Author: @BlazingKevin_, the Researcher at Movemaker
Link: https://www.techflowpost.com/article/detail_29520.html
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Latin America is undergoing a financial infrastructure revolution driven by currency failures. This article provides a panoramic analysis of the stablecoin market in the region based on macroeconomic data from 2024 to 2025, on-chain behavior analysis, and regulatory policy texts. The study finds that the Latin American market has surpassed the early passive dollarization stage and is deeply transforming towards Web3 financial infrastructure.
At a macro level, Argentina's 178% inflation rate and Brazil's $300 billion in crypto transaction volume constitute a dual foundation for stablecoins as survival and efficiency tools. At a micro level, the market is nurturing a new species—Crypto Neobank. Compared to traditional fintech giants like Nubank, Crypto Neobank utilizes zero-fee networks like Plasma supported by Tether and DeFi yields, filling the significant gap between traditional banks and pure crypto speculation. This report notes that the next alpha opportunity in the Latin American crypto market lies in how Web3 infrastructure can leverage this $15 trillion transaction volume to replicate and exceed the growth miracles of traditional fintech.
1. Macro Narrative Reconstruction
To understand the uniqueness of the Latin American market, one must abandon the 'technological innovation theory' from a North American or European perspective. In Latin America, the outbreak of stablecoins is an inevitable product of structural macroeconomic imbalances. The core driving force here is survival and efficiency, and the intervention of Web3 technology is transforming this passive survival need into an active financial upgrade.
1.1 Currency Dysfunction and the Loss of Value Storage Function
Inflation is the strongest catalyst for the dollarization process in the Latin American region. Argentina and Venezuela are typical representatives of this phenomenon.
Despite the Mile government's implementation of radical economic therapies, Argentina's annual inflation rate is still as high as 178% between 2024 and 2025, and the peso has depreciated by 51.6% against the dollar within 12 months. In this environment, stablecoins have ceased to be investment products and have become de facto units of account. On-chain data shows that the trading volume of stablecoins in Argentina accounts for as much as 61.8%, far exceeding the global average. The market's demand for stablecoins exhibits extremely high immediate price elasticity: whenever the exchange rate breaks below key psychological thresholds, the monthly stablecoin purchase volume on exchanges surges to over $10 million.
In Venezuela, as the value of the bolívar continues to evaporate, Tether has penetrated into microeconomic activities like supermarket shopping and real estate transactions. Data shows that there is a strong negative correlation between the exchange rate of the country's fiat currency and the volume of cryptocurrency received, with stablecoins providing a parallel financial system unaffected by government monetary policies.
1.2 Banking Exclusion and the Financial Vacuum of 122 Million People
In addition to combating inflation, financial exclusion is another major pain point. There are 122 million adults in Latin America (26% of the total population) without bank accounts. This massive group has been excluded from the traditional banking system due to minimum balance requirements, cumbersome compliance paperwork, and geographic isolation.
This is the soil for the rise of new banks. Nubank's success proves this logic: through a branchless, low-cost mobile banking model, Nubank has captured 122 million users in just ten years, reaching a market cap of $70 billion and covering 60% of Brazil's adult population.
However, Crypto Neobank is undergoing a secondary upgrade to this logic. While Nubank solved the accessibility issue, the accounts it offers are still primarily in local fiat and often yield savings rates that lag behind inflation. In contrast, Web3 new banks can offer dollar stablecoin accounts without needing a banking license, and through DeFi protocol integration, provide annualized yields of 8% to 10% in dollar terms, which is extremely attractive to users in inflationary economies.
1.3 The Cost Reduction and Efficiency Revolution of the Remittance Economy
Latin America is one of the largest remittance receiving regions in the world, with annual remittances exceeding $160 billion. Traditional cross-border remittances typically charge fees of 5% to 6% and take several days to settle. This means that nearly $10 billion in wealth is lost annually in the form of fees.
In the world's largest single remittance corridor between the U.S. and Mexico, Bitso has processed over $6.5 billion in remittances, accounting for 10%. Blockchain-based cross-border transfer costs can be reduced to $1 or even a few cents, with settlement times shortened from 3 to 5 days to just seconds. This hundredfold increase in efficiency constitutes a dimensionality reduction attack on the traditional financial system.
2. Market Depth and On-chain Behavior
Data from 2024 to 2025 indicates that the Latin American region has formed a unique Latin American model in cryptocurrency adoption: high-frequency, large amounts, and highly institutionalized.
2.1 Trading Volume and Growth Resilience
According to comprehensive data, from July 2022 to June 2025, the Latin American region recorded nearly $1.5 trillion in cryptocurrency transaction volume, with a year-on-year growth of 42.5%. Notably, even during global market fluctuations, the growth baseline in Latin America remains solid. By December 2024, the region's monthly transaction volume soared to a record $87.7 billion. This indicates that the growth of the Latin American market is not simply following the beta returns of the global bull market cycle, but possesses an endogenous necessity logic.
