for nearly 67% of spot crypto trading volume, up from roughly 50% a year ago, according to Bitfinex. The shift suggests investors continue to favor bitcoin over smaller tokens, a sign that traders remain defensive rather than embracing broad risk-taking.

‘Summer slumber’

Data from K33 Research paints a similar picture.

Head of research Vetle Lunde said institutional participation has continued to fade, with CME bitcoin futures open interest falling to its lowest level since 2023. Offshore perpetual futures positioning has remained largely unchanged, indicating speculative traders have been reluctant to add leverage despite bitcoin’s recent gains.

Spot trading activity has also stayed slow. Thirty-day bitcoin trading volume is running at just 62% of its annual average, according to K33, and late July has historically been the weakest period of the year. Average daily spot volume over the past week was roughly $2.3 billion, hovering near yearly lows even as prices recovered.

K33 described the backdrop as a “promising, and typical, summer slumber.”

Cointelegraph is committed to providing independent, high-quality journalism across the crypto, blockchain, AI, and fintech industries.

All news, reviews, and analyses are produced with full journalistic independence and integrity. For more details on our standards and processes, please read our Editorial Policy.

Jack Mallers says he left Twenty One Capital voluntarily and with “no severance” despite collecting roughly $1.6 million in cash on the way out and over $2.2 million in total compensation. He also claims he forfeited his options.

In a statement issued hours after stepping down as CEO of the Tether-controlled BTC treasury company, Mallers claimed to have left “voluntarily” and mentioned his lack of severance and options as though that summarized the situation.

However, omitted from his post was his lavish, seven-figure separation agreement and the millions of dollars he made personally while common shareholders’ investment halved — at best — under his tenure.

Below are details about Mallers’ failure to accomplish a variety of business goals at Twenty One. However, we must first address his staggering compensation and its conspicuous omission from his social media.

Jack Mallers made over $2.2 million from Twenty One

As part of his separation package, Twenty One awarded Mallers a final $50,000 salary payment, which is apparently so “small” it doesn’t qualify as severance.

Twenty One is also paying him $420,455 for his “vested restricted shares,” plus an incredible $1,151,046 in cash to repurchase 226,860 of his shares at $5.23 apiece.

That’s more than $1.6 million in cash for Mallers to resign “voluntarily,” paid to a man who claims he took no severance and forfeited his options.

The company is also paying him out for shares above the current market, which is trading for less than $5 today.

The document never uses the word “severance,” which is presumably how Mallers can claim that he didn’t take any — the most incredible technicality.

Despite his seven-figure payday that was nowhere to be found on his social media, he did forfeit some extras.

The company cancelled his unvested options and restricted stock for nothing, and he kept 1,522,407 vested options with a $14.43 strike price, which are currently out-of-the-money due to Twenty One shares trading below $5.

Those options are the part he can safely call worthless. Of course, they were already out-of-the-money before he “forfeited” them.

Researchers at the Bank for International Settlements (BIS) found that dollar-backed stablecoins are creating a new form of “digital dollarization” that appears largely unaffected by capital controls, particularly in emerging markets.

The new study suggests governments may have less ability to curb stablecoin adoption than traditional foreign-currency bank deposits.

BIS researchers analyzed foreign-currency deposits and dollar-pegged stablecoin inflows across more than 130 economies, finding that both tend to increase during periods of macroeconomic stress. Unlike traditional bank deposits, however, stablecoin flows showed little response to capital controls or other FX restrictions. The authors said this likely occurs because “stablecoins are partly circulating outside the regulatory perimeter.”

Stablecoins could still undermine monetary sovereignty by allowing households and businesses to shift into dollars outside the banking system, particularly in emerging markets with weak currencies or limited access to reliable financial services, the study said.

Despite those risks, the researchers found little evidence that deposit dollarization weakens the transmission of monetary policy, though countries with higher foreign-currency deposits faced a somewhat greater risk of elevated inflation.

BIS said the findings suggest policymakers may need new tools to manage financial stability as stablecoins become more widely used, arguing that regulations designed for traditional banking and foreign-currency deposits may be less effective in a tokenized financial system.

Related: Japanese logistics company eyes JPYC stablecoin to pay drivers

Dollar-backed stablecoins expand in emerging economies

The findings come as use of stablecoins as a payment tool is growing in several emerging markets.

In its recent analysis of Nigeria, the International Monetary Fund (IMF) found households and small businesses are using US dollar-pegged stablecoins for cross-border payments, remittances and access to dollar-denominated assets as inflation, currency depreciation and limited access to foreign exchange drive demand.

The IMF said stablecoins have reduced the cost and time required to move money across borders while expanding access to financial services for users outside the traditional banking system. At the same time, it warned that widespread adoption of dollar-backed tokens could weaken monetary sovereignty by reducing demand for local currencies and shifting more financial activity outside conventional banking channels.

