Stablecoins are boosting U.S. dollar dominance around the world in countries that otherwise have no access to the currency, according to a new report sponsored by global payment giant Visa.

Authored by Castle Island Ventures and Brevan Howard Digital, the report outlined how stablecoins adoption is rising irrespective of crypto’s market cycles, and gaining adoption as a monetary instrument for reasons unrelated to digital asset trading and speculation.

For example, data from Visa and Allium Labs shows that stablecoin volumes reached $461 billion in August alone (adjusted to weed out inorganic activity from blockchain bots). That’s the third-highest month on record, surpassing any point from the 2021 bull market, despite crypto’s market slump over the past two quarters.

“Even though they are small still, they are extending the reach of the dollar—especially in countries where USD is scarcely available,” wrote Nic Carter, general partner at Castle Island Ventures, to Twitter on Thursday.

Stablecoins are blockchain-based currencies backed by a conventionally “stable” asset, like a government currency. They enable the cost-efficient and flexible nature of blockchain payments in a way that doesn’t expose holders to the volatility of assets like Bitcoin or Ethereum.

As the authors note, a whopping 98.97% of stablecoins in circulation are currently backed by U.S. dollars, making USD even more dominant in the stablecoin sector than other areas of foreign exchange dominance. Chief among them is Tether (USDT), which alone accounts for 69% of the $170 billion stablecoin market, according to DeFi Llama.

The report included results from a survey of 2,541 individuals across Nigeria, India, Indonesia, Turkey, and Brazil—all countries where traditional dollar banking services are limited.

The results found that 69% of crypto users surveyed had converted their local currency to stables. Carter said they believe these conversions represent net flows into dollars, rather than “a mere substitution of dollar balance sheets from one dollar instrument to another.”

Furthermore, 39% of respondents had used stables to pay for a good or service, and 39% had used stables to send money to relatives in another country. Overall, 72% said they expected to increase their use of stablecoins in the future.

“Stablecoins are preferred to USD banking due to yield, efficiency, and lower likelihood of government interference,” the report added.

Among the five countries, stablecoins were easily the most popular in Nigeria, where 75% of respondents said they had a “very favorable” opinion of the tokens.

“Crypto-dollarization events are likely to happen. we believe one such event is actively occurring in Nigeria right now, despite government hostility,” Carter wrote. “End users want digital dollar instruments, and currency substitution will happen regardless.”

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