2.2 Brazil's Institutional Hegemony and Argentina's Retail Frenzy
Market structures among countries show significant differences:
Brazil is the undisputed leader in the region, receiving about $318.8 billion in crypto assets, accounting for nearly one-third of the total in the area. Astonishingly, data from the Brazilian central bank shows that about 90% of the funds flowing through cryptocurrencies in the country are done so via stablecoins. This extremely high percentage reveals the high level of institutionalization in the Brazilian market—stablecoins are mainly used for inter-business payments, cross-border settlements, and liquidity transfers, rather than retail speculation.
Argentina ranks second with a trading volume of about $91.1 billion to $93.9 billion. Unlike Brazil, Argentina's growth primarily comes from the retail end, reflecting the ordinary people's daily lifestyle of dollarizing against inflation.
2.3 Platform Preference: Dominance of Centralized Exchanges
Latin American users heavily rely on centralized exchanges. Data shows that about 68.7% of trading activity occurs on centralized exchanges, the second-highest rate globally.
This phenomenon has significant strategic implications for Web3 projects entering Latin America. Riding on existing platforms is the best strategy. Since local exchanges like Mercado Bitcoin and Bitso have compliant fiat channels and deep user trust, Crypto Neobank should not attempt to compete directly with them in fiat deposit and withdrawal services, but rather penetrate their vast user base through cooperation.
3. Asset Evolution
The Latin American market presents a pattern of coexistence between globally accepted stablecoins and locally innovative assets, and is experiencing a generational leap from asset preservation to asset appreciation.
3.1 The Dual Dominance of Tether and USDC
With its first-mover advantage and deep liquidity, Tether remains hard currency in Latin America's peer-to-peer market and informal economy. In the over-the-counter markets in Venezuela and Argentina, Tether is the absolute pricing unit. Brazilian tax data also shows that Tether accounts for about two-thirds of reported transaction volume. Its anti-censorship properties and popularity make it the preferred choice for evading capital controls.
USDC is advancing through compliant pathways. Partnerships with giants like Circle, Mercado Pago, and Bitso are making it the preferred choice for institutional settlements. A report from Bitso indicates that by the end of 2024, USDC has become the most purchased asset on the platform, accounting for 24%, surpassing Bitcoin.
3.2 The Bridging Role of Local Currency Stablecoins
From 2024 to 2025, stablecoins pegged to local currencies in Latin America will begin to emerge, aiming to address the friction between local payment systems and blockchain.
The launch of Meli Dólar by e-commerce giant Mercado Libre in Brazil is a milestone event. Through Mercado Pago, it is embedded in the daily shopping of tens of millions of users, serving as a vehicle for credit card cashback, greatly reducing the user threshold. In addition, the stablecoins issued by Num Finance, pegged to the peso and real, primarily serve cross-exchange arbitrage and enterprise-level DeFi operations, helping local businesses manage liquidity on-chain without bearing exchange rate risks.
3.3 Trend Disruption: Yield-bearing Assets and DeFi Integration
This is the next alpha opportunity for the Latin American market. Traditional banks typically offer very low interest rates on dollar accounts in Latin America. In contrast, new Web3 banks are redefining savings by integrating DeFi protocols.
Taking EtherFi as an example, as a DeFi protocol, it leverages its billions in total locked value to launch credit card products. Users can stake crypto assets to earn yields while spending with the card. This model allows users to consume through borrowing without selling assets, retaining exposure to asset appreciation while solving liquidity issues.
In high-inflation countries, synthetic dollar stablecoins like USDe offering 10% to 15% native yields are extremely attractive. Compared to the reais deposits offered by Nubank, the 10% annualized yield based on dollars represents a dimensionality reduction attack on traditional savings products.
4. Differences in National Directions
The political and economic environments in Latin American countries differ greatly, leading to completely different development paths for stablecoins.
4.1 Brazil: A Duet of Compliance and Innovation
Brazil is the most mature and compliant market in Latin America. The Brazilian central bank's digital currency project Drex faced strategic adjustments in 2025, shifting focus to the wholesale end, leaving vast retail market space for private stablecoins.
In the same year, Brazil implemented a unified cryptocurrency tax rate and clarified the foreign exchange regulatory status of stablecoins. While this increased costs, it also conferred legitimacy to the industry. The local innovation project Neobankless is a prime example of this trend. Built on Solana, it abstracts the complexity of blockchain entirely on the front end and directly integrates Brazil's national payment system PIX. Users deposit reais, which are automatically converted into USDC for interest. This 'Web2 experience, Web3 backend' model directly challenges traditional fintech user habits.
4.2 Argentina: A Liberalization Testing Ground
The virtual asset service provider registration system established by the Mile government, while increasing compliance thresholds, effectively condones the competitive position of the US dollar stablecoin. The asset regularization plan has also brought many gray market stablecoins to the surface.
