As traditional policy tools falter in the face of decentralised finance, new research from the BIS reveals a seismic shift in global money movement — and it’s being led by stablecoins and low-value Bitcoin transfers.
For decades, capital controls have served as one of the bluntest instruments in the policymaker’s toolkit—tools designed to stem financial crises, prevent currency flight and retain economic sovereignty.
But a new study from the Bank for International Settlements (BIS) suggests that when it comes to cryptoassets, those controls are increasingly toothless.
In a report published this month, the BIS documents cross-border flows of Bitcoin, Ether, and the two largest stablecoins—Tether and USD Coin—between 184 countries over seven years. What it uncovers is not just the vast scale of decentralised transactions (peaking at $2.6 trillion in 2021), but their increasing ability to evade traditional friction points, including regulation.
“Capital flow management measures appear ineffective,” the authors write. “Indeed, CFMs may even correlate with an increase in cross-border flows of some cryptoassets, hinting at circumvention.”
That’s not just a technical footnote. For payment professionals, remittance providers and compliance teams, it signals a structural realignment: global payments are now moving through rails that policymakers can no longer fully control.
The rise of stablecoin transfers
Perhaps the most telling shift uncovered in the BIS paper is not just who is using crypto—but how.
While Bitcoin and Ether remain predominantly driven by speculation, stablecoins like USDT and USDC are increasingly behaving like transactional instruments. Their flows are strongly correlated with remittance patterns, particularly from advanced economies to emerging markets, and are most pronounced where traditional remittance costs are highest.
“Higher costs of remittance payments through traditional financial intermediaries are associated with significantly larger cross-border flows in stablecoins and low-value BTC payments,” the report states.
This is no longer theoretical. Countries such as Türkiye, Russia, India and Indonesia have emerged as prominent nodes in these networks. According to the data, Türkiye alone accounted for close to 6% of global USDT flows in 2023–24.
That represents a growing challenge to traditional remittance services, which often struggle with high fees, delays, and limited coverage—and it underscores the business case for regulated, low-cost, crypto-native payment rails.
When gravity doesn’t apply
The BIS authors also use a gravity model, a framework traditionally used to predict trade and capital flows based on factors like geographic proximity, shared language, and borders. But crypto, it turns out, doesn’t obey the usual laws.
Where interbank claims and trade flows are sharply reduced by distance, crypto shows a much weaker correlation. The report finds that a 1% increase in distance reduces interbank claims by 0.6%, but reduces Bitcoin flows by less than 0.1%. Common borders and languages also have diminished explanatory power in crypto networks.
“This highlights the diminishing significance of geographical proximity in crypto flows, particularly for stablecoins,” the authors write.
For those operating in payments infrastructure, this shift matters. It implies that the traditional anchor points of financial compliance and risk assessment—location, correspondent relationships, even local language coverage—are losing relevance in a decentralised, software-mediated payment world.
Regulation lags behind usage
One of the more striking conclusions of the paper is how little influence capital flow management (CFM) policies have on crypto movement. Using a unique dataset that tracks changes in national restrictions, the BIS finds that tightening controls on outflows or inflows had no meaningful effect on crypto volumes. In some cases, the opposite was true.
This echoes earlier findings that crypto is being used to circumvent restrictions rather than launder funds. As the authors note, these flows are “motivated by evading these measures,” and the “pseudo-anonymity of the crypto network could be exploited” for this purpose.
Yet this doesn’t mean crypto flows are inherently illicit—only that current regulatory regimes are poorly adapted to borderless, programmable money. It raises questions for central banks, FATF regulators, and compliance officers: can traditional controls be retooled to function in a decentralised environment?
What it means for payment professionals
The implications of these findings go beyond compliance. They speak to what the future architecture of payments could look like:
- Stablecoins are no longer just crypto liquidity tools—they are becoming the backbone of cross-border transactions where fiat fails.
- Crypto exchanges, not banks, are emerging as primary payment intermediaries.
- Regulatory strategies need to move from entity-based oversight to network-based analysis and flow monitoring.
For payments companies, that might mean building on-chain remittance services, investing in stablecoin interoperability, or partnering with compliant crypto custodians to serve new customer segments.
It also means preparing for a future where capital controls are no longer the firewall they once were.
