Stablecoins and Remittances in Latin America: The Misunderstood $174 Billion Market

Author: Claudia

Translation: Jiahui, ChainCatcher

Recently, every fintech company’s business plan includes the same page: “Latin America is the next big opportunity. Stablecoins are the killer app for cross-border payments.”

But if you ask them how large their actual remittance channels are; how many users prefer dollars over their local currency; why Mexico’s digitalization rate is 25%, while Colombia exceeds 50%. Most of the time, you’ll get a moment of silence.

I spent six months conducting on-the-ground research with our local teams in Brazil, Mexico, Argentina, Colombia, and Peru. Talking to users, mapping out competitors, analyzing internal peer-to-peer, bank card, and payment data, and stress-testing every hypothesis in public reports.

Below are our real findings. As frontline builders, it took me six months to write this article, and I hope it helps you gain a comprehensive understanding of what’s happening there. You’ll find that most fintech companies have misread this market. At the end of the article, I also list the market’s potential, hoping it’s helpful to you.

Mexico peaks, Central America erupts

By 2025, total remittances flowing into Latin America will reach about $174 billion, a new high compared to $161 billion in 2024. About 2.5% of the region’s GDP.

For the first time in 11 years, Mexico shows a decline, down 4.5% to $61.8 billion. Meanwhile, Central America is thriving: Guatemala: +15% Honduras: +19% El Salvador: +18% Colombia: +13% Dominican Republic: +10%

This is not random fluctuation. It’s driven by a structural shift caused by U.S. immigration policies. Migrants from Central America are sending more money home, faster and in larger amounts, to avoid deportation risks.

Mexico has a more mature, well-documented immigrant population and hasn’t shown the same panic-driven remittance behavior. The “hot” remittance channels now are not the primary targets for most fintech companies.

The detailed data breakdown is as follows: Mexico: about $61.8 billion (down 4.5%) Central America: about $55 billion (over 20% growth) South America: about $36 billion (11% growth) Caribbean: about $21 billion (9% growth)

By the way, an interesting data point: by 2027, cross-border payment transactions (trade + B2C + remittances) are expected to exceed $300 billion.

A rarely discussed structural fact is: in Latin America, inflows and outflows are in a ratio of 16:1. Inflows: $174 billion, outflows: about $10 billion. The top five channels all originate from the U.S.:

U.S. → Mexico

U.S. → Guatemala

U.S. → Dominican Republic

U.S. → El Salvador

U.S. → Honduras

Everyone is competing for these markets. The untouched areas are non-U.S. remittance channels:

Venezuela → Colombia → Spain → Ecuador / Colombia / Dominican Republic → Argentina → Bolivia / Spain → Costa Rica → Nicaragua

These channels are relatively small in scale, but almost no remittance operators (MTOs) with U.S. licenses provide services, nor are they touched by crypto payment networks.

If you want to find a defensive channel by 2026, this is the place to watch. Especially as the U.S. 1% remittance tax (passed in summer 2025, affecting about half of remitters) begins to push transaction volume toward digital and non-U.S. channels.

Target users are not crypto traders

Most fintech companies are building products for 25-year-old crypto traders. That’s the wrong target customer.

Based on our on-site research, the real profile of remittance users in Latin America is as follows:

Age: 40 to 60 years old. Sending money home monthly.

Amount: $131 to $648 per month, accounting for 6% to 23% of their income.

Recipient: Over half send to their mother. One-third send to their father.

Use of funds: 80% for daily expenses, including food, housing, transportation. Next is medical expenses. Then education and savings.

This is family’s lifeline money. What does this mean for products?

Risk tolerance is nearly zero. Trust outweighs features. Simple processes win. Deposit → Confirm → Send, that’s enough.

Spanish and Portuguese are non-negotiable requirements, not “icing on the cake.” WhatsApp and mobile-first always beat web versions.

If your product makes a 50-year-old factory worker in New Jersey think more than 30 seconds before sending $300 to his mother in Honduras, you’ve already lost.

The crypto industry has spent five years optimizing for the wrong user base. Latin America’s retail remittance customers don’t want to “self-custody.” They just want to know their money arrives safely.

In Latin America, stablecoins are the product itself

These data should reshape every fintech company’s strategy. Unless otherwise noted, all data come from Bitso’s 2025 Cryptocurrency Landscape Report (over 10 million retail users) and Chainalysis’ 2025 Cryptocurrency Geography Report:

Argentina: USDC and USDT account for over 70% of all crypto purchases. Complete digital dollarization. Bitcoin’s influence is minimal, only about 8%. (Bitso 2025)

Colombia: Stablecoins make up about 52% of crypto purchases, up 2 percentage points year-over-year. Driven by peso depreciation and Colombia’s USD bank account minimum deposit limit of $5,000, stablecoins have become the only accessible USD option. (Bitso 2025)

Mexico: Stablecoins account for about 40% of crypto purchases, higher than last year. Mainly USDT, driven by U.S. remittance channel fund flows. (Bitso 2025)

Brazil: Two narratives tell different stories. Stablecoins account for about 34% of purchases (Bitcoin about 22%), making it the most balanced retail market in Latin America.

