EN | Dollar Access in Latin America The Role of Stablecoins in Financial Inclusion | MERGE São Paulo

Our next panel here is about dollar access in Latin America, the role of stable coins in financial inclusion. Please welcome to the stage Alejandra Dto, global partnership digital assets and blockchain direct director at Mastercar.

Well, welcome everyone. I'm Alejandra. I'm part of the global partnerships team at Mastercard for blockchain and digital assets and I'm very excited to be sharing the stage today with some of the greatest minds for stable coins in Latin America. So we're going to have today here with me on stage Leandro Noel who's the founder of Avenia. So I'm going to ask him to come over to the stage with me.

Bruno Masteado who's director of business development for Circle in Latin America. Damon Burke, head of digital assets of Americas. Yes. Sergio Deos, senior legal manager for FinTech and Asunos Regulators in Marcado Li and Marcelo Sagumorei who's the founder of Brasa Bank. Welcome all of you.

Thank you. So, Latin America has some of the highest inflation rates, lowest banking penetration, and some of the highest adoption rates for stable coin. And I don't think that's a coincidence. So, let's unpack that. I would like to start first asking you guys in just a few words, what does your organization do and in this space and what's your specific role?

Start. Hello. Uh do you hear me well?

Yeah.

So, Avenia is uh we started by issuing BRLA. Blay is the largest stable coin the the market today for Brazilian Royale and uh on top of Blay we started by creating financial products like starting with FX and payments helping offshore companies to deploy their operations in Brazil and grow in Brazil acquire Brazilian users and uh we vision like this stable coin movement with uh as a platform shift so every financial product will be built on stable coins and uh that's what we are building form.

Hi guys, can you hear me?

Y

yeah. So I'm Bruno. Nice to meet you all. Uh good afternoon. I may be the director for Circle in Brazil.

Um we are the issuer of USDC. At least we were um publicly known as the issuer of USDC, the largest regulated stable coin um in the market. We also have Euro C and um we believe in our mission being the providing driving the exchange of value with the frictionless exchange of money. So we also have circle payments network. We are developing a lot of um tech products based on USC and ARC um our recently launched um public blockchain and so we're pretty excited to be with you all here today.

Thanks uh Damon Burke. Uh so I lead digital assets for the Americas for New is a payments provider. Uh so we compete directly with Stripe and Adyen and Checkout.com. Um and similarly we've gone heavily into uh into the digital asset space.

Um so what does that mean for us? It means that we um are providing stable coin settlement uh for our merchants. Uh that means for merchants that are uh processing in one country but they have their treasury in another. We're now using stable coins to move those funds cross border uh faster, cheaper, more secure uh more transparent um and which uh adds to uh new treasury ops. So you can now deploy capital faster for your opex if you're a company.

Instead of waiting seven days, you're getting your funds uh in in a in a day or or less. Um so super focused on you know uh issuing we issue uh stable coin cards uh as in credentials Visa Visa and Mastercards. Um we uh accept crypto as a payment method. We provide on and off ramping um and we're also providing custodial services. So super happy to be here.

I think, you know, we're all here because we understand the growth in the region is exponential and much faster than, you know, developed economies and um and that's why I'm here.

Hi guys. Uh everyone responded everyone responded in in in English, but I allow me allow allow me break the protocol. Uh yeah. So legal manager legal center manager marketplace America delivery. for diversific.

Forech stable coin. dollar. Hello everyone. Um, it's a pleasure to be here. Thank you for having me.

Uh, my name is Marcelo Sakamorei. I'm the founder and CEO of Braza Group. Uh, Braza Group is a financial services u institution that was born in in the UK back in the in 2007. In the UK, we are an electronic money institution here in Brazil. We're a bank since uh we applied for license here in 2011.

Uh we got our license here in Brazil in 2013 and we specialized in in FX in traditional FX. Uh since 2024 uh we got involved with crypto uh more specifically with stable coin because we see stable coins as another currency pair. Um we are uh we are number six in Brazil in volume of FX but we are the first uh the biggest liquidity provider uh of stable coins here in Brazil. Um our vision going forward is to be the one-stop shop for your crypto needs u more specifically uh stable coins related but also uh other services. Uh so in the near future we're going to be introducing uh uh many many things like uh uh RWAS uh accounts in in stable coins.

