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Stablecoins may amplify dollar demand during currency crises, Fed study finds

A New York Fed event study of 9 crisis episodes across eight countries found that wallets tied to crisis-hit countries were 1.8% more likely to receive dollar stablecoins during the week the crisis began.

Reported · Written up by our desk · Stablecoins

A New York Federal Reserve study found that dollar-pegged stablecoins were more likely to flow into crypto wallets linked to countries facing currency or banking crises, highlighting a growing challenge for central banks during stress periods.

Researchers Pablo Azar, Maryam Farboodi, and Nish Sinha studied nine episodes across eight countries between 2021 and 2025, including monetary disruptions, banking restrictions, sanctions, and devaluations affecting Argentina, Egypt, Iran, Myanmar, Nigeria, Russia, Turkey, and the United Kingdom. They linked Ethereum Name Service registrations that carry country signals, such as languages and national identifiers, with transfer histories for 19 major dollar-pegged stablecoins.

According to the paper, tagged wallets showed a higher probability of receiving stablecoins and larger receipt volumes during crisis weeks. The likelihood of receiving stablecoins rose 1.9% during the crisis week, while sending activity increased later, with wallets becoming 1.3% more likely to send stablecoins two weeks after the crisis began.

The researchers said the findings support the idea that demand for blockchain-based dollar exposure rises when confidence in domestic financial arrangements weakens. They cautioned that the dataset, about 4.5 million wallet-event observations, does not cover every resident or wallet in the countries studied, and therefore the estimates require qualification.

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