While digital currencies might not yet be part of the daily lexicon of development professionals, it is crucial that we explore how the fast-evolving potential of cryptocurrencies, central bank digital currencies (CBDCs), and stablecoins might have a positive impact on human development. Here are a few critical questions we can explore in 2025.

What potential do cryptocurrencies offer?

Cryptocurrencies like Bitcoin and Ethereum have gained traction as alternative investments with a market peak of US$3.91 trillion last December. Imagine channeling even a fraction of that towards education, health, skills building, and jobs. While crypto offers low-cost, instantaneous ‘crossing-all-borders’ transactions that can reach unbanked populations and create new economic opportunities, it is also highly volatile and susceptible to illegal activity. To leverage cryptocurrencies for sustainable development calls for measures to mitigate such risks while harnessing and directing it towards development benefits. This may require a non-traditional regulatory framework that allows cryptocurrencies to contribute positively to human development without compromising financial stability. So, can development partners set up and test cryptocurrency funds with the necessary safeguards and to further the outcomes?

Financial inclusion and promoting transparency

CBDCs are digital versions of traditional currencies, backed by governments. In Asia and the Pacific, central banks in China, India, Indonesia, Thailand, Singapore, Japan and the Republic of Korea are already piloting them. By providing a secure digital alternative to cash, they can help integrate previously unbanked populations into the formal financial system, promoting economic inclusion and broader access to financial services. The traceability of blockchain-based CBDC transactions can also improve accountability and reduce corruption. So, how can UNDP support national institutions to create and strengthen the necessary operating, oversight and risk management capabilities to make this happen? 

What role can digital currencies play during crises?

Stablecoins are digital currencies tied to stable assets such as fiat currencies (government-issued money that isn’t backed by gold or silver), providing a less volatile option than traditional cryptocurrencies. They can be integrated into digital ID and payment systems, ensuring secure transactions for the unbanked and underbanked. During economic crises or conflicts, digital currencies can maintain liquidity and support vulnerable communities' livelihoods. We must generate the analytics, good practices, and lessons to determine the contexts in which we can safely use stablecoins to enhance financial resilience in recovering communities. And then can we use our recovery and stabilization portfolios as safe spaces to demonstrate their viability in practice?

Environmental and social impact 

The environmental footprint of cryptocurrency mining is significant. They consume a lot of energy and generate e-waste in the form of discarded electronic devices. Some operations are estimated to consume more energy than entire countries like Thailand or Viet Nam. And water intensity can stress already weak water tables in many parts of the region. Sustainable practices must be integrated into cryptocurrency development to minimize its ecological impact, but it’s easier said than done. What strategies and technologies can be employed to ensure that this rapid advance of digital finance does not come at the expense of environmental sustainability?

Can digital currencies close the Sustainable Development Goals financing gap?

The potential of using digital currencies in sovereign bonds and debt restructuring is still far from clear. While some countries are exploring cryptocurrencies as stores of value, their speculative nature remains a barrier to large-scale investment. Comprehensive macroeconomic analysis and mature regulatory frameworks, with knowledge-sharing across countries and corporations, are crucial to understanding how digital currencies might be woven into financing strategies to leverage more financing for the Sustainable Development Goals. This calls for an open knowledge exchange and is it a role that development partners can play?

The way forward

As digital currencies influence the world of finance, with many countries in Asia and the Pacific moving to integrate them into their resource equation, it is time to explore their potential for scaling and diversifying development finance, while improving financial efficiency and transparency. UNDP is working to expand blockchain to decentralize finance, better track funding and reduce corruption. We can expand this work by considering the potential of digital currencies to generate better human development outcomes.