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

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

Compared to the lively US crypto market, Israel and Pakistan have conducted more low-key but profoundly meaningful tests 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.

Israel’s 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 lifting 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 and liquidity to the crypto industry, sparking 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 rules.

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 permit compliant crypto account openings, they build a bridge for the industry to access formal banking systems. ETFs recognize cryptocurrencies as a class of assets, 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 official issuance and real-world deployment; Pakistan still needs to cultivate licensed service providers and establish stable banking partnerships. Other regions are also advancing their layouts: Hong Kong’s new stablecoin licensing institutions await official launch; the UAE, South Korea, Japan, the UK, and the EU are each implementing different parts 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 clearer: by 2026, the focus of crypto industry deployment will increasingly center on the deep integration of digital assets with fiat currencies, banks, 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 shekel-pegged stablecoins into a market still dominated by US dollar stablecoins, raising the question: can national currencies be made programmable 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 in market hype but in 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 connecting with banks. The new regulation from the Pakistan central bank replaces the 2018 ban, allowing supervised institutions to open bank accounts for compliant virtual asset companies and their users. All banks must meet requirements for risk control, 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. The licenses took effect on the same day, marking Hong Kong’s transition from policy planning to licensed entity deployment. The subsequent step is waiting for actual business launch and market adoption.

By 2026, the global crypto infrastructure layout is becoming increasingly clear:

Source: CryptoSlate

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

Regulatory rules are becoming the new backbone of financial infrastructure

Regulatory frameworks themselves are evolving into industry 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 contingent on 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 activities.

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

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

Global regulation is no longer a unilateral national effort but a multi-region coordinated push. The biggest change in 2026 will be how regulatory rules start directly influencing 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 pooling, 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 the merchant payment segment. 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. Merchants can choose to accept fiat or digital asset settlement. K-Bank in South Korea is also testing cross-border payments with Ripple, exploring integration modes between banking systems and 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

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

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

But actual usage data is rewriting the standards. Chainalysis data shows that in 2025, the actual circulation of stablecoins in the global economy reached $28 trillion, projected to grow to $719 trillion by 2035, and in an optimistic scenario, possibly approaching $1,500 trillion. While these forecasts are model-based, they point to a clear trend: the value of stablecoins is extending 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’s global crypto adoption ranking shows India leading, followed by the US, Pakistan, Vietnam, and Brazil, covering all income levels. The key to lasting adoption lies in onboarding channels, regulatory clarity, and the maturity of financial and digital infrastructure—precisely what Pakistan’s bank 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 depreciation, dollar premiums, and overall financial stability. Simply put, as stablecoins deeply integrate into forex markets, their influence will surge, bringing new policy challenges.

Contradictions are emerging: local fiat stablecoins can maintain the on-chain financial position of their national currencies; 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 class, lowering barriers for broad asset allocation; meanwhile, the more difficult and core challenge of widespread adoption is unfolding under regulatory push: whether crypto can truly connect with local fiat, bank accounts, merchant payments, and forex markets.

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 these pilots succeed, the global crypto landscape will no longer be dominated by US-led investment cycles but will evolve into a regional financial ecosystem where each area adopts and integrates crypto assets within its own regulatory framework. If not, the US dollar and American capital markets will continue to steer the industry’s direction.

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

• 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