The key to cryptocurrency adoption in 2026: not in the United States but in emerging markets, Israel and Pakistan have already started to show results

Digital assets are shifting from simple investment tools to being deeply integrated with domestic financial infrastructure. Countries are testing cryptocurrencies’ real-world application in payments, settlements, and banking systems through regulation and technological experimentation.

Compared to the lively US crypto market, Israel and Pakistan have conducted a more low-key yet profoundly meaningful test this month. The critical industry shift in 2026 may very well be happening where digital assets are deeply integrated with local currencies, banking systems, and financial infrastructure.

Israeli crypto company Bits of Gold announced that after two years of pilot testing, the Israel Securities Authority has approved the issuance and circulation of a stablecoin pegged to the shekel, BILS. Just days ago, Pakistan’s central bank issued Circular No. 10 of 2026, officially repealing the virtual currency ban that has been in place since 2018.

Pakistan’s new regulation explicitly states: under a compliant regulatory framework, licensed virtual asset service providers (VASPs) and approved operators can open bank accounts.

These two initiatives are on a different level from the US’s hype around spot ETFs, but they point to the underlying logic that will determine the future of the crypto industry: whether cryptocurrencies can transcend their role as mere investment tools and truly integrate into mainstream financial infrastructure.

The US has brought regulatory legitimacy, liquidity, and sparked a contest over digital dollar dominance. Meanwhile, other countries and regions are testing a different set of foundational capabilities: whether crypto can seamlessly connect with local fiat currencies, bank accounts, merchant payments and settlements, and establish practical, enforceable market regulation.

Perhaps we need to redefine the criteria for global crypto adoption. Bitcoin ETFs merely provide investors with an additional asset allocation channel, while compliant local fiat stablecoins enable users to hold their national currency directly on the blockchain.

When central banks allow compliant crypto institutions to open accounts, they build a bridge to integrate into the formal banking system. ETFs recognize the asset class property of cryptocurrencies, but local stablecoins and bank access are the real tests of whether crypto can evolve into a usable national financial infrastructure.

Currently, all of this remains in early pilot stages. BILS still needs to complete formal issuance and real-world deployment; Pakistan must cultivate licensed service providers and establish stable banking partnerships. Other regions are also advancing their layouts: Hong Kong’s newly licensed stablecoin issuers await official launch; the UAE, South Korea, Japan, the UK, and the EU are rolling out different components of a comprehensive crypto adoption system, including payment tokens, merchant settlement, market regulation, licensing, and compliance rules.

The UAE still needs to clarify the relationship between the dirham token issuance and central bank registration. But the trend is becoming increasingly clear: by 2026, the focus of crypto’s real-world deployment will increasingly center on the deep integration of digital assets with fiat currencies, banking, merchants, and settlement systems.

Local fiat currencies and banking services

Bits of Gold stated that the approved BILS will initially be issued on Solana, with pilot partners including Fireblocks, QEDIT, Ernst & Young, and the Solana Foundation.

The policy significance lies in bringing local fiat onto the blockchain. BILS introduces the shekel into a market still dominated by US dollar stablecoins, raising the question: can national currencies be transformed into programmable versions without ceding the entire payment layer to dollar tokens?

This is a contest over monetary sovereignty. The US dollar stablecoin has become the primary settlement medium in crypto markets; once the shekel stablecoin is successfully issued and popularized, Israel can build a national currency payment channel within the same blockchain infrastructure. Its value isn’t just about market hype but depends on whether wallets, exchanges, payment providers, and regulators are willing to actively adopt and use it long-term.

Pakistan has also filled a key gap by enabling bank connectivity. The new regulation from the State Bank of Pakistan replaces the 2018 ban, allowing supervised institutions to open bank accounts for licensed virtual asset firms and their users. It also requires all banking access to meet risk management, data filing, fund monitoring, and user risk screening, strictly adhering to the national virtual asset regulatory framework.

This fundamentally changes the environment for licensed crypto firms. Bank accounts are the most basic infrastructure of the financial system, directly affecting whether compliant institutions can custody customer funds, reconcile transactions, perform due diligence, and bring transactions into regulatory oversight.

In Pakistan, where crypto adoption on-chain has long ranked among the highest globally, bank access will determine whether the industry remains in informal, untraceable circulation or moves into a traceable, regulated development phase.

Hong Kong is also following a licensing-first, then deployment approach. On April 10, the HKMA issued stablecoin issuance licenses to two institutions: Anto Financial and HSBC Hong Kong, with licenses taking effect the same day. This marks Hong Kong’s transition from policy planning to licensed entity deployment, though subsequent steps depend on actual business launch and market adoption.

By 2026, the global crypto infrastructure layout is becoming clearer:

Source: CryptoSlate

Brazil, Singapore, Thailand, and the Philippines are also advancing crypto compliance, from virtual asset licenses and stablecoin regulation to tokenized clearing, cross-border tourism payments, and banking custody services.

Regulatory rules are becoming the new financial infrastructure

Regulatory frameworks themselves are evolving into industry’s foundational infrastructure.

