LATAM stablecoin liquidity may depend on few providers, investor says
Researchers in a Latin American stablecoin ecosystem report warned “fragility in the system is concentrated in its thinnest layer,” with just 16 of 494 companies focused primarily on wholesale liquidity, treasury and credit.
A new report warns that Latin America's stablecoin payment ecosystem may rely heavily on a small number of key providers. According to Verda Ventures partner Amit Chu, only 16 out of 494 companies in the region focus on wholesale liquidity, treasury, and credit services related to stablecoins. The report, published by crypto venture firms Varys Capital and Verda Ventures, draws from their Stablescape database and highlights potential instability within the system.
Chu explains that the "fragility in the system is concentrated in its thinnest layer," meaning that disruptions could arise if a key provider loses banking access. This could lead to customers struggling to cash out in local currency, with spreads widening and delays in converting stablecoins to fiat currency. While the report does not provide specific market share figures, it suggests that exchanges and payment companies also contribute to liquidity, often relying on the same underlying desks.
Chu proposes that licensing could help reduce concentration, while local-currency stablecoins may offer more market makers for onchain transactions. He also emphasizes the importance of multiple independent, well-capitalized desks and suggests that each wallet should be able to route through various players to avoid dependence on a single provider.
Despite the reported fragility, Chu sees Latin America as a promising growth opportunity, particularly for businesses that tackle cross-border payments.
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