Uh we also issue one stable coin in Brazilian Royale uh on top of uh dealing with uh other uh other stable coins.

Thank you for that. Thank you for those introductions. And following on that thought, Marcelo, um, now that we're speaking with you, what is exactly the actual problem that we're solving for here in Latin America? Is it inflation? Is it inclusion?

What is it in your perspective?

I think different places uh different problems, right? So the problem in Brazil uh is not much uh um asset protection like uh like it was in Argentina for example. In Argentina they had a hyperinflation recently. So everybody would be uh seeking to have access to stable coins through uh you know for uh asset protection. So so you wanted to have uh inflation hedging etc.

Uh in countries like Brazil we're solving international crossber payments uh issues. Uh the Brazilians are are we have the the state-of-the-art domestic payment system which is Pix. It's uh super good. It's fast. it's cheap or free to most of the people.

Uh, and Brazilians got used to that efficiency in the domestic arena. So they they want and they claim to have they want to have uh the same efficiency on their international payments. So for Brazilian is that that's the that's the key point. Other countries in the region have other users. For example, uh many countries in in in Latin America uh have remittances as their main source of foreign currency.

So for them having efficient rails for the immigrant remittances back home is a big issue and stable coins are major tool to improving the efficiency on on on that segment.

Thank you Sergio. What about you? What do you think that what's that specific pain point that Li is solving for with stable coins in the region? services. problem.

For example, service. Coin inclusive. Damon, your turn now. What is the pain point for Novi? What is New solving for?

What is New solving for? So, first of all, I agree 100% with with the the comments of both both Sergio and and and Braza. Um it is a different problem that we're solving for for for each market. Um specifically for us because we don't work with BTOC, we're we're a B2B player. We service merchants.

Uh the problem we're solving for is is crossber settlement uh and and moving funds out of the country um or back into the country. So we have merchants that are based here that do that we pro process payments for in Chile, Colombia, uh Mexico, Argentina and they want to send their treasury back to uh to Brazil. So we're we're helping with some partners on the stage uh to facilitate, you know, what they call a stable coin sandwich, right? which is going fiat and then crossber uh on onchain and ideally holding those funds on on chain after um after they're back in in the uh the the treasury of the merchant. Um I'll give you a great example.

We service many of the largest betting platforms um you know that are on the jerseys of the of the the the large teams here in Brazil and their treasuries are in uh tax-free zones Cyprus, Bahamas, Lithuania. Uh so we process the payments here and the current status is is then we receive the realis from Visa or Mastercard. Uh we then literally will call up bankodo Brazil uh Dav Vianda City Bank exchange for dollars and then send via old school swift wire to one of those locations and we have a 7-day settlement period as part of our contract. Enter stable coin settlements. We can now receive directly from Visa or Mastercard those realis and then uh do onchain FX from realis to USDC or another stable coin um and then send to those merchants in now going from 7 days to zero or one days which completely changes the both uh uh the amount of opex that a that a merchant has to use for business expenses.

Um, so you're moving from seven days to one day. You're you have full transparency because it's on the blockchain. You have security and it's significantly cheaper. And finally, icing on the cake is you can actually earn yields on those funds both while they're in float as well as when they're sitting in a custodial account. So, you know, you're getting a new revenue stream, you're getting the funds faster, and you get better security and better economics.

It's kind of an unbe unbeatable uh win-win. And um and that's what we're helping to facilitate for our merchants and and that's the problem we're solving for. So,

thank you, Damon.

