EL LIBERTADOR STABLECOIN

The stablecoin yield fight in D.C. is also about the future of the dollar in Latin America.

In Washington this week, Senator Mark Warner (D-VA), a senior Democrat on the Senate Banking Committee, said he is working with the Republican majority to advance legislation to establish a regulatory framework for a cryptocurrency and enterprise blockchain market to operate freely in the United States. While a similar bill passed the U.S. House of Representatives last year with broad, bipartisan support, the Senate version has been stalled over an increasingly bitter fight between the banking industry and U.S. issuers of stablecoins over whether the dollar backed tokens can offer yield or not to customers. Banks argue retail deposits will “evaporate” and credit will be curbed, while crypto companies like Coinbase insist the banks are stifling competition and consumer choice to protect their monopoly which doesn’t serve the interest of an evolving economy.

Meanwhile Latin Americans are watching the debate in Washington as cross-border payments are growing rapidly in the region despite the high cost and slow settlement times on traditional banking payment rails. It is seen as part of a wider problem of systemic friction built into all aspects of the region’s financial systems that play a role in keeping economic growth rates low and sluggish.

What is underneath?

The U.S. Congress previously adopted the GENIUS Act which legalizes and regulates the issuance of stablecoins in the U.S.. The law requires 1:1 dollar reserve backing, restricting issuances to regulated entities and applying strict anti-money laundering and sanctions compliance rules. Since its passage, dollar-backed stablecoin flows have exploded worldwide.

The yield debate in the market structure bill arose as more financial services customers are opting to use fast and easy stablecoins as a payment and settlement tool for a variety of transactions. Offering 3.5% to over 10% yield as “rewards” for holding or lending out stablecoins into credit pools is a highly attractive product a time when the average savings account interest rates in retail banking are less than 1%.

But the use case of stablecoins is the bigger attraction internationally. Global stablecoin transaction volume hit a record US$33 trillion in 2025 with more than half using the dollar-backed USDC token issued by Circle, a U.S. company listed on the New York Stock Exchange since last June.

Thanks to the GENIUS Act’s passage, Circle’s USDC quickly overtook the El Salvador-based Tether’s USDT stablecoin worldwide, and is challenging Tether’s dominance in Latin America where most transactions relate to cross-border payments. This is because Latin American customers have greater confidence in U.S. regulated, U.S. dollar-backed tokens and are migrating to USDC and its American-issued peers like PayPal’s PYUSD for retail and Ripple’s RLUSD for institutional transactions.

Dollar stablecoins are also a hedge against inflation in Latin America by trading peer-to-peer internationally at rapid speeds, outrunning deeply entrenched friction in the region’s traditional financial system. With the fixed dollar peg, users avoid the volatility that Bitcoin and some other free-floating cryptocurrencies can carry. The surging adoption of stablecoins in Latin America since the GENIUS Act’s passage in the U.S. has been dramatic, particularly in Brazil and Mexico.

And this is only the beginning, because cross-border payments have been surging in the region at the same time. The two are finding each other. In 2026, Latin America stands as a high-growth but relatively smaller slice of the global cross-border payment market. Global volumes are more than $190 trillion annually while Latin America’s slice is between 4% and 8%. But the region is also now a global leader in both growth rates in these payments and in broader digital transformation for retail and B2B financial activity.

In just the remittance space alone, Latin America has the highest growth rates in the world. Meanwhile, more than 75% of small and medium size businesses in Mexico and Brazil are expanding to international commercial partnerships. As I wrote last week, Argentina is flinging open its doors to tariff-free imported consumer goods both in shops and online, and signing new trade deals to reduce barriers to expand large and medium scale B2B and B2C commerce.

But Latin America is also one of the slowest and most expensive regions for cross-border payments over banking rails. This is the gum sticking to the shoes of every transaction. Stablecoins are a solution that more and more are turning to at a time when Latin America is also leading on rapid fintech adoption.

Nubank of Brazil is one example of how it is all coming together. It is now the largest digital bank in the world by customer count, offering banking services as well as instant and virtually cost-free peer-to-peer transfers across its global network. Since the GENIUS Act, it adopted USDC as its preferred stablecoin with a generous rewards program for holders. In its most recent quarterly earnings for 2025, Nubank reported US$783 million in net income, a 39% year-on-year increase, thanks to scale gains in Brazil, Colombia and Mexico. It is attracting younger retail customers away from traditional banks which still charge outrageous interest rates on consumer credit and fees on almost every move a customer makes.

If stablecoin issuers can offer rewards in the United States that are already driving adoption in Latin America, most believe U.S. adoption will skyrocket and increase demand for more issuances within the regulated market. Bigger volumes of reliable dollar-backed American stablecoins will mean more circulation into Latin American markets, bringing higher liquidity, lower costs, faster settlement and greater efficiencies for businesses and consumers alike.

Our take:

It’s obvious why the U.S. banks have their hair on fire about stablecoin yield. Just look at Nubank. Imagine 50 Nubanks popping up all over the U.S. as consumer confidence is falling and the cost of living keeps rising. Many Americans, particularly young people with salaried jobs who hope to start a family, would be crazy not to consider jumping ship to neobanks at least for the medium term.

Banks can turn their noses up at all things blockchain, and refuse to move with the times. But if they fail to ban stablecoin yield in the market structure bill, they will probably have little choice but to get on board eventually. Stablecoin adoption will likely take off faster than some imagined. What are the banks going to do then, refuse mortgages to young couples whose paychecks get direct deposited into a neobank account twice a month? It’s exactly the kind of myopic fail that the fast-growing enterprise blockchain industry will be just waiting — pitchforks in hand — for the banks to bumble into doing. The social media backlash writes itself, complete with populist ire from right-wing and left-wing influencers alike.

And that’s why Latin America really stands to gain from a stablecoin boom here. Their retail segment, particularly up-and-coming young professionals and entrepreneurs, are already loving them and want more. We should be giving Americans and our neighbors in the hemisphere as many as we can since every U.S.-issued stablecoin is pegged 1:1 to an actual dollar sitting in a vault guaranteeing 100% redemption no matter what. Not a euro. Not a Chinese yuan or a Bitcoin or a lump of silver. An actual U.S. dollar.

That’s the point. The more stablecoins we export to Latin America, the more the U.S. dollar retains its power in a world of rapid digital transformation. The more stablecoin adoption we achieve in the U.S., the more demand for issuance and the more liquidity they will provide to a changing financial system.

As a former bank account holder in Brazil, I can attest to the outrageous amount of value that Latin American financial institutions extract from their retail customers, like bits of flesh being ripped from one’s limbs on a monthly basis. Moreover, money is very expensive to get if you don’t already have it in abundance. Moving it is also ridiculously expensive and can take 5 to 21 days to complete its journey from point to point. Those with less money have proportionately more syphoned out of them than those with more.

When Brazil introduced the Pix digital payment system for all domestic peer-to-peer financial transactions in BRL - a kind of government-run version of Venmo - it became wildly popular. It was economically and financially liberating for Brazilians in every social class as it has universal interoperability in the Brazilian financial system. But if you ask most Brazilians, they suspect the government will find a way to tax some of those transactions and start generating passive income for itself. There is not much long-term faith there or in most Latin American countries in anything that deprives the consumer of choice and competition. U.S. stablecoins not only add a private sector layer of options and inflation hedging on transactions in Latin America, they carry liquidity and cross-border use cases. Settlement networks like Pix plus stablecoins, along with whatever new regulated innovations may come, help keep the digital transformation working for the good guys if they are all tools that anyone can use.

True, the easy, rent-seeking passive income of the old banking system is threatened by all this. But maybe it should be.