Japan’s Financial Services Agency plans to upgrade crypto asset regulation from the Payment Services Act to the Financial Instruments and Exchange Act, strengthening disclosure, institutional risk control, market manipulation oversight, insider trading restrictions, regulatory authority, and user protection mechanisms. This means crypto assets will be incorporated into a strict financial regulatory system, with access qualifications tied to compliance, ongoing supervision, and accountability.

This also confirms that regulation design itself is a form of underlying infrastructure. Markets rely on laws to define access rights, asset custody qualifications, marketing boundaries, and legal responsibilities for trading behaviors.

The UK is steadily building its regulatory system. From September 30, 2026, to February 28, 2027, new crypto license applications will open; the new rules will officially take effect on October 25, 2027. This will simultaneously advance licensing, ongoing supervision, consumer rights, asset custody, prudent operation, and market manipulation rules.

The EU’s MiCA regulation has been fully implemented, establishing a unified crypto rule system covering transparency, mandatory disclosures, institutional access, daily oversight, consumer protection, market fairness, and financial stability.

Global regulation is no longer a single-country activity but a multi-region coordinated effort. The biggest change in 2026 will be that regulatory rules start directly determining whether crypto products can enter mainstream financial channels.

The UAE has introduced a payment token regulatory framework, with the central bank publishing a list of licensed institutions; several financial institutions have also been approved to issue dirham stablecoins (DDSC) for institutional payments, settlement, liquidity management, and cross-border trade settlement. Currently, these are limited to institutional scenarios; large-scale retail adoption remains to be tested.

South Korea has also completed merchant payment segments. In March, Crypto.com partnered with KG Inicis to connect crypto payments to a vast merchant network, serving foreign tourists and local e-commerce users, with merchants able to choose to settle in fiat or digital assets. K-Bank in South Korea is also testing cross-border payments with Ripple, exploring how banking systems can integrate with crypto payment channels. The core value of these layouts is extending crypto applications from investment to real-world scenarios like cashier settlement, cross-border remittances, and daily consumption.

Deployment is the ultimate test

Source: CryptoSlate

The US-centered narrative remains dominant, given its large scale. As of April 29, the total crypto market cap is close to $2.59 trillion, with Bitcoin’s market cap around $1.56 trillion. US dollar stablecoins still dominate liquidity, with USDT’s 24-hour trading volume about $111.5 billion and USDC about $47.8 billion.

The massive scale ensures US policies and the dollar settlement system remain the global focus. The stability of the CLARITY Act-backed stablecoin game is fundamentally about competing for economic dominance over digital dollars. Dollar liquidity remains the core pillar of global crypto infrastructure, irreplaceable.

But actual usage data is rewriting the standards of evaluation. Chainalysis data shows that in 2025, the actual circulation of stablecoins in the real economy reached $28 trillion, projected to grow to $719 trillion by 2035, and in an optimistic scenario, possibly approaching $1,500 trillion. While these are model-based forecasts, they point to a clear trend: the value of stablecoins has extended from trading margins to core scenarios like payment infrastructure, corporate treasury pools, and cross-border clearing.

Emerging markets are at the center of this transformation. Chainalysis’ global crypto adoption ranking shows India leading, followed by the US, Pakistan, Vietnam, and Brazil, covering all income levels. The key to sustained adoption lies in fiat on-ramps, regulatory clarity, and the maturity of financial and digital infrastructure—precisely what Pakistan’s banking access and Israel’s local stablecoins are testing.

The International Monetary Fund also warns of risks: cross-border stablecoin flows could impact exchange rates, cause currency devaluation, dollar premiums, and overall financial stability. Simply put, as stablecoins become deeply integrated into forex markets, their influence will surge, bringing new policy challenges.

Contradictions are emerging: local fiat stablecoins can maintain the national currency’s on-chain financial position; bank access will bring crypto firms into the regulatory fold; merchant payments will push crypto beyond investment into daily settlement. But each new channel also raises higher demands for reserve management, redemption mechanisms, AML, market manipulation, and exchange rate risk controls.

The current landscape is already clearly divided. US ETFs and Wall Street’s entry have turned crypto into a financial investment asset, lowering the barrier for broad asset allocation; but the more challenging, core test of adoption—whether crypto can truly connect with local fiat, bank accounts, merchant payments, and forex markets—is still unfolding under regulatory push across regions.

All remains in early stages. BILS awaits official issuance and user deployment; Pakistan waits for licensed institutions to fully connect with banks; Hong Kong’s new licensees await operational launch; Japan, UK, and EU await regulatory rules tested under extreme market conditions; the UAE needs to refine issuance and registration rules; South Korea needs merchant payment volumes to reach real transaction scales.

If all these pilots succeed, the global crypto landscape will no longer be dominated by US investment products but will evolve into a regional financial ecosystem where local regulators, markets, and assets are integrated. If not, the US dollar and American capital markets will continue to lead the industry’s direction.

The next real contest will not be market hype but actual usage and deployment.

• This article is reprinted with permission from: 《Foresight News》
• Original title: 《Israel and Pakistan show crypto’s next growth phase is likely to be outside the US》
• Original author: Liam ‘Akiba’ Wright, CryptoSlate
• Translation: Chopper, Foresight News