Lemon Cash addresses the 'last mile' payment issue by issuing crypto debit cards. Users hold USDC to earn yields, exchanging it for pesos only at the moment of swiping. This model is highly sticky in high-inflation environments as it minimizes the time holding fiat.
4.3 Mexico and Venezuela: Polarization
Due to the financial technology law and central bank restrictions, Mexico has formed a pattern of isolation between banks and crypto companies. Companies like Bitso are thus vigorously developing business-to-business operations, using stablecoins as a bridging tool to optimize cross-border fund transfers between the U.S. and Mexico, bypassing the inefficiencies of the traditional banking system.
In Venezuela, amid the restoration of sanctions, Tether has even become a settlement tool for oil exports. Meanwhile, among the populace, Binance's peer-to-peer trading remains a lifeline for obtaining foreign exchange, with the market completely voting with its feet for private dollar stablecoins rather than the failed official oil coin.
5. From Traditional Finance to Crypto Neobank
The Latin American market is undergoing a critical turning point from traditional fintech to Crypto Neobank. This is not only a technological upgrade but also a generational leap in business models.
5.1 Valuation Gap and Alpha Opportunities
Currently, Nubank has a market capitalization of about $70 billion, and Revolut is valued at $75 billion, validating the business viability of digital banks in Latin America. In contrast, the total valuation of the entire Web3 banking sector is less than $5 billion, only 7% of Nubank's market cap.
This is a huge value gap. If Crypto Neobank can capture even 10% of Nubank's market share, leveraging a better unit economics model, its valuation could increase by 10 to 30 times.
5.2 Next Generation Infrastructure: The Zero Fees Revolution
One of the biggest obstacles to the widespread adoption of crypto payments is fuel fees. Plasma and its flagship product Plasma One have brought breakthroughs. As a blockchain officially supported by Tether, Plasma enables Tether transfers with zero fuel fees. This eliminates the biggest psychological and economic barriers for users using cryptocurrencies for payments.
The data proving that the total locked value surpasses $5 billion within 20 days of launching shows that when infrastructure directly provides bank-level services, the speed of capital inflow is astonishing. This 'infrastructure + new banking' vertical integration model may become mainstream in the future.
5.3 Dimensionality Reduction of Business Models
Crypto Neobank has three protective moats compared to traditional banks:
Settlement Speed: Reduced from 3 to 5 days with SWIFT to seconds with blockchain.
Account Currency: Upgraded from depreciating local fiat to inflation-resistant dollar stablecoins.
Source of Income: Transitioned from earning interest rate spreads to allowing users to share in the native yields of DeFi protocols.
For users in Latin America, this is not only a better experience but also a necessity for asset preservation.
6. Challenges, Strategies, and Endgame Predictions
6.1 Challenges and Breakthrough Strategies
Despite the promising outlook, events where banks close crypto enterprise accounts due to compliance fears still occur in Mexico and Colombia. Furthermore, regulatory fragmentation in Latin America is severe, and the compliance costs for cross-border operations are extremely high.
For the Latin American market, Web3 projects need to follow a specific winning script:
Brazil First: Given that Brazil accounts for 31% of Latin America's crypto transaction volume and has a well-developed payment system, it must be prioritized as the primary battleground.
Niche First: Don't try to be everyone's bank from the start. The successful path is to first capture a segmented community and then expand.
Viral Marketing: 90% of Nubank's growth comes from word of mouth. Crypto Neobank should leverage on-chain incentives to achieve low-cost viral growth on social networks like WhatsApp.
6.2 Market Forecast
Based on the above analysis, we make the following predictions regarding the development of stablecoins in the medium to short term:
Private stablecoins are replacing central bank digital currencies: Given the retreat of Brazil's Drex in the retail sector, privately issued compliant stablecoins will effectively assume the role of digital fiat currency.
Mainstreaming Yield-bearing Assets: Stablecoins that do not generate interest may face competition from yield-generating assets such as tokenized U.S. Treasuries. Latin American users will increasingly prefer to hold assets that can resist inflation and generate yields.
Market Segmentation: The market will divide into two camps: one is a highly compliant, bank-integrated whitelist market, and the other is a gradually shrinking but still existing gray peer-to-peer market.
Conclusion
The stablecoin market in Latin America is the forefront of global fintech experimentation. Here, stablecoins are not just a technological enhancement but a necessity in times of need. From the digital lifebuoy in the hands of Argentinians to the cross-border settlement tool in the hands of Brazilian financial giants, stablecoins are reshaping the financial veins of this continent.
With the implementation of the regulatory framework in 2025 and the rise of the new species of Crypto Neobank, Latin America is expected to become the first region in the world to achieve large-scale commercial implementation of stablecoins. For investors, the current opportunity window is only 12 to 18 months, and whoever can replicate Nubank's user experience on the Web3 track before 2026 will become the next hundred billion dollar giant. The race has started, and Latin America is that untapped gold mine.
