EN | From Pix to Stablecoins: Brazil’s Leadership in the Non-USD Economy | MERGE São Paulo

All right, everybody. So, moving ahead here to our last panel of the day. Um we have a real treat for you guys. Two of the the pioneers of the Brazil Fintech crypto digital asset ecosystem here um to to uh to share some wisdom with us, to enlighten us a bit. So, we've been talking a lot about stablecoins today.

You've heard that term mentioned quite a bit. And uh how this has become one of the meta narratives of digital assets in 2026. Uh most of you probably know that the majority of stablecoins in issuance and circulation are USD denominated, right? Um but over the last year in 2025, we've begun to see a lot more interesting use cases and product market fit of of local currency stablecoins, non-USD denominated stablecoins. Uh and one could make the argument convincingly that Brazil has become really the most interesting market for non-USD stablecoins in the world.

Uh and we have uh a couple of folks here who are going to be explaining this for us. So, um we have John Delaney, who is the uh CEO and co-founder of Crown. And we have Bruno Batavia from Valor Capital. And um we'll let you guys take it away. I feel like we could just continue the conversation we were having outside and that would be cool, but we should probably not do that.

That's a good idea.

Yeah, cool. So, hi everybody. Quick show of hands, who is coming from outside Brazil? Awesome. Okay, so we're going to talk a little bit about Brazil and then we're going to talk about not Brazil a little bit, but uh I want to start by introducing my friend Bruno Batavia.

It's hard to introduce this man. He's one of these guys that is very young, as you can see, but if you add up all the years of experience he has doing different things, it doesn't add up. So, I'm not sure where the years went or, you know, what's so going on. How have you managed to break time barriers? But he's been many years at the Central Bank.

I can't remember how many. 13 years. 13 years at the Brazilian Central Bank, very involved in a lot of the projects that we're going to hear him talk about. And I think the best And now he's a he's at Valor Capital, where I'm very proud to say he's an investor in Crown. And just want to start off This guy wrote, together with some other folks at Valor, a really cool paper that you can find at Brazil stack.

com about the most important innovations in Brazil. So if you want to learn about Brazil, it's a great place to start. Can you tell us a little bit about that just to kick things off? Amazing, John. Thanks.

Thanks for the introduction. Yeah, I think like Brazil did a lot, especially during the past 12 years, right? And not necessarily we disclose this to international people. So we made an extra effort and we worked with McKinsey as well to figure out what were kind of like the tailwinds, the triggers, the pillars of different types of like innovation agendas that were pushed throughout these years, right? Brazil has a unique combination of fairly sophisticated regulatory frameworks around fintech and digital assets, but also which can be leveraged, right?

By with be leveraged by digital public infrastructures. So we have payment systems, instant payment systems like PIX. I'm going to highlight some of the numbers here. We have data access for open banking, open finance, but also we pushed throughout many years a digital public infrastructure that was fully blockchain based, which connected financial institutions, payments payment institutions, crypto companies, right? To move money with tokenized deposits, interoperating with stable coins, but also enabling tokenization of capital markets and real world assets more broadly.

And Brazil, I think it's somewhat like a benchmark, right? When it comes to digital financial innovation. On the big side, which may be the flagship project, right? It was the fastest growing instant payment system in the world. It processes more than twice the global volume of PayPal but domestically, right?

Combined, it's like higher than Visa and MasterCard. So, right now have roughly more than 300 million transactions per day. Uh and uh and like and we have uh also attraction is quite well doing the past few years. So, we included more than 70 million people that didn't have like digital bank accounts. Uh and also leveraging open finance, which are the data scheme, right?

You can like think about like how we can provide uh tailor-made services. Uh you can have like better visibility on the banking history and provide better credit and the and do better credit underwriting. So, these capabilities combined with like a new layer of smart contracts, tokenizations that companies like Crown and Lock, right? With stable coins programmability, it's like an amazing opportunity to really like innovate and think about like companies that can start first in Brazil and go global. Nice.

And when I think about the Brazil stack, to me it's there's all this incredible innovation that has come to into to fruition in Brazil. And there's a background innovation. I want to test this narrative with you. That is the currency itself. And for those of you who aren't deep into Brazilian monetary history, Brazil went through a period of high inflation like many countries in in Latin America and other emerging markets in the '90s.

