Instead, the observed wallet activity supports the model’s central assumption that financial stress encourages stablecoin adoption. Its broader monetary-policy consequences remain theoretical.
Governments also retain significant points of control. Major dollar tokens such as USDT and USDC are issued by centralized companies that can freeze addresses, while regulated exchanges can be required to restrict transactions or identify customers.
Those powers shift enforcement away from a country’s banking system toward a wider network of issuers, exchanges, and blockchain addresses.
Transfers between self-custodied wallets can leave governments with fewer immediate domestic chokepoints even when issuers retain the ability to intervene at other stages.
A $300 billion market shifts where governments can't intervene The policy challenge becomes more consequential as stablecoins expand from a niche crypto product into a global dollar-payment network.
The market has already grown beyond $300 billion and is expected to reach trillions of dollars before the end of the decade.
Blockchain analysis firm Chainalysis projects an even steeper rise in activity, estimating that adjusted stablecoin transaction volume could reach $719 trillion by 2035 through organic growth alone and approach $1.5 quadrillion if broader macro and adoption trends accelerate usage.
That growth would increase the number of routes available to households seeking dollar exposure during periods of domestic financial stress, but it would not put stablecoins entirely beyond government reach.
The largest dollar tokens remain centralized. Issuers such as Circle and Tether can freeze identifiable addresses, while governments can impose requirements on regulated exchanges and other intermediaries even when a transfer initially bypasses the domestic banking system.
The problem is that enforcement becomes less uniform once tokens move beyond those points.
Federal Reserve Vice Chair for Supervision Michael Barr warned in June that US stablecoin legislation left an illicit-finance vulnerability around secondary-market transfers involving unhosted wallets.
The Bank for International Settlements has identified a similar problem for monetary policy, arguing that stablecoin dollarization can threaten monetary sovereignty while restrictions may prove less effective when bearer-like tokens circulate through self-custodied wallets.
That creates a more fragmented enforcement map. Governments can exert substantial control over banks, stablecoin issuers and regulated trading venues, but may have less visibility or immediate reach when dollar tokens move between private wallets without returning to those intermediaries.
The distinction becomes particularly important during a currency crisis, when demand for an alternative store of value and payment rail can rise just as authorities try to restrict capital movement.
The New York Fed paper suggests that this choice of financial infrastructure is becoming part of the macroeconomic constraint itself. As stablecoin networks grow, effective capital mobility increasingly depends on both the controls governments impose and the blockchain rails households can still access.
At the scale projected for the next decade, that could turn stablecoins from an alternative payment mechanism into a material constraint on how governments defend currencies during periods of financial stress.
The post The next currency crisis may be harder to contain because of stablecoins, New York Fed report shows appeared first on CryptoSlate.
https://cryptoslate.com/the-next-currency-crisis-may-be-harder-to-contain-because-of-stablecoins-new-york-fed-report-shows/
August 27, 2026 2
