The use of cryptocurrencies in developing countries could hurt their fiscal autonomy and financial stability, according to a report titled “Banks globally are boosting cybersecurity investment to counter evolving digital threats,” published on Sep. 25 by Moody’s Investors Service.
Moody’s rating is a credit grade that assesses the risk of default for governments, companies, and financial products, and it matters because it influences borrowing costs, investor confidence, and access to global capital.
Moody’s warns of crypto fueling capital flight
The report states that the risks are most pronounced in regions where the use of crypto extends beyond investing, to include savings and remittances.
Moody’s writes that as USD-pegged stablecoins become more pervasive, they could threaten and weaken monetary transmission, as more pricing and settlement occur outside a market’s domestic currency.
“This creates ‘cryptoization’ pressures analogous to unofficial dollarization, but with greater opacity and less regulatory visibility,” Moody’s said. For the USA, this could mean devaluation of the dollar.
Cryptocurrency can also provide new ways for capital flight, through pseudonymous wallets and offshore exchange, allowing individuals to move wealth abroad discreetly, undermining exchange rate stability, according to the report.
This illustration photograph shows screens displaying the logo of the rating agency Moody’s Analytics and signs of the ratings used by rating agencies, in Toulouse on March 18, 2025.
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The report also states that cryptocurrency can help people move money out of the country in new ways, such as through pseudonymous wallets and offshore exchanges. This makes it easier for people to move money out of the country without anyone knowing, which hurts exchange rate stability.
Moody’s has also pointed out that more people in emerging markets, especially in Southeast Asia, Africa, and parts of Latin America, are now owning cryptocurrency.
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Inflation, currency pressure, and limited access to banking services are among the main reasons why people migrate to crypto. In more developed economies, on the other hand, institutional integration and clear rules are driving adoption.
Crypto ownership has expanded to an estimated 562 million people by 2024, representing a 33% increase from 2023, according to the report.
Countries are increasingly moving to crypto
Several developing nations have permitted the use of cryptocurrency for currency payments in the economy, but levels of acceptance vary among these countries.
El Salvador became the first country in the world to accept Bitcoin as legal tender in 2021. Rather than an established form of payment or exchange, businesses based in El Salvador now must accept Bitcoin in addition to their current currency, the U.S. dollar. Additionally, the Central African Republic designated Bitcoin as a legal currency.
In Venezuela, where hyperinflation has eroded confidence in the bolivar, several businesses accept other stablecoins as payment for everyday goods and services, particularly USDT pegs or equivalent currencies, as per data. In some instances, local employers have informed workers that workfare must be paid in cryptocurrency.