Bruno, so in that sandwich that Damon just mentioned, what is circle solving for? It's the middle part in the sandwich. So, Mr. [laughter]

Um, so we want to help all these guys um enhance their products, develop new products so that they can deliver better experiences and and new products to their customers whether they are retail or B2B. So um we have been working closely with partners uh in the market in Brazil and in Latin for retail use cases like dollar access uh USDC backed cards and also the B2B um portion um we're helping those partners um with crossber payments through our tech products like our payments APIs and uh circle payments network. So essentially with circle payments network um regulated financial institutions are able to connect to us um have access to our global network of partners who all uh comply with the same KYC and AML standards um so that they know they can trust each other and based on USDC and and all the blockchain networks that um it goes on and recently we also launched um stable effect which is a new product based on um ARC um the the blockchain network I just mentioned where you can swap um BRL stable coins to USDC instantly uh real time and you know in seconds uh Via is already there um I think I'm stealing your your line here but yes guys uh we want want to make sure every business um who's trusted, who is regulated gets to develop their products with USC and uh we are here for them and we really believe we can make a difference in LAM and globally.

You're making my job very easy because you're referencing each other the next one, right? So you just reference Leandro. So Leandro for from the perspective of the founder, what is Avenia solving for? So I I start by saying that we are firm believers that better financial products will bring more prosperity for like society in general and uh stable coins are a really superior technology to build financial products like it's a a platform that is global by definition. It's the same functions that you interact uh either if you are in Brazil, in Bahamas, in the UK, in Asia.

Uh so we believe that in the future applications will build like global from day one uh with like infrastructure providers uh regulated in each market and uh with this mindset of being global. Uh they will be able to deep dive on markets that they think the like they have better fit or like their solution is better and uh focus their best. But uh launching much more easily uh compared to when you you were in the traditional finance in which you had like years to get licenses like all the compliance all the anti- fraud all the settlement banking relationships and etc. So today we are also only B2B. Uh we serve both uh platforms that has individuals as end users or uh platforms that has businesses.

And uh the value prop here is basically that if they would come directly they would need a local license local entity here. Uh probably get a license now. Uh they would have to connect to directly with banks. they will have like liquidity providers, exchanges, they will have like compliance providers or they can go with us uh and have it all in one single API. So uh this the time to market that companies have in order to like grow in Brazil and and acquire Brazilian users is much more efficient by getting one infrastructure provider that already has this like regulatory mindset with compliance first approach and etc.

uh that comes like since use cases from tourism flows in which individuals can come to Brazil and pay pics as they are locals. Uh which if you compare with Swift only the fixed cost of a message would already be very significant to to the end uh uh fee in the payment. Uh but with stable coins is like pretty much uh for free like it's basically a pigs and uh the uh taxi spreads are super tight and you have either even uh taxi uh incentives right so that could go from these individual platforms but also businesses that has this time to market approach that is very much more efficient than compared to traditional funds. So yeah like starting from this banking and effects platform but going in the future to investments with like BLA stake for instance which is already with uh tens of millions of ris uh earning yield on chain uh or investment products in general or credit facilities like it's uh both a play of a ma matrix growth uh the expansion of geographies and the expansion of products. Uh very challenging uh journey but uh very exciting too.

So Leandra, I'm staying with you. Let's bring all of this to the earth a little bit more. So let's start to get specific. Share with us one specific use case with one region, one geography, one segment that you are seeing with stable coin right now.

Sure. Uh so I will stay with this tourism flow. uh we serve lots of these neo banks that are building on stable coins. Uh there are both like uh some neo banks focusing on B2B flows but others like more in the individuals uh with B2C and uh there is like fintex in the latam region that has like millions of users and they uh there they can receive local uh currencies as fiat. Uh this local currency is can be used to come here to Brazil and go to a coffee shop or to a restaurant and scan a QR code for them to pay for a hotel, for a restaurant, for Uber, for grocery stores, for anything.

Uh and this like we take the the local currency, do the all the sandwich that they the guys uh told about and settle with the merchant in like five, six seconds. Uh, and like for a foreigner that doesn't have a CPF and doesn't even speak the language, being able to pay is like really really something else. Uh, even merchants, we we hear cases that the merchants don't believe that the the gringo can pay a uh but we there are days like in the carnival or the summer that we are doing 100,000 transactions every day. So that's one uh topic that is very relevant for us and uh I believe that we will only grow.

