When Christopher Waller, a governor of the U.S. Federal Reserve, recently proclaimed that stablecoins are “expanding the power of the dollar” in Latin America, he did more than simply observe a market trend. He handed Washington’s official blessing to a quiet financial revolution that is already reshaping economies from Buenos Aires to Mexico City. Waller’s words, delivered at a conference in Dubrovnik, frame the meteoric rise of dollar-pegged cryptocurrencies not as a threat to monetary stability, but as a natural extension of American monetary dominance.
To anyone paying attention in Latin America, however, this is a deeply ambivalent gift. For millions of citizens fleeing hyperinflation, capital controls, and broken banking systems, stablecoins like USDT and USDC offer a lifeline. But for the region’s sovereign economies, they represent a slow, voluntary surrender of monetary policy to a foreign power. This is not adoption. This is digital dollarization by stealth.
Let us be clear about what Waller actually said. He argued that using stablecoins creates a de facto “fixed exchange rate” with the U.S. dollar, meaning that any interest rate hike by the Federal Reserve instantly tightens financial conditions for a street vendor in Caracas or a small business owner in La Paz. Far from seeing this as a problem, Waller celebrated it.
He dismissed stablecoins as “mere payment instruments” that lower costs and scare complacent banks. This is a remarkable statement from the world’s most powerful central banker. It signals that Washington no longer views crypto as a rogue industry to be suppressed, but as a strategic tool to perpetuate dollar hegemony in the 21st century. The numbers back him up.
In 2025, stablecoins overtook Bitcoin as the most purchased cryptocurrency in Latin America, accounting for 40% of all crypto acquisitions. The number of digital asset holders in the region jumped 63% to 57.7 million people, roughly one in eight adults. Tether’s USDT alone captures nearly 100% of stablecoin transaction volume in Bolivia, Peru, and Ecuador, and 98% in Colombia. This is not a fringe experiment. It is a mass migration of value into a dollar-denominated parallel financial system.
Why is this happening? The reasons are tragic and predictable
Argentina’s annual inflation hit 120% last year; Venezuela’s exceeded 300%. Remittance corridors to Central America and the Caribbean are still gouged by 5–8% fees from traditional money transfer operators. Stablecoins offer an instant, cheap alternative: send USDT from Miami to Managua in minutes at a cost of less than 1.5%. They also provide an escape hatch from local currencies that lose purchasing power by the week. For a teacher in Buenos Aires, converting her pesos to USDC on her smartphone is not a speculative bet—it is survival. Waller is right that stablecoins are useful. But usefulness and wisdom are not the same thing.
The dark side of this “dollar digital” wave is that it systematically hollows out the institutions that Latin American countries need to regain economic stability. When citizens, businesses, and even some local governments shift their deposits into stablecoins, they are draining liquidity from domestic banks. This disintermediation weakens local lenders, reduces their ability to extend credit in pesos or reais, and makes the entire financial system more dependent on private, unaccountable issuers based in Delaware or the Cayman Islands. Moreover, seigniorage—the profit a central bank earns from issuing money—evaporates.
Every time a Latin American user holds USDT instead of pesos, that user is effectively outsourcing the creation of money to Tether, a company with a checkered history of reserve transparency. The irony is painful: countries that fought for centuries to free themselves from colonial monetary systems are now voluntarily handing the keys to their payment networks to a handful of Silicon Valley and offshore entities.
The geopolitical stakes could not be higher
Waller’s endorsement coincides with the advancement of the “Clarity Act” in the U.S. Congress, a bill designed to finally regulate digital assets by clarifying the roles of the SEC and CFTC. If that law passes and creates a compliant, dollar-backed stablecoin ecosystem, the effect in Latin America will be immediate and overwhelming. The dollar will no longer circulate only as green paper bills—it will flow as code, embedded in every wallet, every remittance, every e-commerce checkout.
“I’ve always viewed stablecoins simply as a payment instrument; there’s nothing wrong or dangerous about them. They’re just bringing competition to the world of payments.” Christopher Waller.
The U.S. will have achieved something remarkable: a global reserve currency that requires no vaults, no armored trucks, and no Federal Reserve branches abroad. Just a blockchain and an internet connection.
But what does this mean for Latin American sovereignty? Critics call it “digital imperialism.” I call it a Faustian bargain. The region desperately needs stability, and stablecoins provide it at the individual level. Yet the collective cost is a permanent dependence on U.S. monetary policy. When the Fed raises rates to fight inflation in Ohio, it will simultaneously trigger a credit crunch in São Paulo’s stablecoin economy, because those digital dollars are ultimately backed by U.S. Treasury bonds.
When Washington imposes sanctions or freezes reserves—as it did with Afghanistan’s central bank—will it hesitate to blacklist a stablecoin wallet address used by a Colombian activist group? The infrastructure is already there. The precedents are chilling.
None of this means that Latin American governments should ban stablecoins
Prohibition would be as futile as trying to ban the tide. But they must stop pretending that this is a neutral technological upgrade. It is a structural transformation of their monetary systems, and it demands a strategic response. The region should accelerate the development of central bank digital currencies (CBDCs) that are interoperable with stablecoins but retain local monetary control.
It should negotiate hard with Washington for a “monetary non-aggression pact” that guarantees fair access to dollar-based payment rails without extraterritorial overreach. And it should invest in financial education that explains not just how to use stablecoins, but what they cost in terms of long-term sovereignty.