3.3 For Policymakers
What you'll learn: Three immediate realities that demand policy attention: accelerating capital flight, infrastructure-free financial inclusion, and geopolitical payment neutrality.
Beyond the systemic risks and monetary sovereignty concerns examined in previous sections, three realities demand immediate attention from policymakers. These aren't theoretical challenges for future administrations. They're current dynamics reshaping economies while regulatory frameworks lag behind. Policy decisions today will shape whether nations can effectively capture value.
The Talent and Capital Flight Accelerator
Traditional capital and talent flight required physical movement like cash smuggling, offshore accounts, visa applications, or family relocations. These frictions gave policymakers response time. Stablecoins reduce frictions significantly, but don't eliminate all barriers.
A software developer in Lagos can now earn from San Francisco companies while living in Nigeria [1]. They receive USDC payments directly, bypassing local banking entirely. They're not emigrating; they're economically emigrating while physically staying. Nigeria keeps the person but loses the economic integration. No income tax from foreign earnings. No foreign exchange flowing through central bank reserves. No multiplier effects from formal financial system participation.
The scale surprises those still thinking in traditional terms. Bitwage processed $100 million in Argentine salary payments in 2024, with 70% of customers receiving wages in stablecoins, making Argentina responsible for 48% of global enterprise crypto payments on the platform [2]. These programmers, designers, and consultants earn legally from global clients, choosing payment rails that often operate outside traditional banking systems.
Capital flight accelerates similarly. When investors can access global DeFi yields from anywhere, local interest rate policy loses effectiveness [3]. Why accept 2% from local banks when Aave offers 5% on USDC? Why buy government bonds yielding 4% when tokenized U.S. Treasuries yield 5% with better liquidity? The capital doesn't physically leave, but it economically exits the local system.
India discovered this dynamic when attempting to restrict cryptocurrency [4]. Engineers didn't stop working for DAOs or earning in stablecoins. They simply became more sophisticated at obscuring activity. The talent India spent decades educating and millions supporting now contributes to protocols that don't benefit India's economy. The restriction didn't stop participation; it drove it underground, making taxation and regulation significantly more difficult.
Singapore took the opposite approach, creating clear frameworks for stablecoin operations [5]. Result: over $20 billion in stablecoin-related economic activity now flows through Singapore entities. Global companies establish Singapore subsidiaries specifically for stablecoin treasury operations. The talent and capital that fled other jurisdictions concentrated where rules were clear. Singapore didn't just avoid loss; they captured gains from others' restrictions.
While talent and capital mobility offers opportunities, policymakers rightly worry about tax evasion and money laundering. The question isn't whether to have concerns, but whether restrictive approaches address them effectively compared to regulatory frameworks that maintain oversight.
The choice facing policymakers isn't whether to allow this parallel economy. This parallel economy already operates at scale. The choice is whether to integrate it productively or watch it operate entirely outside national frameworks. Continued regulatory uncertainty drives activity offshore, creating habits and infrastructure that become harder to recapture.
Financial Inclusion Without Infrastructure Costs
Traditional financial inclusion required massive infrastructure investment. Bank branches cost millions to build and operate. ATM networks require constant maintenance and cash management. Payment systems need decades of development and integration. For developing nations, achieving financial inclusion through traditional means would cost hundreds of billions and take generations.
Stablecoins deliver financial services through existing smartphones and internet connections. No branches needed. No ATMs required. No proprietary payment rails to build. The infrastructure already exists; it just needs enabling regulation rather than restrictive oversight.
Kenya proved this model with M-Pesa, reaching 80% financial inclusion through mobile phones rather than banks [6]. But M-Pesa required building proprietary infrastructure and works only within Kenya. Stablecoins operate globally on existing blockchain networks. A farmer in rural Tanzania can access the same financial services as someone in London, using the same smartphone and internet connection they already have for WhatsApp.
Traditional banking infrastructure for Nigeria's unbanked: $15 billion [7]. Stablecoin enablement through regulation and digital literacy: $100 million. This 150x difference accelerates inclusion from decades to years.
