Moody’s Releases Cryptocurrency Report: Issues Warning

Credit rating agency Moody's announced in its report that cryptocurrency adoption in developing countries could put monetary policy sovereignty and financial resilience at risk.

The report noted that this risk increases as cryptocurrencies go beyond being just an investment tool and are now being used for savings and money transfers.

Moody's argued that the proliferation of dollar-denominated stablecoins, in particular, and the increasing use of pricing and payments in currencies other than local currencies could weaken the monetary policy transmission mechanism. This, it added, could reduce transparency and regulatory visibility, creating pressures for “cryptocurrency”—akin to unofficial dollarization.

The report also noted that cryptocurrencies provide new channels for capital flight through anonymous wallets and offshore exchanges, which could undermine exchange rate stability. Moody's noted that the heaviest adoption of crypto assets has been seen in Southeast Asia, Africa, and parts of Latin America, driven by factors such as high inflation, currency depreciation, and limited banking services.

In contrast, crypto adoption in developed economies is reportedly advancing largely due to institutional consolidation and regulatory clarity. According to the report, approximately 562 million people worldwide will be using cryptocurrencies by 2024, representing a 33% annual increase.