Bruno, what about you? One specific use case for circle.

Yeah, shifting a little bit to the the B2B area. Um we have been helping companies manage their treasury flows. Uh importers pay their exporters in Hong Kong, in other countries of Asia. So essentially we're helping these guys um reduce that settlement time track where their money is uh during the payments and um create efficiency. So uh when we talk to to those customers and sometimes there is a customer who says like it take 20 days for my money to get to Africa and we go on and tell them like you can do this in 15 minutes stops depending on the the network you're using.

So it's a it's a game changer. Imagine how much working capital that guy has to hold for that money to get there in 20 days. And we we have other customers who have like huge amounts of floating so they can artificially produce instant payments. But there's cost on that. There is opportunity cost on that.

So we have been helping those companies and these partners um figure out how they can do all this and deliver better products for those companies so they can actually focus on their main activities instead of holding a bunch of money somewhere. Damon.

Uh, yeah. I mean, just to kind of pile on, um, so similar to the case the the use case that I just mentioned about Brazil, we um we have many of the largest hotel chains and OTAA, so online travel agencies. So, despar the the equivalent of booking in Mexico. Uh these are tourists, mostly American that are paying for vacations in the US and we so they're paying in dollars. We then settle the Visa Mastercard settles to us in Mexico City uh in Mexican pesos and then the trips are usually to Cancun or Cabo San Lucas and those economies both work in dollars.

So then the OTAAS or the hotel chains are buying dollars again and then sending them via wire internal in domestically to the to Cabo or or Cancun. That whole cycle there's two FXs and it costs 4 and a.5%. Totally apart from the payment fees that we charge and Visa Mastercard charge. It's insane and it takes a while.

So again, enter stable coin settlement. We'll now receive dollars, you know, from tourists in the US. We will settle these merchants directly in USDC and then we'll just send them to them onchain uh the funds and they're paying their suppliers in dollars. And the idea is is not only that we do the backend with uh a stable co a regulated stable coin but we're also entering we're also convincing these merchants to keep those funds on chain uh so that they can capture yield and and so until the funds are are utilized for opex that they're actually earning instead of the bank. Uh so you know similar to to both uh what what Bruno and Leandra said it is a gamecher if you're sitting in the treasury department or accounting for one of these large platforms.

Um and and that's what we're focused on.

Thank you. Brazil. local. Stable coin. Marcelo, I'm the last in line.

Um, when you asked the question, I was actually thinking uh about uh talking about the answer that Leandro gave you and then I thought, well, I have to say something else. And then and then uh uh the answer that I was thinking about just Bruno told uh told us about it uh and so on. Actually everything that my colleagues here uh spoke about was something that was actually on my mind. So uh in reality it's not I'm going to talk about one use case that I truly like um but not one necessarily that we are very active implementing right now but it's on our plans to implement in the future. Uh we uh I lived abroad as an immigrant.

Uh and many people here probably lived abroad. You're going to be living abroad, right? Um and many many of those um expats uh they are living in a different country because they are sending money back home to support their family uh to support uh their children or maybe to save uh dreaming about one day going back to uh to their home country, right? uh these people especially those um most humble immigrants uh they I feel that they are actually exploited because the companies that are in in this industry charge uh outrageous rats um you know many times we're talking about uh 5% 8% uh all the way to 10% or many times more when you when you add the fixed fee to it. So, um I think that the advent of uh blockchain and specifically the the stable coin um uh reality actually bring uh uh a hope to this uh to these people and I can explain that uh by uh mentioning for example the the Japan Brazil corridor.