The 150x Cost Difference in Financial Inclusion
Traditional Banking Infrastructure
$15 billion for branches, ATMs, payment systems
20-30 years
~$150 per unbanked person
Stablecoin Enablement
$100 million for regulation, education, connectivity
2-3 years
~$1 per person
Comparison
150x more expensive
10x longer
Becomes obsolete before completion
Brazil demonstrates the hybrid approach. While building Pix for domestic instant payments, they're simultaneously exploring stablecoin frameworks for international connectivity. Rather than choosing between traditional and blockchain infrastructure, they leverage both strategically.
The leapfrogging opportunity benefit most smaller nations. Estonia, with 1.3 million people, cannot justify building extensive financial infrastructure [8]. But they can enable stablecoin usage and instantly connect to global financial networks. The same strategy works for island nations, landlocked countries, and post-conflict states where traditional infrastructure was destroyed.
Consider the alternative scenarios. Path one: spend billions on traditional infrastructure that takes decades to build and becomes obsolete as finance digitizes. Path two: enable stablecoin usage and achieve broader financial inclusion faster and cheaper than ever possible before. The cost-benefit analysis favors digital enablement, yet many policymakers remain locked in twentieth-century thinking about financial infrastructure.
The social benefits compound. When rural populations access digital financial services, education opportunities expand, healthcare payments become possible, and small businesses can participate in global commerce. The economic multiplier effects from financial inclusion are well documented. Stablecoins simply achieve them faster and cheaper than traditional methods.
The Geopolitical Neutrality Option
For seventy years, countries faced binary choices in international finance: align with the dollar system or accept isolation. The dollar's dominance meant accepting U.S. policy preferences, sanctions regimes, and surveillance capabilities. Alternative systems like the yuan meant accepting Chinese influence. The euro came with European Union oversight. Most choices involved trade-offs between access and sovereignty.
Stablecoins offer an unexpected third path: neutral, programmable money that doesn't require political alignment. While major stablecoins currently track the dollar, the underlying technology enables any asset backing. Countries can create trade relationships using stablecoins without entering traditional banking agreements that come with political strings.
International Finance: Pick Your Dependencies
Dollar System (SWIFT)
Global acceptance, deep liquidity
Accept U.S. policy preferences, sanctions compliance
Surveillance, potential exclusion, political alignment
Yuan System
Access to China trade
Accept Chinese standards, technology
Data sovereignty loss, political influence
Euro System
EU market access
EU regulatory compliance
Limited global reach, complex requirements
Stablecoin Rails
Neutral protocols, 24/7 operation
Technical infrastructure only
Regulatory uncertainty (for now)
Countries Already Choosing:
Turkey: $10B+ in USDT trade to maintain relationships despite sanctions pressure
Bahamas: Sand Dollar CBDC + stablecoin enablement = dual options
ASEAN: Regional frameworks maintaining independence from all three powers
Turkey illustrates this dynamic [9]. Caught between U.S. sanctions pressure and Russian trade relationships, Turkish businesses increasingly use USDT for international trade. Not because they're evading sanctions, but because stablecoin rails operate independently of SWIFT messaging that could be monitored or blocked. They maintain economic relationships without deepening political dependencies.
Small nations benefit most from this optionality. The Bahamas cannot influence dollar policy but depends entirely on dollar stability. By enabling stablecoin usage alongside their Sand Dollar CBDC, they maintain dollar benefits while building alternative capabilities. If future geopolitical shifts affect dollar access, they have operational alternatives already functioning.
This neutrality extends beyond currencies to technology standards. Unlike SWIFT, which the U.S. and EU can weaponize, blockchain protocols operate neutrally. Unlike Chinese digital payment systems that require accepting Chinese technology standards, open-source stablecoin protocols allow countries to maintain technological sovereignty while accessing global networks.
ASEAN countries are exploring this balance collectively [10]. Rather than individual nations choosing between dollar, yuan, or euro systems, they're developing regional stablecoin frameworks that interconnect while maintaining independence. The technology enables collaboration without subordination, economic integration without political capitulation.