But at the systemic level, the central bank reports that about 90% of crypto trading volume is linked to stablecoins. The assets users buy are mixed, but the funds flow is dollar-denominated. (Bitso 2025; Chainalysis 2025 citing central bank data)

Across Latin America: In 2025, stablecoins account for 40% of all crypto purchases, surpassing Bitcoin (18%) for the first time in the region. Over three years (July 2022 to June 2025), total crypto trading volume reached about $1.5 trillion. (Bitso, Chainalysis)

Institutionally: A Fireblocks survey of Latin American institutions found that 71% use stablecoins for cross-border payments, the highest globally, compared to a global average of 49%. (Fireblocks 2025 Stablecoin Status Report)

Interpreting these data can be done in two ways, both true and worth distinguishing:

In Argentina, over 70% of assets purchased on exchanges are stablecoins. This is a behavioral signal indicating complete retail dollarization. People treat USDC and USDT as savings accounts.

In Brazil, stablecoins make up about 90% of trading volume. This is a capital flow signal, showing that most funds passing through Brazil’s crypto payment networks are dollar-denominated, even if users are transacting in Bitcoin or local tokens.

These tell different stories. Argentina reflects user desire for USD. Brazil reflects a system operating in USD. Both reach the same conclusion but impact product design differently.

Why does this happen? Not because Latin American users love crypto. They are solving three pain points that banks cannot:

• Hedging inflation (Argentina, Venezuela)
• Capital controls (Argentina, Brazil)
• Cheap and fast cross-border asset transfers

This is the part most Western fintech companies overlook: in Latin America, the stablecoin balance itself is the killer app. Users don’t want to “use” stablecoins for a transaction and then convert back to local currency.

They want to hold USD. The transaction is just an incidental outcome.

This is fundamentally different from what products like Wise or Remitly are building. That’s why the next phase of Latin American fintech will be won by those who control the daily balances, not just the transfer flows.

Who will win in the next decade?

The Latin American remittance market currently has no absolute winner. The $161 billion market is divided among six types of players:

Banks (Citibank, Bancolombia, BAC): Trusted, with infrastructure, but slow, costly, reliant on agent networks.

Traditional remittance operators (Western Union, MoneyGram, Ria): Brand and agent networks, but expensive, hampered by physical locations.

Telecoms and retailers (M-Pesa, Tigo, Walmart, 7-11): Distribution channels, but not native digital platforms.

Digital remittance operators (Wise, Remitly, Xoom): Good experience, low cost, but weaker trust and brand recognition.

Crypto players (Bitso, Strike, Felix Pago): Fast, nearly zero-cost, but trust issues and regulatory risks.

Infrastructure providers (TerraPay, Thunes, Loop, dLocal): B2B coverage, but no retail brand presence.

You might not know who is gaining market share, so let’s look at the shifts in market share in the US-Latin America & Caribbean corridor (2020 → 2024):

Western Union: 29% → 16.8% (declining rapidly)

Remitly: 14% → 22.7% (digital platforms gaining ground)

MoneyGram: 7% → 9.9% (steady)

The trend is clear: traditional remittance operators like Western Union are losing ground, while digital-first platforms are rapidly capturing market share from traditional players.

Already, Bitso handles about 10% of US-Mexico flows via stablecoin payment networks. Felix Pago has facilitated over $1 billion in USDC-to-SPEI transactions via WhatsApp.

The winners in the next decade will be a combination of these four: digital user experience, low cost, trust, and a stablecoin payment network behind it.

Banks take 5%, crypto networks only 2%

Average cost of remittance from the U.S. to Mexico: about 6.0% of the remittance amount. Most expensive: Paraguay, reaching 11.9%. Cheapest: El Salvador, at 3.9%. Cash transfers: about 6.21% on average. Digital transfers: about 5.11% on average.

Let’s look at a real snapshot from the U.S. to Mexico ($300, December 2025):

From the data, it’s clear: banks take about 3-5% profit from exchange rate spreads. Even if fees are listed as “zero dollars,” banks still profit from the exchange rate margin.

Crypto payment networks reduce total costs to below 1-2%. For an immigrant remitting $300 monthly, that means saving 5-8% per transaction, directly sent back to family. Over a year, that’s like a month’s worth of groceries.

This is the entry point. And in non-U.S. channels, this advantage is even more pronounced.

