Stablecoins: A disruption Bangladesh cannot ignore—but must carefully shape

The global financial landscape is undergoing a tectonic shift. While the hype surrounding volatile cryptocurrencies often dominates mainstream headlines, a quieter and far more profound transformation is occurring: the rise of stablecoins. For Bangladesh—an economy deeply dependent on remittances, foreign exchange stability, and banking-led financial intermediation—this is not merely a fintech trend. It represents a fundamental restructuring of how value moves across borders.

The scale of this shift is staggering. By 2025, stablecoins had already processed $28 trillion, growing at an annual rate of 133% since 2023. Chainalysis, a renowned blockchain analytics firm, projects that stablecoin volumes could reach $1.5 quadrillion by 2035.

What Exactly Are Stablecoins?

Stablecoins are a category of cryptocurrency designed to maintain a stable value, typically pegged to a fiat currency (most commonly the US dollar), a commodity such as gold, or a basket of assets. Unlike volatile assets like Bitcoin or Ethereum, stablecoins are engineered for price stability, making them suitable for everyday transactions, savings, and remittances.

By operating within increasingly structured frameworks, they are emerging as practical financial instruments that address concerns regarding price volatility and regulatory visibility. The most dominant type today is the fiat-backed stablecoin, which maintains a 1:1 reserve backing with high-quality assets such as cash, bank deposits, or short-term government securities. These reserves are held by independent custodians and are subject to regular audits. Leading examples, such as Tether (USDT) and USD Coin (USDC), function as 'digital dollars' on blockchain rails.

Unlike traditional digital money—which is simply a record in a private database—stablecoins exist on public or permissioned blockchains. This offers several structural advantages:

• Programmability: Smart contracts can be attached to money, allowing a payment to be released automatically only when specific conditions are met, such as goods reaching Chittagong port.

• 24/7 Availability: Transactions settle instantly without banking hours, weekends, or holiday delays.

• Atomic Settlement: The transfer of value and its related conditions happen simultaneously, significantly reducing counterparty risk.

Stablecoins are a new class of private-sector-issued, efficiency-driven digital payment instruments that bridge traditional finance and decentralised systems.

Why This Matters Deeply for Bangladesh

Bangladesh stands at a sensitive juncture in the evolution of global payment systems. With annual remittance inflows hovering around $30 billion—equivalent to approximately 6.57% of GDP—the country is one of the world's most remittance-dependent economies. These inflows serve as a critical lifeline and rank as the second-largest source of foreign exchange earnings after the ready-made garments sector.

Several factors make Bangladesh uniquely positioned to either benefit from or be vulnerable to stablecoins:

• Heavy reliance on migrant worker remittances from the Middle East, Europe, and North America.
• Strong dependence on the US dollar for international trade.
• High costs and delays in regulated banking channels due to strict foreign exchange controls.
• A rapidly growing freelance workforce receiving payments in foreign currencies.

Crucially, despite official restrictions, crypto and stablecoin usage continue to grow underground. Unofficial inflows of USDT and USDC are already entering the economy without regulatory scrutiny, raising concerns about shadow economies, gradual dollarisation, and reduced monetary policy effectiveness. While the National Blockchain Policy 2026 provides a foundation for sovereign permissioned infrastructure, it currently groups stablecoins with broader private crypto assets, prioritising risks over opportunities. A more balanced framework for licensing regulated private stablecoins is needed.

Bangladesh's Remittance Exposure at a Glance * Annual Inflow: ~$30 Billion (~6.57% of GDP) * Average Traditional Cost: 4–7% (vs. UN SDG target of 3%) * Potential Stablecoin Cost: ~1% * Potential Annual Savings: $1–2 Billion

Navigating the Risks

Stablecoins are not risk-free, and a responsible policy must account for several concerns:

1. Monetary Sovereignty: Heavy use of USD-pegged stablecoins could weaken control over BDT monetary policy.

2. AML/CFT Exposure: The pseudo-anonymous nature of blockchain requires robust KYC frameworks to prevent money laundering and terrorism financing.

3. Financial Stability: A sudden "run" on a stablecoin could destabilise the broader economy.

As the Financial Stability Board has noted, unregulated global stablecoins could amplify macro risks for emerging markets. However, these risks underline that adoption must be carefully designed, not broadly prohibited.

Global and Regional Approaches

Globally, regulators are integrating stablecoins into the financial system rather than banning them. Jurisdictions like the EU (MiCA), Hong Kong, Singapore, and Japan are allowing innovation while embedding control at critical points. Regulators focus on fiat on/off-ramps, ensuring that all conversions between stablecoins and traditional currency pass through regulated banks.

Regionally, two different strategies have emerged:

• India: A "control-first" approach, prioritising its CBDC (e-Rupee) while tightly restricting stablecoins.

• UAE: An "enable-with-control" approach, where stablecoins are permitted within a licensed environment.

For Bangladesh, the UAE's approach is highly significant, as a large share of remittances originates from UAE-based migrant workers where stablecoin-based transfers are becoming increasingly viable. The challenge is to ensure these flows remain within the visibility and control of the formal financial system.

The "Bangladesh Model"

Bangladesh has the opportunity to develop a tailored model. This could involve licensing qualified banks and fintech companies to issue BDT-pegged stablecoins, backed 1:1 by high-quality domestic assets. By keeping economic value denominated in Taka, the country can mitigate dollarisation pressure and maintain monetary sovereignty.

The approach could begin with a regulatory sandbox focused on remittance corridors, ensuring interoperability with the National Payment Switch Bangladesh (NPSB). Incoming USDT or USDC could be quickly converted into the local BDT stablecoin through authorised channels, capturing the speed of blockchain while keeping funds within the regulated Taka ecosystem.

A Practical Use-Case: Remittances

Consider a Bangladeshi migrant worker in the UAE. In the conventional model, costs range from 4–7%, and transfers rely on complex settlement processes between multiple banks.

With a regulated BDT-pegged stablecoin:

1. The sender converts funds into USDT/USDC and transfers them instantly to a licensed converter.
2. The converter swaps them into the official BDT stablecoin at a regulated rate.
3. The recipient receives the digital Taka instantly in their wallet to spend, transfer, or redeem into a bank account.

This process reduces total costs to approximately 1% and enables the economical transfer of even small-value remittances, improving financial inclusion for millions.

Should Bangladesh Act Now?

While Bangladesh explores its CBDC (e-Taka), it should simultaneously take a proactive approach to stablecoin experimentation, perhaps under the designation BDTC. Delaying engagement will only allow informal systems to grow unchecked.

Strategic Calculus: Reasons to Act vs. Readiness

Stablecoins represent a fundamental shift in how money moves. The question is not whether they will impact Bangladesh—that is already happening. The real question is whether Bangladesh will shape this transformation or be shaped by it. A carefully designed approach can turn this disruption into a strategic advantage for the nation.

Conclusion

Stablecoins are not just a technological innovation; they represent a fundamental shift in how money moves, how systems settle, and how control is exercised across borders. For Bangladesh, the question is not whether stablecoins will have an impact, as that transformation is already happening.

The real question is whether Bangladesh will shape this transformation or be shaped by it. A carefully designed approach—balancing innovation with control, openness with regulation, and global integration with domestic stability—can turn this disruption into a strategic advantage for one of South Asia's most dynamic and remittance-dependent economies

A Y M Mostafa is CTO and SEVP at Prime Bank

Disclaimer: The views and opinions expressed in this article are those of the authors and do not necessarily reflect the opinions and views of The Business Standard.