And they fixed it by introducing a new currency, which is the real. The way they did it is super interesting and I won't go into the details, but they basically made an indexed currency called the URV, right? And so, the R became was the real. And basically what happened is everyone transferred everyone started using this index currency as an inflation index. So prices were quoted in this thing, and then pretty soon that became the currency.

So the the V dropped off and it just became the R, the real. And then we picked the V back up for BRLV. And so it stopped so the real stopped being indexed to anything. It just became a normal currency. But I would argue that there is actually still an index, which is the interest rates in Brazil, which are very very high.

So Brazil has like almost 15% interest rates. And what that does So if you if you look at just the currency, the currency the real has depreciated almost 50% against the dollar over the last 10 years. But if you look at the currency together with the interest rate in dollar terms, the two of those together have actually appreciated in value against dollar plus dollar interest rate. And so somebody who converted their money from USD to BRL 10 years ago and had access to that really high interest rate ended up with more dollar value after 10 years. The reason why I sort of tie this together in my mind is that it's another way of the of of of fighting really dollarization, right?

It's it's about monetary sovereignty of Brazil. In this big inflation crisis in the '90s, a lot of other countries experienced that and it led to a high level of dollarization, right? And so you have countries that started issuing their own debt in dollars, like the famous Brady bonds. And Brazil never did that. And to me it seems like one of the reasons is that it has this this high interest rate.

However, it's a very blunt instrument, right? And so great, Brazil preserved its monetary sovereignty partially by having these high interest rates that allowed people to have incentives to stay in the local currency. But, you know, it means that taxpayers have to pay a lot of taxes for the government to pay its debt service obligations to all of these bondholders. And it also means that, you know, regular people might not have access to the rate, and so the, you know, this big interest rate's actually getting stuck with intermediaries. And going back to the Brazil stack, there was this period like 12 years ago when the IP license came out.

So, the big The Brazilian Central Bank is amazing, and they sort of saw this, in my view, as a problem, and created a new licensing regime, which is what led to Nubank. Uh right? And so, basically, one of the things you can do that's really cool is you can pass the interest along in a very frictionless way to holders of the money through these accounts. And that was a huge inspiration for me, actually. So, the co-founder of Nubank is a guy named Ed Wible, and he is a big part of the Crown story because he's uh one of our board members and early backers.

And for me, the idea of a stablecoin that can actually fuse together the currency and the interest rate and allow them to travel through the financial system together means that more people have access to that rate in the same way that the Brazilian government was sort of fomenting that via this big fintech fintech licensing boom. And so, I'll introduce myself. I'm John. Great to Great to see you guys. And I'm the co-founder and CEO of of Crown, which issues the largest stablecoin issued in an emerging market currency, BRLV, and that's exactly what we do.

So, we solve two fundamental problems for making the a digital real actually a piece of a financial system that does more than just money movement. It's a It's a an asset that people want to hold because one, it delivers interest. Most people don't want to hold an instrument denominated in BRL that does not deliver interest when the rates are so high. And second, it solves the security problem of like holding an asset that might not be backed by a very robust structure. And so, we have the a full bankruptcy remote reserve structure.

And that means that we're the first stablecoin in the world to give the holders of our currency, even people who buy in the secondary market, actual perfected legal claims on the assets in our reserves, which are 100% Brazilian government bonds. I think, man, this is flying by. I kind of want to go Should we switch to agentic stuff? Let's talk about agentic stuff. We were outside talking about AI agents, and I just got back from San Francisco 2 weeks ago.

And the most interesting conversations I had there were all about what people thought about agentic payments. And there's a lot of differences of opinion cuz this is happening really, really fast. But I'm going to throw out a number for you, and then I I want to get your take. But I saw the founder or co-founder of Cloudflare. So, it's Cloudflare like basically runs the internet, and he was saying that Cloudflare processes 200 million transactions per second.

And so, here we are in our blockchain world trying to like break whatever, you know, 100K transactions per second. And this guy is saying, "When I look at the way that agents interact with websites, right?" So, he gave the example of just someone shopping for an item. You might go to like five websites to see, you know, do some research and then pick the item that you're going to buy. An agent, according to their research, goes to about a thousand times more websites.

So, the number of transactions that the internet, that Cloudflare has to process, is probably like a thousand times more than the 200 million per second. And my question for you is, are any of those going to be monetized? And like if so, how are we going to do that? Like how are you thinking about that? Is that the opportunity?

