Original title: (Paradigm invested in a Brazilian stablecoin company, but why Brazil?)
Original author: Eric, Foresight News
Recently, the Brazilian stablecoin company Crown completed a $13.5 million Series A funding round led by Paradigm, with a valuation of $90 million. The press release from The Block clearly emphasized that this is Paradigm's first investment in a Brazilian company. This funding round is also Crown's second round of financing completed within two months; in mid-October, Crown just finished a $8.1 million seed funding round led by Framework Ventures, with participation from Coinbase Ventures and Paxos.
This may not be a front-page headline, but there are two points in the news worth noting: Why Crown? And why Brazil?
Why is Crown worth investing in?
Analyzing a matter usually requires considering both internal and external factors.
In terms of external factors, I believe the investment opportunities for domestic stablecoin issuers in the U.S. have become scarce. Tether and Circle have already captured the vast majority of the market, making it necessary for investment institutions seeking greater Alpha to target external markets. Moreover, there are also not many targets that allow foreign capital to invest in companies associated with their local fiat currencies while ensuring that stablecoins can have a market domestically.
Brazil is one of the few 'treasures' in the Americas that meets most conditions, as to why, we will discuss later.
Returning to Crown, according to disclosed data, the total amount of reais (Brazilian fiat currency) stablecoin BRLV issued by Crown is only slightly over 100 million, which translates to less than 20 million U.S. dollars in value. The trading volume in the past 30 days is only 56,000, indicating that the current market for domestic currency stablecoins in Brazil is not large, let alone that Crown is currently only targeting institutional clients.
Clearly, the logic of investing in Crown is betting that the team behind it can achieve results in this market in the future.
Crown's co-founder and CEO John Delaney has served as a lawyer in the international finance sector and was also the COO of the well-known Brazilian company Xerpa, which received investment from Founders Fund. Xerpa launched the 'Earned Wage Access' platform in 2019, allowing employees to access their earned wages at any time (rather than waiting until the end of the month), helping to avoid high-interest credit. This is particularly popular in Brazil's high-interest and financially pressured environment and is seen as a tool for employee financial well-being. The company charges a small fixed fee and does not involve interest.
Co-founder and Chief Engineer Vinicius Correa was an early engineer at Brazil's digital bank Nubank. Nubank's investors can also be considered luxurious; in a total of 2 billion U.S. dollars in multiple rounds of financing, participating institutions include Sequoia Capital, Tiger Global, Goldman Sachs, Founders Fund, Tencent, and Berkshire Hathaway. Nubank went public on the New York Stock Exchange in 2021, with an IPO valuation of 41.5 billion U.S. dollars, and its market capitalization is currently nearly 80 billion U.S. dollars.
Founding partner and head of ecology Alex Gorra previously served as the managing partner of the family office Brainvest, managing 5 billion U.S. dollars in assets, and has held positions in ARX Investments, UBS, Rothschild Bank, and JPMorgan. COO Bruno 'BL' Passos previously led cross-functional teams at Hashdex.
Crown's founding team can be said to be a star team; both founders have participated in the process of taking Brazilian local companies from 0 to 1. Although the current data for BRLV does not look good, it does not hinder it from securing over 20 million U.S. dollars in funding within two months.
In addition, the Crown team stated in their blog that the launch of BRLV is essentially also due to the contributions made by USDT and USDC in purchasing government bonds. Issuing stablecoins locally in Brazil can also provide purchasing power for government bonds, thereby stabilizing the economy, which in turn further stimulates the use of stablecoins. This is a win-win situation. If U.S. dollar stablecoins merely help the U.S. 'survive,' then the real stablecoin can be said to have genuinely helped the country.
Why bet on Brazil?
In terms of the fiat currency underlying the stablecoin, there seem to be many better choices than the Brazilian real, so why choose Brazil?
You might not believe it, but this country, which the 80s and 90s generation last heard of because of football, has become one of the largest and globally leading innovation centers in Latin America, with over 1,500 fintech companies and more than 100 million users.
As a capitalist country, Brazil's banking industry has long been dominated by five major banks (Itaú, Banco do Brasil, Bradesco, Caixa, Santander), which account for over 80% of assets, much higher than in the United States (around 50%). Traditional banking services are rigid, fees are high (annual credit card interest rates often exceed 300%), and there is severe bureaucracy, leading to tens of millions of low and middle-income earners and unbanked individuals (historically reaching 55 million) being excluded from the system.