Strategic advantages grow as countries with stablecoin capabilities maintain options for tomorrow's geopolitical shifts. Those that reject or delay adoption lock themselves into traditional dependencies that become harder to escape. The choice isn't about rejecting existing systems but about building alternatives before crisis makes them necessary.
For sanctions policy, stablecoin trading reduces traditional financial coercion effectiveness. Smart policymakers recognize that financial coercion requires different tools as the monopoly power of traditional rails ends.
The Public Markets Gateway
October 2025 marked a regulatory precedent when SUI Group Holdings (NASDAQ: SUIG) became the first publicly traded company to partner in stablecoin revenue sharing [12]. The structure involves Ethena Labs issuing suiUSDe and USDi stablecoins, the Sui Foundation providing blockchain infrastructure, and SUI Group participating as a digital asset treasury company. Net revenue from stablecoin reserves flows to both SUI Group and the Sui Foundation, who then use those proceeds to purchase SUI tokens on open markets. Public equity investors now hold shares in a company whose business model depends on stablecoin revenue converted into volatile token purchases.
This creates accountability questions with no existing framework. If suiUSDe loses its peg, which party bears responsibility to public shareholders? Ethena controls the stability mechanism, the Sui Foundation maintains blockchain infrastructure, and SUI Group provides capital but operates neither component directly. Traditional securities regulators oversee the public company, stablecoin regulators (where frameworks exist) oversee asset issuance, and blockchain governance operates separately. No single regulator has clear authority over the complete value chain from stablecoin reserves to token buybacks appearing on public company balance sheets.
The token buyback mechanism intensifies the complexity. Public shareholders face exposure to three distinct risk factors: stablecoin operational risk (can Ethena maintain the peg?), blockchain performance risk (does Sui network continue functioning?), and token price risk (will SUI maintain value?). Index funds tracking the Nasdaq automatically gain this exposure without active crypto allocation decisions. Traditional financial regulation lacks precedent for public companies systematically converting stablecoin revenue into token purchases.
The competitive implications extend globally. SUI Group's structure demonstrates that public markets can provide capital to stablecoin infrastructure through revenue-sharing partnerships rather than direct issuance. Malta, Singapore, and Dubai are already positioned as crypto-friendly listing venues. If public companies can participate in stablecoin economics while listed in these jurisdictions, capital formation accelerates without traditional regulatory requirements that might apply to direct stablecoin issuers.
For smaller nations, this offers unexpected advantages. Countries cannot easily attract major stablecoin issuers like Circle or Tether to establish primary operations, but they can enable public companies to list locally while participating in stablecoin partnerships. Estonia's e-Residency program, the Bahamas' crypto-friendly regulations, or Malta's blockchain frameworks could attract digital asset treasury companies. Tax revenue and financial sector growth become possible without building complete stablecoin regulatory frameworks.
The U.S. faces particular urgency given its dominant public equity markets. SUI Group listed on Nasdaq before launching stablecoin partnerships, but future companies might choose overseas listings if U.S. regulatory ambiguity persists. Jurisdictions that define how securities law applies to companies earning stablecoin revenue will attract these hybrid structures. Those that maintain ambiguity will watch companies list elsewhere, losing both tax revenue and influence over this developing intersection between traditional finance and digital assets. Early regulatory clarity creates first-mover advantages that disappear once global frameworks harmonize.
The Window Is Closing
These three dynamics, talent and capital mobility, infrastructure leapfrogging, and geopolitical optionality, are reshaping global economics while most policymakers debate whether stablecoins should exist. Stablecoins already exist and people use them. Policymakers must decide whether to shape their development or watch from the sidelines.
First-mover jurisdictions are already capturing benefits. Singapore attracts talent and capital through clear frameworks. The EU sets global standards through comprehensive regulation. Small nations achieve financial inclusion through enabling approaches. Meanwhile, countries that delay face brain drain, capital flight, and reduced economic sovereignty.
The decisions made in the next 12 to 24 months will determine economic positioning for decades. Will your nation be where innovation happens or where innovators leave? Will you achieve financial inclusion through twentieth-century infrastructure or twenty-first-century technology? Will you maintain economic sovereignty through options or dependencies?