Is that not the right way to think about it? Well, for sure. I think on the Val Andre side, so I oversee emerging technologies which is the kind of like the bundle of AI and blockchain. And Val has been investing quite a lot during the past 10 12 years on blockchain with more than 30 blockchain related portfolio companies. But of course, most recently we've been doing this kind of a bridge between US markets and Latin American markets.

We recently invested uh in Perplexity and 11 Labs. And of course, as a fund that's looking both across blockchain AI, we think about how this overlap is playing out. On the stablecoin side, we've been tracking of course the new protocols, the new uh standards, right? X102 and others. And I And I think agentic payments uh goes a long way.

Uh not only across basic payments, agentic commerce, agentic investment, but also when it comes to uh AI infrastructure itself, right? Think about like digital public infrastructure. How can How can agents pay each other, right? Uh How you can you pay like for an MCP, any kind of like AI service? Uh How can you pay for computing, right?

For data, for storage. So these are actually microtransactions that will be happening, right? And you think about Sorry. I just wanted to ask a follow-up question. Do you think that these you know, all these websites that might have new models based on ads will start having revenue models based on something else because you can't sell ads to an agent.

Are they Are we going to be looking at microtransactions to like read websites?

No, for sure. I think there's some kind of like issue around like disrupting the interface itself, right? So you think about all these AI companies are the new interfaces, right? And you just don't go to the websites. You just like ask ChatGPT, Claude, whatnot uh what kind of like goods you want to purchase, right?

So, you just ended up like avoiding the the whole website experience, and the agents do it on your behalf, right? So, I think it's more than fair that these actually websites that are get giving the data for the agents to transact, right? They they might be able to even like charge for like different types of like informations like the crawling part of the workflow. Uh but also like there are ways to figure out how they can like get their monetizing and how they think about uh how they are being disrupted, but also how can like create actually new business models on top of the new stack, right? And maybe just wondering maybe on your end as well, I would love like to ask, how do you see uh like a locally packed stablecoin and like this type of like local infrastructure uh compared to like USD pegged stablecoins on this agentic journey, right?

So, this is this like the kind of kind of like new banking as a service and new core banking ledger, and how like programmability and like local connectivity and rails can actually like I don't know create a new type of setup and stack. It's a super interesting to think about because in Brazil, you have this amazing kind of web two stack with PIX that, you know, can do a lot of transactions really quickly, really cheaply, and I kind of think about it like it's an intranet between the banks. And the really cool thing would be to make it more like an internet, and to do that, we actually need stablecoins to bridge that gap because PIX is kind of stuck in this closed system, which is by design, of course. And so, I think that's a really important element of it. And in, you know, I I again, I kind of go back to the Brazilian state's incentives to resist dollarization.

If everything is happening offshore in dollars, if all of these microtransactions must require, you know, me a Brazilian taxpayer and resident to sell BRL in order to participate in those ecosystems. I think that's really going to lead to a lot of dollarization in Brazil. And so, I'm very happy that we have such an innovative central bank that's getting behind the crypto ecosystem because I believe that making really good digital asset experiences denominated in local currency is a huge part of the of the story of of Brazil's future and continuing the amazing work that the central bank has done over the last 35 years. Yeah, I know. And I think we only have like 5 minutes, but there are like different layers and nuances, right?

When it comes to stablecoin solutions. And thinking about having like a domestic one like crown is quite interesting because beyond the the basic payments, right? Stablecoins become local infrastructure for settlement as well. And you have and as you have the increase of capital market this trend of capital markets going on chain, right? And you have like more different types of asset classes being represented as a token and like on chain settlement having maybe a local stablecoin which pegged with the the local currency, right?

As this kind of like core plumbing of the next gen capital markets that it's going on chain makes a lot of sense, right? And and also like in terms of like FX and cross-border payments, the plumbing side, right? As you know, when you're having like stablecoins global stablecoins interconnecting with domestic payment rails and legacy banking systems, you have a lot of like clearing and reconciliation coordination, which is not efficient, right? These these workflows are going on the back end, but if you have like a locally pegged stablecoin which an on chain instrument, right? The same as like global stablecoin issuers on the USD side, you have the capability to create real like on chain FX protocols and systems which are much more efficient and like agentic credit as well.

So, maybe you can like double click a little bit on this. Yeah, I I there's so much there, right? I think to start with the uh the FX question, as soon as anybody mentions on-chain FX in Brazil, I start to think about compliance immediately because part of the story of Brazil being very mindful about its monetary sovereignty has been like the Central Bank asking for and and this is actually those of you who are not from Brazil, you're probably going to find this surprising. The Central Bank collects user-level information about everybody who does an FX transaction. And they really don't want to give that up.