But this has also created a huge demand gap, with fintech companies like Nubank entering the market by offering no-fee credit cards, providing simple and low-cost services that quickly fill the market void.
Although the Brazilian central bank cannot change the monopoly of traditional banking, it has unexpectedly taken the initiative to promote competition and inclusivity, even becoming a classic case of global digital financial regulation. Its biggest contribution is the launch of the instant payment system Pix in 2020. Pix supports free and real-time transfers 24/7, with transaction volumes exceeding one trillion reais by 2025, covering over 90% of the population. Pix quickly replaced cash and credit cards upon launch, becoming the preferred payment method for 76% of Brazilians, significantly enhancing financial inclusion and providing low-cost infrastructure for fintech (such as payment integration of Pix, credit innovation).
I believe you often see in the news of the Web3 industry various trading platforms or Crypto payment tools integrating Pix. It is indeed not an easy task for the central bank of a capitalist country to lead the launch of a payment system capable of shaking the existing banking system, but this 'benefit to the people' direction also allows local fintech companies to have better development prospects because they can reach more users.
Because of this, new financial forms like cryptocurrency are highly accepted in Brazil. Brazil has a population of over 200 million, a smartphone penetration rate of nearly 90%, over 180 million internet users, and an average internet usage time of over 5 hours. The young, digital natives, especially Generation Z, have a strong demand for mobile finance. Last September, Circle directly started supporting the direct exchange of reais for USDC.
The popularity of U.S. dollar stablecoins in Brazil has been analyzed by many articles as being due to the instability of the Brazilian currency. However, according to my verification, even if this aspect is included, it only accounts for a small part. It now seems that if this reason holds, then investment institutions like Paradigm would not have placed such heavy bets on Brazil's local fiat currency stablecoins and fintech companies.
In fact, Brazil experienced multiple instances of hyperinflation in the 1980s and 1990s, even reaching an extreme monthly inflation rate of 80%. However, in recent years, although the volatility of the real remains non-negligible, for a country like Brazil, it has achieved decent results in stabilizing the currency value and reducing inflation. By 2025, Brazil's inflation rate is expected to hover between 4.5% and 5%, although still above the central bank's target, it is already good enough compared to neighboring Argentina.
Some Brazilian residents holding U.S. dollar stablecoins indeed do so to hedge against the depreciation of the real, especially in the context of the Federal Reserve's interest rate hikes in recent years, but actually, more is for practical purposes like foreign trade, tax avoidance, facilitating capital flow, and trading cryptocurrencies.
According to Chainalysis data, Brazil ranks fifth globally in cryptocurrency adoption, following India, the United States, Pakistan, and Vietnam. Its cryptocurrency inflow from July 2024 to July 2025 reached 318.8 billion U.S. dollars, significantly leading among Latin American countries.
According to data provided by cryptocurrency market maker Gravity Team, Brazil has begun using stablecoins as tools for investment and cross-border payments, with stablecoins currently accounting for about 70% of the indirect capital flow between local Brazilian trading platforms and international trading platforms.
At this point, some may wonder, since we already have a national-level payment tool like Pix, what is the significance of stablecoins?
One feature of the BRLV launched by Crown, which is not explicitly stated on its official website but mentioned in the press release, is that it will share government bond interest income with stablecoin holders, and in Brazil, this figure is 15%. Although it is not possible to distribute it all to holders, even half would be a very attractive yield.
In the future, BRLV can also be integrated into the Pix system. For ordinary people, even the poor may not have the motivation to exchange for stablecoins, but for those who are affluent, stablecoins not only do not affect payments but also can 'earn interest' just by holding them. In the future, seamless trading with U.S. dollar stablecoins may also be possible, even participating in DeFi. In short, various imaginations will certainly create enough demand and scenarios for stablecoins in this land.
In most countries with relatively weak national power, unable to maintain the stability of their currency for a long time and with scarce foreign exchange reserves, U.S. dollars and U.S. dollar stablecoins are a lifeline for the people, and Brazil just happens to be one of the exceptions.
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