Stablecoin liquidity in Latin America: concentration risk

The cryptocurrency payments ecosystem in Latin America faces a structural challenge that could redefine its near future. A new report indicates that wholesale stablecoin liquidity in the region depends on a very small group of providers, which could create significant bottlenecks if any of these players loses access to banking services.

A market concentrated in a few specialists

A detailed analysis of the Latin American crypto ecosystem reveals a clear asymmetry between the services offered to end users and the infrastructure that supports them. According to a recent study of 494 companies in the sector, only 16 of them primarily focus on providing wholesale liquidity between stablecoins and fiat currency, as well as treasury management and cross-border payment gateways.

This high concentration means that retail platforms rely heavily on the same banking entities to settle transactions in local currency, making the sector vulnerable to regulatory changes or unforeseen closures of institutional bank accounts.

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To ensure sustainable and resilient growth, the stablecoin industry in Latin America must diversify its sources of liquidity and foster stronger banking partnerships that reduce dependence on a handful of key intermediaries.

Investing in cryptoassets is not fully regulated, may not be suitable for retail investors due to high volatility and there is a risk of losing all invested amounts.

Generative artificial intelligence tools were used to create this article.