Cross-Border Payments with Stablecoins: The LatAm Case

Cross-Border Payments with Stablecoins: The Latin America Case.

Latin America received 156 billion dollars in remittances in 2023, an 80% growth compared to 2018. This massive capital flow faces significant frictions: high fees, long settlement times, and fragmented banking infrastructure. Stablecoins are emerging as a viable alternative to reduce these inefficiencies.

The United States-Mexico remittance corridor is the largest in the world, moving more than 60 billion dollars annually. Traditionally, this flow depends on networks like Western Union, MoneyGram, or bank transfers via SWIFT. The average cost to send 200 dollars to Latin America is approximately 6%, and settlement time can reach 3-5 business days.

Stablecoins offer a clear value proposition in this context. A USDC or USDT transfer can be settled in minutes, with transaction costs in the order of cents. Bitso, a Mexican exchange, already processes more than 80 billion dollars in annualized cross-border payment volume in the region, using stablecoins as settlement rails.

The typical operational model works like this: the sender in the United States converts dollars to stablecoins through a regulated platform. Stablecoins are transferred instantly to an exchange or fintech in the destination country. The recipient receives local currency in their bank account or digital wallet. The entire process can occur in less than an hour.

In Brazil, the stablecoin system moved R$ 230 billion in 2024, according to market data. Jeeves, a B2B payments fintech, recently announced a stablecoin route between Brazil and the United States for instant corporate transfers.

The benefits for companies are particularly relevant. Payments to international suppliers, which traditionally take days and cost significant percentages, can be executed in minutes with low fixed costs. For companies with operations in multiple countries in the region, stablecoins offer a unified settlement layer that simplifies treasury.

However, regulatory challenges persist. Most Latin American countries still don't have clear frameworks for stablecoins as payment instruments. In Brazil, Central Bank Resolutions 519-521 establish requirements for virtual asset service providers, but integration with the traditional payment system is still under development.

Competition with CBDCs is also on the horizon. Drex, the Brazilian Central Bank's digital currency, may eventually offer similar functionalities for cross-border payments. However, interoperability between CBDCs from different countries is still nascent, while stablecoins already operate at global scale.

For the Global South, stablecoins represent more than payment efficiency. They offer access to digital dollars for populations with volatile local currencies, protection against inflation, and financial inclusion for the unbanked.

Remittance volume using crypto assets grew 900% globally last year, with Venezuela, Argentina, Brazil, Mexico, and El Salvador leading adoption in the region. This organic growth, driven by real user need, suggests that stablecoins are finding product-market fit in the international payments use case.

In summary, Latin America is becoming a global laboratory for cross-border payments with stablecoins. The combination of high remittance volume, fragmented banking infrastructure, and digitally connected population creates ideal conditions for adoption.