Venezuela to Colombia is the most popular intra-region channel, estimated at $2.35 billion in 2021. Before accounting for the heavily inflated exchange rate margins of traditional banks, fees there ranged from 1-3%.

The most costly traditional channels are precisely where stablecoins are disrupting first. That’s why, years before any regulation, Venezuela was already moving toward peer-to-peer stablecoin trading.

Same continent, five sets of regulations

Most “Latin America expansion” business plans treat the region as a single country. But it’s not. The regulatory landscape is the biggest reason most fintechs fail to expand successfully here. And by 2025, a new variable has emerged that most haven’t factored into their costs.

The biggest change on this map isn’t in Latin America but in the U.S.

The federal 1% tax on cash remittances, passed in summer 2025 as part of the “Big Beautiful Bill,” affected about half of remitters. Digital and crypto payment networks largely are exempt.

This is the biggest regulatory boon for the stablecoin remittance industry in a decade. Bills proposing increased state taxes are also circulating. The ongoing shift from cash to digital has just received a major acceleration.

Once you see this map, a wise phased expansion strategy in Latin America becomes obvious:

First, Colombia and Argentina: faster paths, lighter regulation.

Simultaneously, push into Brazil and Mexico via licensed local partners: slower but more defensive.

Enter Venezuela through peer-to-peer stablecoin networks: demand is already emerging naturally; go where the demand is.

Most expansion plans make the mistake of starting in Brazil because “it’s the biggest.” It’s the largest, but also the hardest. First, conquer the easier markets, build local payment network experience, then bring in licensed local partners to enter Brazil.

Don’t underestimate the impact of the U.S. side. That 1% tax is a policy change quietly reshaping the landscape.

Within 12 months, the share of remittances via cash channels will plummet. Those who control digital and crypto payment networks will capture a completely different market than today.

What does a winning tech stack look like?

After six months of observation from multiple angles, here’s the architecture capable of winning:

2. Local payment network integration: Pix (Brazil), SPEI (Mexico), PSE (Colombia), CVU/CBU (Argentina).

3. Scaled stablecoin liquidity: USDT and USDC, deep order books, minimal spreads, quick conversion to local currencies (BRL, MXN, ARS, COP). This is a baseline, not a moat.

4. Card layer: since recipients usually want to spend these dollars, not just hold them. Overlay a bank card on stablecoin balances to turn remittance into everyday financial products.
   This is the direction of Visa and Bridge’s stablecoin card layouts, Nubank’s USDC integration, and a wave of regional bank and fintech collaborations.

5. Value-added / yield layer: for recipients holding rather than spending the remittance. Offer 4-6% yields on USDC, surpassing all local savings accounts. This part is almost impossible for others to integrate well.

6. Trust and ultra-simplified experience: one-time KYC, local language, and an interface that even a 55-year-old can easily use. The product that wins in the end isn’t the most feature-rich but the simplest.

Thus, the closed loop here is: deposit → remittance → recipient holding USDC or converting via local payment networks to local currency → spending via bank card or earning balance yields.

This is something banks can’t do (no stablecoin payment network). Traditional remittance operators can’t do it (no wallet/card tech). Pure crypto exchanges can’t do it (no local payment integration). Digital-only banks can’t do it (no cross-border crypto liquidity).

Companies ready to seize this opportunity are emerging from all directions, converging in the middle. The first to assemble a complete architecture will win the daily balances game.

Trust is ten times more important than technology

First, stop treating Latin America as a single market. Brazil, Mexico, Argentina, Colombia—each country needs different licenses, different payment networks, different stablecoins, different marketing strategies.

The companies that succeed here operate tailored tech stacks for each country, not regionally. Treating “Latin America expansion” as a single project signals that the team hasn’t done its homework.

Second, stablecoin adoption has already happened. The debate over whether users will hold digital dollars is over—they already do, in large quantities, regardless of your product.

The remaining question is: where do they keep their balances? Exchanges, wallets, digital banks, or linked bank accounts? Products that capture daily balances will win users. Everything else is just a fleeting transaction.

Third, trust, not technology, is the bottleneck. The key to opening crypto payment networks for retail remittances is a brand that even a mother in Venezuela trusts.

That’s a marketing challenge, not an engineering one. Most fintechs in this space are over-engineered and under-marketed. Local faces, local languages, local community partnerships will always beat better tech.

In fact, Latin America isn’t the “next big opportunity.” It’s the biggest current opportunity driven by stablecoins in cross-border payments. While everyone’s watching the U.S., it has quietly developed for two years.

The fintech companies that win the next decade in this region will be those that combine local payment networks, stablecoin liquidity, trust, and a closed-loop economy (remit → hold → spend → earn).

Most teams I’ve seen pitching Latin America only have one or two of these elements. Almost none have all.

That’s the gap. That’s the opportunity.