From Venezuela and Iran's Turmoil, How Stablecoins Became a "Second Monetary System"

Summary

Using the Venezuela case as a starting point, this article argues that stablecoins are repeatedly mentioned not due to speculative narratives, but because they become a financial tool that ordinary people can still "use" in environments where local currency credibility is damaged, banking systems fail, and cross-border capital flows are restricted. What stablecoins offer is not higher returns, but an alternative channel independent of the domestic financial system for payments, settlements, and temporary value storage.

Looking further, while stablecoins carry centralization and compliance risks, in the context of systemic failure, "manageable stablecoins" often remain superior to "inevitably depreciating fiat currencies." Their proliferation objectively extends the influence of the US dollar and gradually assumes some informal global clearing functions when sovereign monetary systems fail. As real-world usage accumulates, regulatory attitudes are shifting from simple prevention to rule-based management, and the payment and settlement infrastructure surrounding stablecoins is moving from narrative to operational reality.

Stablecoins are transitioning from an asset class to a form of financial infrastructure. Their growth is not driven by market sentiment but by real-world problems, validated repeatedly through continuous use. The true value of stablecoins lies not in whitepapers and stories, but in being proven time and again during moments of financial failure in the real world.

1. When National Credit Fails, What People Truly Need Isn't "Gains"

Venezuela repeatedly becomes a focal point of discussion not only due to recent sudden political conflicts but also because it has long been in a state of "repeatedly damaged national credit." This damage is reflected not only in inflation data or exchange rate fluctuations but more so in whether the currency, banking, and payment systems can still function normally.

When the system itself lacks stable expectations, financial issues descend from the "investment level" to the "survival level." For ordinary people, the practical concern is not whether to allocate a certain asset, but a series of more fundamental questions: Can wages still be safely saved? Can money sent from relatives overseas arrive smoothly? Will bank transfers suddenly be frozen? Will assets quickly become worthless due to capital controls, policy changes, or rapid currency devaluation? These questions directly impact the daily economic lives of individuals and families.

It is precisely in such environments that the meaning of "hedging" itself changes. Hedging no longer means pursuing higher returns or beating inflation, but finding a form of money that can still be used normally: the ability to preserve value, make payments, transfer funds, and move across borders often becomes more important than price volatility itself.

2. The Logic of Stablecoin Usage Under Broken National Credit

Why are stablecoins repeatedly mentioned in environments of broken credit?

When local currency credibility continues to weaken, banking system efficiency declines, or even functional failure occurs at certain stages, stablecoins often naturally enter the realm of practical choice. This is not because they are inherently cutting-edge or radical, but because they happen to sit at the intersection between the traditional financial system and real-world survival needs. At this point, stablecoins are not a better investment vehicle, but an alternative path that does not rely on the domestic banking clearing system. They allow funds to still fulfill the most basic functions: preserving value, payment and settlement, and cross-border transfer, without being entirely subject to the operational status of the local currency system and domestic financial infrastructure. In cases like Venezuela, stablecoins frequently appear because they are genuinely used in people's daily lives and, to some extent, assume roles originally meant for the local currency and banking system.

"Failed States" Are Not Exceptions, But Highly Concentrated Samples

Globally, Venezuela is not an isolated case of large-scale stablecoin adoption; Iran also constitutes a highly typical real-world sample. For a long time, Iran has faced continuous depreciation of the Rial, high inflation, and financial blockades due to international sanctions, with restricted access to foreign exchange and cross-border settlement channels, making it difficult for the banking system to effectively fulfill value preservation and fund transfer functions. Recently, as economic pressures intensified and social unrest escalated, Iran's financial and capital controls tightened further, restricting foreign exchange access and reducing the freedom of capital movement, continuously eroding public confidence in the stability and predictability of the domestic financial system.

