Stablecoins Integrate into Major Banking Systems in Latam

In a significant development for businesses in Latin America, Circle, the leading issuer of stablecoins, has announced new integrations of USD Coin (USDC) with two of the region’s main real-time payment systems: Pix in Brazil and SPEI in Mexico.

This move aims to revolutionize cross-border transactions in the region, providing faster, cheaper, and more efficient access to digital dollars, a key asset in the growing landscape of digital finance.

International payments without barriers

Traditionally, cross-border transactions, especially those involving international transfers, have been slow and costly. Settlement times can take days, and businesses often face significant costs associated with converting local currencies to U.S. dollars. With the integration of USDC into Pix and SPEI, Circle eliminates the need for international transfers, reducing access time to foreign currency to mere minutes.

This change is crucial for companies operating in both countries, the two largest economies in Latin America. Now, businesses can convert Brazilian Reais (BRL) and Mexican Pesos (MXN) into USDC without undergoing the traditional conversion process to USD.

This innovation not only saves time but also reduces costs by offering competitive exchange rates between local currencies and the stablecoin.

The role of USDC in financial systems

USDC, a stablecoin pegged to the U.S. dollar, has gained traction globally as a reliable digital currency. Its stable value, backed by reserves of U.S. dollars or equivalent assets, makes it an attractive alternative to more volatile cryptocurrencies. Unlike Bitcoin or Ethereum, whose values fluctuate, USDC maintains a constant value of 1:1 with the U.S. dollar, making it ideal for cross-border payments, commercial transactions, and remittances.

In Latin America, a region heavily reliant on the U.S. dollar for international trade and remittances, stablecoins like USDC offer a bridge between local fiat currencies and the global financial system.

Benefits for businesses and remittances

The adoption of USDC in Latin American payment systems also has broader economic implications. For businesses operating in the region, especially those with international operations, the ability to use USDC simplifies processes such as paying suppliers, managing payroll, and receiving cross-border payments. Additionally, companies benefit from the stability of USDC, mitigating risks associated with currency fluctuations.

Remittances, particularly between the United States and Mexico, will also significantly benefit from Circle’s integration with SPEI. The U.S.-Mexico corridor is the largest remittance flow in the world, with over $63 billion sent in 2023. These flows represent up to 4% of Mexico’s GDP. Stablecoins, which offer lower fees compared to traditional remittance services (typically around 6.35% of the nominal value), can reduce costs for senders and ensure that recipients receive a larger portion of the money sent. USDC adds an additional layer of security and speed to these transactions.

Stablecoins in the banking system

Circle’s move to incorporate USDC into the national banking systems of Brazil and Mexico is just the beginning. The company has indicated plans to extend its integrations to other banking systems across Latin America.

Meanwhile, Visa has launched its Visa Tokenized Asset Platform (VTAP) to support stablecoins and tokenized deposits. Spanish bank BBVA plans to test a token on Ethereum starting in 2025, aiming to facilitate the process for banks by providing an API integration as a single access point to multiple blockchain networks.

Another example of this advancing trend is the involvement of three major Japanese banks—MUFG, SMBC, and Mizuho—in a cross-border payment system called the Pax Project, which aims to use stablecoins to achieve the G20 goals of faster, cheaper, and more transparent cross-border payments