Stablecoins are often presented as a threat to banks. In Lebanon’s remittance market, that is the wrong starting point. The banks have already lost much of that role.
Lebanon is an extreme case, but the remittance last-mile problem is global. For recipients, the value of a stablecoin depends not only on how cheaply it crosses borders, but also on how reliably and fairly it becomes spendable money at the other end.
A 2023 United Nations Development Programme report estimated that Lebanon received between $6bn and $7bn a year from 2011 to 2021, and that remittances reached 37.8% of gross domestic product in 2022. But the sharper figure concerns the channel. In 2021, according to Banque du Liban data cited by UNDP, 70% of remittances reached Lebanon through informal channels, mainly cash outside banks and licensed money-transfer operators. Another 30% moved through money-transfer operators and almost none through banks. The flows remain large – the BdL’s 2024 balance-of-payments report found workers’ remittances of $6.8bn. These estimates are imperfect, but the message is clear: stablecoins would not enter a remittance system still dominated by banks. They would enter one already organised around cash-based and non-bank transfer channels.
That changes the question. Will Lebanon’s remittance lifeline remain organised around today’s mix of licensed transfer companies and informal cash-based networks, or will part of it move into private digital-dollar platforms?
Replacing middlemen, not reliance
Remittances pay for ordinary life: food, rent, electricity, school fees and medical care. They also carry a cost. Using 2020 World Bank data, UNDP reported that the average cost of sending remittances to Lebanon was about 11%, against a global average near 6%. Even modest savings on flows of this size would matter for household budgets.
Stablecoins could reduce part of that cost, especially where users can cash out through a low-cost local channel. A sender abroad can buy a digital dollar such as USDC or USDT and send it to a wallet in Lebanon. The transfer itself may be cheap, but the remaining question is the exit: who turns the digital dollar into cash, a bill payment, a card transaction or household purchasing power, at what cost and under what rules. That is where the new gatekeepers appear.
Stablecoins do not eliminate middlemen; they change who the middlemen are. Instead of relying on a bank branch or a money-transfer counter, the user may depend on a wallet, an exchange, a cash-out partner, a card provider or a foreign issuer. These actors can shape access, fees, conversion, reliability and restrictions.
Lebanon’s grey-listing by the Financial Action Task Force makes the issue harder. Stablecoins raise real anti-money laundering concerns, especially in a country already under closer scrutiny. But remittances create a specific policy problem. FATF itself, in the same statement that lists Lebanon, cautions that remittance flows should be neither disrupted nor discouraged. A supervised digital-dollar corridor could link transaction records to verified senders, recipients and cash-out points in a way that informal cash networks and direct wallet-to-wallet transfers often do not. The policy question is whether that visibility can be gained without obstructing legitimate transfers, while applying customer checks, transfer limits, reporting duties and clear user protections.
The dependency trade-off
There is a deeper paradox. One reason Lebanese households moved into cash after 2019 was that bank deposits could be trapped, while banknotes in hand could not be remotely frozen by an issuer. A stablecoin is different. Its issuer can block transfers from a wallet. Tether says it works with more than 340 law-enforcement agencies in 65 countries and that this co-operation has led to the freezing of more than $4.4bn in assets. Under the Genius Act, issuers covered by the law must have the technical capability to comply with lawful blocking orders.
This is not an argument against issuer rules or lawful enforcement. Those are necessary if stablecoins are to operate inside the regulated financial system. The problem is dependency. A supervised local channel could make remittance use safer and more visible, and help reduce avoidable restrictions, false positives and opaque cash-out practices. But it could not determine alone whether the underlying digital dollar remains usable. Issuer policies, screening systems and foreign legal orders could still affect access. For a remittance-dependent country, that makes stablecoins useful, but not sovereign infrastructure. This is platform dollarisation: dependence not only on a foreign currency, but on foreign platforms that decide when it can be used. A digital-dollar system may solve part of Lebanon’s local access problem, but it also creates a different dependency, with limited local recourse if access is blocked abroad.
The trade-off is that local rules can improve the exit – by requiring transparent fees, reliable cash-out, customer checks, reporting and user recourse – but they cannot govern the foreign-issued token itself. Lebanon makes the wider issue especially clear. Stablecoin policy cannot stop at reserves or issuer regulation. For remittance recipients, the decisive question is who controls the final conversion into usable money.
Lebanon’s next financial gatekeeper may not be a bank. It may be the platform that controls the exit.
Mustafa Dah is Associate Professor of Finance and Chairperson of the Department of Finance and Accounting at the Lebanese American University.
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