Simultaneously, there have been instances of periodic restrictions on communication and internet services in various parts of Iran. This change, while not directly targeting the financial system, objectively amplified the inherent fragility of the financial system itself. In a reality highly dependent on online systems, bank transfers, electronic payments, account settlements, and cross-border fund allocation heavily rely on stable network connections. Once communications are disrupted, these functions often struggle to operate smoothly, significantly compressing the usability of the local currency in daily transactions, fund allocation, and value transfer. The uncertainty of whether fiat currency can be used smoothly at critical moments further weakens public trust in the traditional financial system.

Against this backdrop, dollar-pegged stablecoins represented by USDT and USDC are increasingly used for pricing goods and services, temporary income storage, and cross-border transfers. In some scenarios, they even directly replace the local currency, becoming the reference unit for daily transactions. This usage logic is not complex and carries almost no speculative color; it is a "still usable" monetary choice repeatedly validated by reality under conditions of damaged local currency credit, failing banking systems, and restricted capital flows. Cases from both Venezuela and Iran indicate that "failed states" are not exceptions but structural samples where real demand for stablecoins is highly concentrated. Their proliferation stems more from the gaps left by real-world financial systems than from narratives within the crypto market.

It Bypasses Not Regulation, But a Failing Financial System

From a Web3 perspective, the reason stablecoins repeatedly emerge is not because they bypass regulation, but because they bypass a local currency system and banking clearing system that can no longer function normally. When a country's currency continuously loses purchasing power, bank transfers are inefficient or may be frozen at any moment, what stablecoins provide is a real-world channel independent of domestic financial infrastructure.

3. Are Stablecoins Really Safe?

Before discussing the real-world value of stablecoins, one question cannot be avoided: Are stablecoins really safe? In the Web3 context, they are often criticized for not being decentralized enough, or even seen as merely moving the centralization risks of traditional finance onto the blockchain. This criticism is not unfounded. It must be acknowledged that mainstream stablecoins indeed exhibit obvious centralization characteristics, managed by specific issuers with the ability to freeze addresses and comply with regulatory scrutiny, and are not entirely untouchable in extreme situations.

But in environments like Venezuela, people face not the question of "whether centralization is ideal enough," but more direct real-world risks: the local currency may depreciate sharply in a short time, bank accounts may be frozen due to policies, foreign exchange controls, or systemic issues, and funds may not even be freely transferable. Under such premises, safety itself needs to be redefined.

It is precisely in this context that a seemingly contradictory yet extremely realistic choice emerges: a stablecoin that "may be frozen" often remains superior to a fiat currency that is "almost certain to continuously depreciate." The former, at least most of the time, remains usable—it can be used for payments, transfers, and cross-border movement—while the risk of the latter is not just volatility, but the systematic erosion of purchasing power, even losing functionality entirely at critical moments.

This is precisely the "decentralization paradox" of stablecoins. They are not perfect and do not offer absolute safety, but when cracks appear in institutions and financial systems, people often choose the tool with relatively more controllable risks and more predictable outcomes. This choice is not an ignorance of centralization risks, but a sober trade-off.

4. Viewing the "Geopolitical Function" of Stablecoins from Venezuela

The Venezuela case clearly demonstrates that when a country's monetary system experiences structural failure, stablecoins do not merely exist passively but gradually take over some functions originally belonging to sovereign currencies.

In essence, the proliferation of stablecoins is an unofficial extension of US dollar influence. It spreads not through central banks, international organizations, or formal monetary agreements, but via blockchain and crypto networks, entering regions with fragile local currency credibility with lower barriers and faster speed. Stablecoins do not create a new value anchor; they transplant existing US dollar credibility, in the form of on-chain assets, into corners inadequately covered by the traditional financial system.

For some countries, this process is not neutral. When residents spontaneously begin pricing, storing value, and settling in stablecoins, the usage space for the local currency is gradually squeezed. Even without a formal "dollarization" policy, monetary sovereignty is weakened in practice. This is not a reflection of political stance, but a result of practical choice.