So uh there's a lot of Brazilians that actually immigrate to Japan uh and they are there specifically to work and save uh to come back to Brazil, right? Uh those people's those people are in the hands of very very few players and there's a lot of things against them. The time difference of 12 or 11 hours, it's one big thing to start with, right? the language, the difficulty uh to uh to to make correspondent agreements between financial institutions so on so forth. So on their reality they're exploited and they pay 10% of what they send back to the financial institutions involved right and I mean we ourselves we tried in the past to uh get a correspondent there or even to get our license uh in Japan it's super hard many times it's hard to establish communication with uh with the people there because not many people speak English right but now if you think that now with stable coins anyone with a phone any Brazilian with a phone with a binary account or any other exchange for that matter uh will be able to go log into that account uh you know top up the account with their Japanese yen and and and do a simple trade there's going to be a bid and ask between uh JPY and PRL right and they're going to probably spend mostly uh half% so they're going to be able to reduce the cost of their transaction by 20 times that's very significant that's revolutionary and that's improving the life of those that need the most.

And I'm very excited about this because this is something that we're working hard to implement next year. um you know we have been going through this route and we have been doing everything that these guys uh mentioned here and we're uh and we are adding this uh this service to our portfolio uh next year and I'm very actually pleased because it's the one that I tried harder in the the old times right with the traditional uh finance uh world and I never managed to get it done and now finally we're going to get it done through uh stable coins. I really like that use case. And so if all of the use case that you guys have shared make a lot of sense, right? So what's stopping the mass adoption?

Why isn't this already totally embraced in, you know, in this case in the Japanese and Brazilian market and and the others? So starting with you, Marcelo.

Yeah. Well, crypto and and stable coins is fairly new. Um then in the history of crypto we had many uh many negative news uh frauds um volatility of the original cryptos etc etc. Now it's been uh you know what uh almost like two decades since bitcoin was invented. Uh so the idea and the concept is being mature.

It's just like uh when you first heard about internet my mother was like I'll never buy anything on the internet because it's offra right. So today she doesn't do anything but on the internet right. So I guess that the first thing is the maturity of the market and the technology and the acceptance of people. Uh I would guess I'll say that the second uh item but probably the most important item is regulation right uh if you don't have clear regulation you don't have the major players coming in you don't have uh you know a wild adoption uh uh uh for consumers because consumers uh feel unsafe they don't they don't know they don't have the duty to know uh so this year is actually uh very important I mean the the 12 uh months. It's actually very important because we have two major events.

Uh in the in the US we had the Genius Act which which was a major thing for the crypto industry. Uh and here in Brazil we had the Brazilian central bank regulation signing everything that's going to be implemented in the next uh 12 months or so. So regulation a very clear regulatory environment is something that you must have in order uh to have a a a great adoption of that technology of that system or those methods. The next thing that you need is on and off uh ramp um uh availability and this is something that I think that everybody here is working on right so everybody's building working integrating uh and and and establishing those rails which are essential because it doesn't matter if I understand the concept if there is a law or a regulation about it and I don't have the means to change BRL into whatever uh into whatever other crypto uh after After we have the the the the on andoff ramp infrastructure uh at least significantly built, it's never going to be complete. Uh then we needed the the customer education.

So which means the understanding and that's going to happen as we have the network effect. So it's one thing if I'm the only user it's almost like useless uh because I have nobody to trade with. But if the two of us uh are part of a network it's already much better. But then when the five of us or the six of us are part of it then there's no reason for you not to be there because if you're not using that uh that technology you are the outsider now. So I guess that uh the the education and the network effect uh is is the last item of this uh of this uh of this uh journey for states.

When will we be there? When we got involved in stable coins, I used to say that in five years there will be no uh FX without the blockchain, right? Everybody was discussing which mental institution they would put me in, right? This was back in 2024. We didn't have uh any regulations, etc.

, etc. Uh and I and I keep saying the same thing. So in 2029 uh which is much sooner than most of the people will bet with you there's not going to be FX in this on this planet that's not conducted on the on the uh on the blockchain and I can give you one uh one vision of how it's going to work on a good day uh in Braza uh on Treadfi we move 1 billion dollars in FX all right that's a a typical good day of volume Right. But then on that day, which is a good day on stable coin, we just did 100 million dollars. Right.

So stables are just onetenth of the the tread five. Okay. Now you're going to see first gradually during this year an increase and we are already watching the size of the market growing and the faster and the faster adoption coming. This is going to accelerate through time. uh we're going to see this phenomena actually uh increasing le next year and for sure in 2029 u there's not going to be any effects uh that's not conducted on the blockchain.