The clock isn't counting down to some future decision point. Every month of delay means talent lost, capital fled, and infrastructure advantages foregone. The cost of waiting isn't just missed opportunity. It's accumulated disadvantage in an increasingly digital global economy where traditional tools of economic management lose effectiveness daily.
How to Communicate This
Open with the reality: "Citizens are already using stablecoins. The question isn't whether to allow them, but how to shape their development."
Present the trilemma: "You can: 1) Ban and watch activity go underground, 2) Ignore and lose policy tools, or 3) Regulate and capture benefits."
Use peer examples: "Singapore processed $2.4 trillion in stablecoin activity from June 2024 to June 2025, becoming the second-largest stablecoin hub globally after the United States thanks to its clear framework [11]. The EU's MiCA provides consumer protection without stifling innovation."
Quantify the stakes: "Your country has [X billion] in remittance flows. Current fees extract [Y%]. Stablecoins could save families [Z million] annually."
Example: Mexico receives $60 billion in annual remittances. At an average 6% fee, families lose $3.6 billion to intermediaries. Stablecoins could reduce fees to under 1%, saving families over $3 billion annually while increasing the amount reaching local economies.
Common objection: "This threatens monetary sovereignty" → "It's already happening. Clear frameworks let you maintain oversight and tax revenue rather than losing both."
Key Takeaways:
Digital talent and capital flight happens instantly without physical movement
Stablecoins deliver financial inclusion 150x cheaper than traditional infrastructure
Neutral payment rails provide alternatives to dollar/yuan/euro dependencies
Regulatory decisions in the next 12-24 months determine decades of economic positioning
References
[1] Stablecoin Payments in Nigeria: Powering Crypto Commerce in Africa's Largest Economy - https://www.transfi.com/blog/stablecoin-payments-in-nigeria-powering-crypto-commerce-in-africas-largest-economy
[2] 70% of Argentines get paid in stablecoins - https://www.linkedin.com/posts/aqeel-zahid-itp-5826b138_bitwage-ceo-70-of-argentines-get-paid-in-activity-7247376054439268352-XFrc/
[3] DeFi Interest Rates: Challenges, Innovations, and the Path to Stability - https://www.prestolabs.io/research/defi-interest-rates-challenges-innovations-and-the-path-to-stability
[4] Overview of India's Cryptocurrency Policy in 2024 - https://www.gate.com/learn/articles/overview-of-india-s-cryptocurrency-policy-in-2024/5729
[5] Asian regulators move to tighten grip on stablecoins as adoption grows - https://kapronasia.com/insight/blogs/blockchain-research/asian-regulators-move-to-tighten-grip-on-stablecoins-as-adoption-grows
[6] Mobile Payments go Viral: M‐PESA in Kenya - https://documents1.worldbank.org/curated/en/638851468048259219/pdf/543380WP0M1PES1BOX0349405B01PUBLIC1.pdf
[7] High cost of financial services - https://efina.org.ng/wp-content/uploads/2024/05/High-Cost-of-Financial-services.pdf
[8] Stablecoin Payments in Estonia: Web3 Startups, DAO Payroll, and Borderless Payments - https://www.transfi.com/blog/stablecoin-payments-in-estonia-web3-startups-dao-payroll-and-borderless-payments
[9] Cryptocurrency Regulations in Türkiye - https://www.sanctionscanner.com/blog/cryptocurrency-regulations-in-turkiye-1167
[10] ASIA: Asia Moves to Regulate Stablecoins Amid Growing Adoption - https://fintechnews.sg/112102/blockchain/asia-moves-to-regulate-stablecoins-amid-growing-adoption-report/
[11] Stablecoin Adoption Booms in Asia-Pacific: $2.4T Transactions, Led by Singapore and Hong Kong - https://financefeeds.com/stablecoin-adoption-booms-in-asia-pacific/
[12] Sui, SUIG, and Ethena to Launch Native suiUSDe - https://blog.sui.io/suig-ethena-suiusde-stablecoin/
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