The Race for Latin America's Massive Stablecoin Market Heats Up as Mercado Libre Rolls Out the Meli Dolar

Foreign currency-backed stablecoins are widely seen as the next big thing in Latin America. Stablecoins let customers seamlessly protect themselves

The race to capture Latin America's booming stablecoin market just got hotter. After Circle’s fanfare-filled launch of its USDC via banking giants BTG Pactual and Nubank in March, unicorn Latin American e-commerce marketplace Mercado Libre has rolled out its own commission-free dollar-backed stablecoin, the Meli Dolar.

Pegged 1-to-1 to the US dollar, the Meli Dolar will naturally leverage Mercado Libre's massive presence in Brazil to try to establish market dominance in the country. From there, propelled by Mercado Libre's already huge client base, the next step will be to expand the offering to the rest of the markets in the region.

“The Meli Dolar is an open solution from Mercado Pago, which has a unique capacity to scale financial products and services for everyone,” said André Chaves, senior vice president at Mercado Pago, the Mercado Libre subsidiary that is operating the stablecoin.

Foreign currency-backed stablecoins are largely seen as the next big thing in Latin America. They allow clients to easily protect themselves from the wild fluctuations of the region's fiat currencies and escape the usually high fees of opening an international currency account.

While Brazil has so far been the center of stablecoin operations in the region thanks to its softer regulatory environment and massive digital banking client base, other markets have also seen interesting developments.

Such is the case of Argentina, which saw the launch of the first fully local dollar-pegged stablecoin, the Criptodólar, by Ripio at the beginning of August. The offering comes as an answer to one of Argentina's biggest financial pain points: the black market for currency exchange, which subjects Argentinians to largely disparate exchange rates.

Mexico, despite operating under a more challenging regulatory environment, is largely tipped to be the next frontier in the market thanks to its massive US-dollar remittances. Recently, Brale launched the MXNe, the first Mexican peso-backed stablecoin, which runs on the Solana and Stellar crypto networks.

However, as Latin America's stablecoin market gains steam partly thanks to gaps in legislation, experts anticipate that regulatory scrutiny will increase. As Erick Rincón Cárdenas, director of TicTank at Universidad del Rosario, puts it: “Central banks might see this as a potential replacement for activities within the regulated financial system and could move to restrict certain operations, like currency exchanges.”

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