Yeah. So buy shares of circle [laughter]

three years. What about you sir? What is stopping mass adoption and when will we see it? follow. Transformer.

online%. Thank you. Damon, can you repeat the question?

Can you repeat the question?

Of course. What is stopping mass adoption of stable coins right now in Latin America and when will we see it if we ever do?

Yeah, so I would say this. Um, there's two things and and both of you mentioned it. Uh, on and off ramping and UX. If you've ever tried to help your parents buy crypto, you'll know exactly what I'm talking about. Uh, it's it's a disaster.

And there are certain companies that are doing it well, but nobody's nobody's perfected it. Um, the other thing I would say is why do I use my Mastercard, right? Loyalty. Right. And in the US, we get actually quite a bit.

Um, so there's incentive to to use a card product. Um, if I could get that same loyalty with a with stable coins on everyday spend, I'd use stable coins. Um, and and then and as I said, the off on and off ramping like I think, you know, to your point about 2029, I or sooner, I don't see on and off ramping. I just see on-ramping or or just on onchain and funds stay on chain. As I said before in the kind of uh uh examples I mentioned, you can't beat, you know, moving from 7-day settlement to one day.

You can't beat uh uh full transparency and security versus sending funds via wire on a Friday and you have no visibility in in terms of when they when they uh are received or what's happening with them over the weekend and you can't beat an additional revenue stream. Now, if you're talking about consumer mass mass adoption paying with stables, um it's that it's like this moving back and forth from 1.0 to 2.0. you know, and and and facilitating that process so that it's seamless and um userfriendly and and you don't even think about it, right?

So like in the US, if you if I pay Bruno a what would be a Pix payment, but in the US it's a Venmo payment, moving those funds to my account is seamless because of a company called Plaid, right? They've built all the API APIs, all the background. you don't have to think about it and facilitates 70% of the of flows and touch se 70% of accounts in the US. Um so when we get to that point which I think is sooner than later because of the economics uh is is when we have mass adoption.

Yeah.

Thank you Bruno.

Yeah trying to add something to what they all said. Um we talk a lot about abstraction in the experience. So we have regulations, we have serious players, the text there, it's proven, it's working, everybody seeing um that it's good, but as Damon said, trying to get your parents or your grandpa, grandma to do it is terrible. So we need to abstract this in the experience for them. We all use WhatsApp every day.

I have no idea what's what protocol is behind WhatsApp. So I think that's going to happen over the next couple years. Um institutional adoption. Um our regulators they are very um forwardlooking and supportive. So I think they're they're going to help us with that.

And I think there's some work around education to deviate from the stigma of the schemes and etc. And uh working on the ab abstraction during the the experience. Leandro any final thoughts to add?

Yeah, like all valid points that uh my colleagues bring brought uh to the discussion. Uh one sentence that is almost a cliche in financial evolution is that it's gradually and then suddenly uh I think he will experience this here as well. Uh the movements that I see are two. Uh there is either companies that are being built uh from scratch directly on stable coins and they like already onchain uh as a whole and they don't want to to touch fiat and uh they are seeing uh ways to do that. uh and there are companies that were built on traditional rails and they will see the necessity of uh modernizing or upgrading their systems to stable open rails too.

Uh it will happen sooner than the later for sure. Uh all core banking all like platforms that are built in different programming languages uh will be uh changed to to this uh rails too. uh but in order for that to happen the regulation is a key point uh we also are firm believers of this abstraction thesis uh much more than the education uh it's better to like the barrier for educating and understanding what's a wallet what's a cryptography uh key and all that stuff it's like too high uh but if you're thinking only on the job to be done and you want to move from reis to dollars or from rise to arrows uh and you do that with a superior technology uh but delivering experience that your user is already used to uh that's much better uh you you help with that.

Thank you so much. Thank you all for being here. Thank you to the audience too for listening and I hope that we see each other in next merch.

Nice. Thanks guys.

Thank you.