And so, I think one of the challenges for the people in this room is thinking about how we might meet them in the middle and do on-chain settlement, but still have And this is a conversation I've been having a lot with different projects in the space about, for example, maybe we can plug our license into an AMM and we have some certificate that sort of permissions uh at least allows us to give the Central Bank the ID information that it wants. It sounds very anti-DeFi, and I totally get that, but I kind of think that we might need that. But your point, once you unlock all of that, you have instant settlement, you have all of the things that we need for the you know, for for what everybody's been talking about on stage today to really happen, for money moving to feel much more instant and free and you know, it's a much better these the elusive great user experience for for crypto. Yeah, may- maybe as like one of the use cases that you might be able to highlight here is that beyond basic payments, because of the high interest rates that we have right now in Brazil, there's a major opportunity to do carry trade transactions, right? So, that's when uh international investors want to access Brazilian treasuries.

So, sovereign bonds, uh they went this like 15% yield right, which is very rare. And they have access to local credit lines, which are low interest rates. But right now, in order to do so, they have to access traditional banking, set up non-resident bank accounts, that takes like weeks, months, even, right? They don't have necessarily the best like effects baked into these accounts. But how can like a stablecoin issuer like yourself really cater to this type of use case?

So, by delivering the interest together with currency, you can do things like enable carry trade, which is basically what you're describing, right? So, roughly somebody wants to buy the Brazilian real in order to access this really high interest rate, even though they're not living in Brazil. And that might sound like a niche trade, but it's a very large trade. It ends up on average being about 10% of all Brazilian government debt that's issued is held by foreigners in these very specific account structures that are a real pain in the ass to set up. They take months to set up.

You have to appoint legal, tax, other representatives in Brazil in order to do that. And we make that experience available in one click with 24/7 execution. So, that is, you know, that's about a $150 billion market in the spot market alone. And there's a lot of that volume because there's so much friction that gets pushed out into derivatives like NDFs. So, we're seeing that is also a very major use case for a stablecoin like ours that can deliver yield to to institutional holders who are looking for it on the market.

Well, for sure. I think like Treasuries, uh tokenized Treasuries, right? We're one of the first like products that had to have like PMF, right? On the on-chain part of the world. And uh maybe emerging market bonds have like lower risk countries that actually have like large economies like Brazil, 200 million people, top eight top 10 economy.

Fairly sophisticated. Could be like a very interesting unique use case to export, for sure. Yeah, and Brazil has I guess we'll just end maybe end with this. Brazil is by most counts the fifth largest country of you know by crypto adoption, by number of users. It's a country where more people have held digital assets than have held stocks.

And this is getting this trend is accelerating generationally as more people get used to digital asset experiences. I think we heard several people talk about this like there's so much more compelling things settle instantly. And now the young kids are all used to that and they don't want to use something that's going to settle in T plus two. So, I think you know Brazil is as has been a leader in innovation for the last you know at least since I I've been in Brazil for 16 years and since I got here it's already a leader, very wonderful place to build especially in this space and great to have partners like this guy. Yeah, and just like as a final note as well on your point right like in terms of demographic right, Brazil has 30% more internet access like roughly 90% of like all the citizens are connected here.

And in terms of like hours spent on the internet daily right it's like roughly 40% more on the global average. Plus the demographics they like the average age is much younger right. So, I think this like incredible combination of like interesting demographics interesting behavior as well, connectivity interesting setup in terms of regulatory stack and digital public infrastructure fairly unique and having like a company like Crown exploring the whole setup I think is low hanging fruit is like an obvious play and that's glad that you guys are doing this. And and so a question people often ask just to I I promise I'll wrap this up now is that you know, why would you need digital assets if we have pics, if we have open finance, if we have this stuff. I think we've talked about some of the reasons but like more broadly we are at the beginning of a cycle where pieces of financial infrastructure are migrating from off-chain to on-chain.

It's going to be a long cycle and not 100% of everything is going to migrate on-chain, but it's happening and the pieces that migrate do not go back and with each generation and each new experience and each piece of infrastructure that migrates a bunch of stuff moves and for everything that's denominated in BRL, you need BRL stable coins to make all that stuff work. Thanks, man. Thanks, yeah. Thank you.