How Latin America’s First Ever Stablecoin Could Trigger a Crypto Battle

Bogotá — The stablecoin business is taking off in Latin America as the adoption of such crypto assets, renowned for their parity with fiat currencies, gain traction amid lingering regulatory gaps in most of the region’s nations.

Ripio, an Argentine exchange, is looking to take part in this booming market, and has announced the launch of what is considered the first Latin American stablecoin: “Criptodólar.” This coin will be listed under the symbol UXD and will maintain a 1-to-1 parity with the US dollar.

This announcement marks a milestone for the Latin American crypto business, as it formally enters the race for the adoption of locally issued stablecoins and the development of its own blockchain infrastructure. Ripio, which boasts more than eight million users across the region and approximately 350 employees both in Latin America and Spain, will rely on the native LaChain network for UXD operations. The company plans to open local offices in Uruguay as part of this expansion.

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Currently, the total market capitalization of major stablecoins globally stands at US$125.14 billion, with significant contributions from Tether (USDT), USD Coin, Dai, among others.

Erick Rincón Cárdenas, director of TicTank at Universidad del Rosario, says such moves in the stablecoin business may raise concerns for Latin American central banks, as they could have to deal with substitutions of traditional activities that have been supervised by the legacy financial system. In that sense, they may seek to restrict certain operations, such as foreign exchange transactions.

This will also test tolerance of regulatory entities, potentially leading to norms that could either benefit or challenge the regional crypto industry. Latin America’s central banks have held a reactionary stance toward crypto assets, alleging concern about financial stability, Rincón said in a conversation with Bloomberg Línea.

Camilo Rodríguez, a crypto asset investment advisor at CR Academia, highlights one of the factors that makes UXD stand out: “The number of payment gateways and ramps, both for cash and bank transfers, that lead to Ripio.” He explains that for every dollar they receive, they issue one UXD. Additionally, having numerous banking ramps and commercial partners is one of Ripio’s primary tools to offer stablecoin acquisition costs at a more competitive value.

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Stablecoins in Latin America

Rodríguez points out that Latin America will now have its own blockchain for emerging markets, using UXD as a transactional medium. Although not a decentralized blockchain, the commercial use of this technology is significant and provides a starting point for a unified Latin American market that could challenge international blockchains and provide the region more prominence, he adds.

Regarding LaChain, Rodriguez notes that the blockhain is based on Polygon, but that it operates as a separate infrastructure, with its own nodes and transaction validators. Key founders of LaChain include SenseiNode, Ripio and Num Finance, which has significant experience with stablecoins in emerging markets.

Mauricio Tovar Gutiérrez, co-director of the research group InTIColombia at the National University of Colombia and co-founder of Tropykus, believes that differentiation will be crucial for UXD in an environment where other competitors already have strong network effects and recognition. He thinks that UXD needs to establish its presence, generate incentives, and form more alliances than established stablecoins like USDT or USDC. While it might be challenging for UXD to compete in the short term, Tovar Gutierrez says the fact that these developments are happening in the region is promising.

The competition to dominate this market intensifies as key players in the crypto ecosystem identify opportunities to expand their market in a region where inflation and depreciation of local currencies have favored stablecoins. Stablecoins have provided a safeguard against inflation, particularly in countries like Argentina with soaring inflation rates exceeding 100%.

Andrés Gómez, director at CryptoMarket Colombia, emphasizes that stablecoins have gained leverage thanks to their ability to facilitate efficient and cost-effective transfers between countries. He points out that this functionality is no longer limited to the US dollar, as the EUR also has its digital pair, enabling users to conduct transactions in this currency through a blockchain.

According to the CEO of Efy Finance, Andrés Tobón, cryptocurrencies have gained significant ground due to the poor performance of traditional financial institutions in Latin America. Stablecoins, with their stability and peg to the dollar, have become the preferred method of transaction for millions of users in both non-dollarized and dollarized economies, thanks to their privacy and independence from governments