But from the perspective of ordinary citizens, the significance of stablecoins is precisely the opposite. They are not a political tool but a "monetary escape channel." In environments where the banking system is restricted and capital flows are strictly controlled, stablecoins preserve for individuals the possibility of saving the fruits of their labor and completing cross-border transfers.

It is within this tension that stablecoins gradually reveal a new role: an informal global clearing layer. When sovereign monetary systems function well, they remain on the periphery; but when financial systems develop cracks or even fail, they passively take over some functions of settlement, value storage, and cross-border movement.

5. How Stablecoins Enter the Real Financial System

From "Forced Use" to "Repeated Use"

In events like Venezuela, stablecoins enter the real world not as an active choice but as a forced outcome. When extreme situations arise, people need a tool that "still works" to complete the most basic payments and value preservation. But as similar scenarios repeatedly occur at different times and in different regions, stablecoins gradually cease to be merely temporary substitutes in extreme environments and begin to be seen as a reliable financial tool. This change is also quietly influencing how regulators, financial institutions, and the entire cross-border payment system judge them.

The Shift in Regulatory Attitude: From "Whether to Allow" to "How to Regulate"

This change is particularly evident at the regulatory level. Early discussions focused more on "whether stablecoins should exist." As their real-world usage paths in cross-border payments and daily settlements become clearer, the question has shifted to: Since they are already being used and are difficult to replace in some scenarios, how can they be incorporated into a manageable, monitorable framework? This is not ideological agreement but an acknowledgment of reality. Stablecoins do not solve abstract efficiency problems; they address structural pain points like slow cross-border transfers, high costs, and opaque paths—issues that have long existed but are infinitely magnified in regions with fragile financial systems.

The Underestimated Survival and Cross-Border Attributes

Precisely because of this, the "survival attribute" and "cross-border attribute" of stablecoins have long been underestimated. Their existence does not rely on market sentiment; they are often first adopted when foreign exchange is restricted, banking channels are unstable, or even interrupted. This usage is not conspicuous but highly sticky; once a path is formed, it is difficult to be easily replaced. Meanwhile, the payment and settlement infrastructure surrounding stablecoins is also moving from concept to operation. Modules like wallets, on-chain transfers, compliant custody, and cross-border interfaces are being gradually pieced together driven by real-world demand, assuming functions originally performed by traditional clearing networks in some scenarios.

Payment Stablecoin Infrastructure: An Overlooked Main Theme

From this perspective, "payment stablecoin infrastructure" is likely one of the easily overlooked implicit main themes this year and beyond. It does not stand at the forefront of any hot narrative, yet it is almost the foundational bedrock upon which all narratives are built. Whether it's DeFi, RWA, on-chain finance, cross-border remittances, or real commercial settlements, as long as real fund flows are involved, most cannot bypass the role of stablecoins in clearing, settlement, exchange, and compliant channels. The Venezuela case has stated this plainly enough. For real users, they only care about one thing: Can this money reach me smoothly, safely, and on time? And once funds truly start flowing, it inevitably involves a whole set of invisible yet indispensable infrastructure behind the scenes: stablecoin issuance, custody, cross-chain, exchange, and compliant on/off-ramps.

The Role Shift from Asset to Infrastructure

This also determines that stablecoin payments are not an emotion-driven sector, but a problem-driven one. Its demand is forced out by reality when local currencies lose control, banking system efficiency declines, and cross-border flows are restricted. Therefore, the growth of stablecoin-related infrastructure often does not explode or make noise; it is slow but steady. Once a certain payment path is verified as "truly usable," it will be used repeatedly and gradually embedded into local fund flow habits.

From a longer time dimension, a trend is becoming clear: stablecoins are transitioning from an "asset form" to a "financial infrastructure form." They are no longer just traded or allocated; they are increasingly appearing in the most basic and rigid-demand links: payments, settlements, cross-border movement, and value storage. By the time the market truly realizes this change, it may no longer be a new direction, but a set of financial infrastructure systems already widely used and difficult to replace.