Stablecoins have become a significant on-ramp and transfer tool across Latin America, but new research suggests the region’s ability to move from stablecoin balances into local currency could hinge on a narrow slice of specialized liquidity providers.
In a report released by Varys Capital and Verda Ventures, researchers using Verda’s Stablescape database reviewed 494 regional companies and identified just 16 whose primary role is providing wholesale stablecoin-to-fiat liquidity—such as liquidity services tied to corporate treasuries and credit. Verda Ventures partner Amit Chu warned that this “thinnest layer” may create systemic fragility if banking relationships for a key provider are disrupted.
Key takeaways
- Varys Capital and Verda Ventures analyzed 494 Latin American companies; only 16 are mainly focused on wholesale stablecoin-to-fiat liquidity.
- Chu argues the risk may be concentrated among a small number of desks, potentially intensifying problems at the “exit” from stablecoins to local bank accounts.
- The Stablescape database does not track transaction volumes or market share, limiting how precisely researchers can measure concentration.
- Chu points to licensing and clearer rules as a key lever to reduce bottlenecks by enabling more banking access for liquidity providers.
- He also highlights local-currency stablecoins and multi-desk routing as practical ways to improve redundancy.
Why “exits” may matter more than token demand
Stablecoins are increasingly used in Latin America’s crypto economy, helping users bypass slow or expensive transfer channels. But Chu’s central concern is less about how stablecoins are acquired and more about what happens when users try to convert them into local currency.
In his view, if a critical liquidity provider loses banking access or otherwise faces operational constraints, the immediate effects can show up where users cash out. Chu described the risk as an “exits problem,” where conversion costs and settlement timelines deteriorate—rather than a sudden collapse in stablecoin availability.
“The problem would be at the exits. Spreads would widen, cash-outs to local bank accounts would slow or pause, and funds in transit with the failed desk could be stuck,” Chu said.
Thin liquidity layer, limited visibility into who holds the risk
The report’s headline finding is the gap between the number of firms that appear to supply liquidity and the number of specialized providers primarily responsible for wholesale stablecoin-to-fiat conversion. According to the report, researchers identified only 16 companies whose primary business is providing that liquidity, despite a larger pool of companies involved in related services.
Chu said public datasets can be misleading about where currency risk ultimately sits. While many entities may quote or facilitate liquidity, the underlying capital and risk management may be concentrated elsewhere.
“There are many sellers of liquidity and very few specialists. What we can’t see from public data is how many of them warehouse the currency risk themselves and how many pass it to the same few desks and exchanges. Our view is that it’s the second, and that’s the fragility the report is pointing at,” he told Cointelegraph.
At the same time, Chu cautioned that Stablescape does not provide transaction-volume tracking. As a result, the report cannot definitively quantify market share or prove how concentrated liquidity flows truly are—only that the ecosystem’s “specialist” layer is comparatively small.
He noted that some exchanges and payment companies are also categorized as liquidity sources elsewhere in Stablescape. Even so, Chu said Verda believes some of those firms may ultimately rely on the same underlying desks, which would preserve the underlying concentration risk even when more names appear in the public record.
Stablecoin adoption is rising—so cash-out resilience becomes a priority
The fragility question lands in a broader trend: stablecoins are already a meaningful part of Latin America’s crypto activity. According to a September Chainalysis report cited by Cointelegraph, by June 2026 stablecoins accounted for 32.1% of cross-border crypto value in the region, and 22.1% of domestic P2P activity. The same Chainalysis data set also put stablecoins at 17.6% of personal wallet balances in the region.
That context matters because adoption tends to increase reliance on conversion pathways. If more users route value through stablecoin rails, the system’s ability to convert those balances into local currency becomes a practical requirement—not just a backend detail for institutions.
The report also linked adoption momentum to conditions that can destabilize monetary systems. Chu said countries showing greater monetary instability tended to exhibit faster stablecoin adoption, though the report’s exact implication is that users look for alternative settlement and storage options when local currencies face strain.
What could reduce concentration risk
Chu emphasized that concentration is not inherently synonymous with malfunction, but it increases the importance of redundancy. He compared Latin America’s stablecoin liquidity structure to more established FX markets, where the number of dealer institutions can be limited.
“Mature FX markets also have far fewer dealers than customer-facing firms. What matters is redundancy and capital,” he said.
To strengthen resilience, Chu argued that licensing is a major policy lever. He suggested that clearer regulatory rules could make it easier for banks to serve liquidity providers, potentially broadening the set of institutions that can participate in stablecoin-to-fiat conversion.
He also pointed to technical and product direction. Local-currency stablecoins could, in theory, allow more settlement to occur onchain—reducing the need for constant currency conversion at the point of cash-out. In parallel, he noted that global trading firms have begun to quote Latin American currency pairs, which could provide alternative pricing and execution routes.
Finally, Chu stressed operational design: a resilient ecosystem should not depend on a single conversion path. In his framework, each major currency should have multiple independent, well-capitalized liquidity desks with separate banking relationships, and each wallet should be able to route between multiple players rather than funneling activity through one partner.
What to watch next
For users and market participants, the key uncertainty is how much of the reported specialist concentration translates into real-world cash-out dependency—especially during disruptions. Readers should watch for evidence that more liquidity providers gain banking access, that routing and settlement options diversify, and that on-the-ground cash-out performance holds up when specific desks face banking or operational constraints.
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