Stablecoin adoption has accelerated across Latin America as well. Bitso Business, the enterprise payments arm of crypto exchange Bitso, reported an 81% year-over-year increase in stablecoin payment volume during the first half of 2026. The company also said that Circle’s USDC (USDT) and Tether’s USDT (USDT) accounted for 40% of all crypto purchases in the region in 2025, surpassing Bitcoin for the first time.

stablecoin market capitalization has increased to about $309.7 billion, up from roughly $260 billion a year ago.

Stablecoin market cap. Source: DefiLlama

Magazine: Binance & OKX users face $1,900 fines in Vietnam, Coinbase in China? Asia Express

MEXC has opened Bittensor’s TAO staking to its reported 40 million users through validator Yuma, adding exchange-based access to rewards from one of the largest decentralized artificial intelligence networks.

Yuma announced on Tuesday that its validator infrastructure now powers TAO staking on MEXC, allowing the exchange’s customers to delegate the token without moving their holdings to a separate Bittensor-compatible wallet.

Under the integration, Yuma will operate the validator infrastructure behind the service while MEXC provides the customer-facing staking product. The companies said the arrangement is designed to increase participation in Bittensor and make its staking system easier to access through a centralized exchange.

MEXC reports serving more than 40 million users in over 170 countries and regions. CoinMarketCap describes the company as a global exchange founded in 2018, while MEXC says its platform lists more than 3,000 cryptocurrencies across spot and derivatives markets.

For TAO holders, the new service removes several steps normally required to stake directly on Bittensor. According to Taostats documentation, direct staking involves transferring TAO to a supported wallet, selecting a validator and completing the delegation on the network.

Yuma’s role extends beyond processing those delegations. Within Bittensor, validators assess the output of miners across different subnets and assign weights that influence how the protocol distributes token emissions.

Each subnet operates as a specialized market for a particular digital service. According to Bittensor, those services can include machine-learning inference, model training, computing power, storage and prediction systems.

Exchange access removes barriers to TAO staking

Bittensor uses TAO as both its incentive token and the main asset supporting its staking system. Holders can delegate TAO to validators, which use their stake to participate in the network’s consensus process and allocate capital among subnets.

Rewards depend partly on validator performance and how those validators position stake across the network. Yuma’s infrastructure will handle that process for the TAO committed through MEXC, although the announcement did not disclose an expected annual yield, lock-up period, or minimum staking amount.

According to Bittensor’s network description, independent subnets compete to produce digital commodities while validators continually assess their relative value. The protocol calls this process Yuma Consensus, a system intended to align the incentives of token holders, validators and miners.

Bittensor’s ecosystem currently contains 128 subnets, according to the company. Individual projects focus on services including AI inference, coding assistants, financial modeling and model training, with token emissions distributed according to their measured contribution to the network.

The exchange integration also gives users an alternative to native subnet staking. CoinGecko explains that direct participation typically requires investors to buy TAO on an exchange, transfer it to a compatible wallet and then use a Bittensor interface to select a validator or exchange TAO for a subnet’s Alpha token.

MEXC and Yuma did not state whether users staking through the exchange would receive exposure to individual Alpha tokens. Their announcement identified TAO staking as the available product, with Yuma providing the underlying validator connection.

TAO traded near $199 at the time of writing, according to CoinMarketCap data supplied with the announcement. The price gave Bittensor a market capitalization of about $1.91 billion, placing the token among the largest crypto assets linked to decentralized AI.

Governance concerns remain part of TAO’s market backdrop

Yuma’s partnership with MEXC follows its public criticism of Root Reborn, a proposed Bittensor governance overhaul intended to change how validators allocate capital and reduce continued selling of subnet tokens.

During TAO’s June pullback, Yuma argued that the proposal could turn validators from neutral network operators into active capital managers. The validator group warned that the model could encourage collusion, preferential treatment and frontrunning while pushing subnet developers to focus more heavily on validator relationships.

“Such a change could fundamentally alter the role of validators,” Yuma wrote in its assessment of the proposal.

Supporters of Root Reborn have presented the proposal as a possible response to pressure within Bittensor’s token structure. Critics, including Yuma, have raised concerns about concentrated governance power, strained liquidity and possible regulatory complications.

Those disagreements emerged as TAO suffered a sharp reversal in June. Crypto.news data showed that the token fell nearly 20% from its June 15 peak of about $283, reaching roughly $225 on June 19 as governance concerns, derivatives liquidations and weaker risk appetite weighed on the market.

Despite its objections to Root Reborn, Yuma has continued to support Bittensor as a validator. Its MEXC integration places the group behind a staking channel that can connect millions of exchange accounts to the network’s reward system, while the unresolved governance debate continues to shape how validators may operate in the future.

Cointelegraph is committed to providing independent, high-quality journalism across the crypto, blockchain, AI, and fintech industries.

All news, reviews, and analyses are produced with full journalistic independence and integrity. For more details on our standards and processes, please read our Editorial Policy.