'Emerging Market Stablecoins' Are Finding Product Market Fit
Image of a 20 Mexican Peso bill which is equivalent to one US dollar (19.738800 pesos) in Mexico ... More City, on June 2, 2022. - A stable political outlook in the face of uncertainty in Colombia, Brazil and Chile, and an attractive financial yield are encouraging a surprisingly strong Mexican peso, despite the country's tepid economic outlook, experts say. (Photo by Pedro PARDO / AFP) (Photo by PEDRO PARDO/AFP via Getty Images)
US dollar-pegged stablecoins like USDT and USDC are all the rage this year, but tokens denominated in local market currencies are starting to find product market fit.
Bitso, the Mexico-based crypto platform with operations across Latin America, has launched a new stablecoin pegged to the Mexican peso.
Announced at the Merge Buenos Aires conference on March 25, the MXNB stablecoin will live on the Arbitrum network, an Ethereum Layer 2 network that has become a popular rail for stablecoins in emerging market countries.
The idea is that MXNB will allow foreign companies doing business in Mexico to more easily convert in and out of Mexican pesos, thereby making it easier to offer products and services to Mexican customers.
Similar products have gained traction in the Latin America region as of late.
Bitso recently joined forces with Mercado Bitcoin and Foxbit to launch a Brazilian real-pegged stablecoin called BRL1. Brazil's Braza Bank announced a real-pegged token of its own on the XRP Ledger in February.
These products join the party of other BRL-paired stablecoins such as BRZ — issued by Transfero, and BRLA — issued by BRLA Digital — that have been operative in the market for several years.
USD stablecoins comprise the majority of the market due to their liquidity and convenience. They provide an easy way access to dollars for those seeking a store of value, and are ubiquitous in the crypto trading world.
However, soft currencies don't possess these same characteristics, and users don't generally want to hold them for any prolonged period if there are better options available.
So why the newfound interest in these stablecoins pegged to local currencies?
The short answer is market access. These tokens serve as a bridge for individuals and businesses looking to on and off-ramp into new markets to offer products and services denominated in the local currency.
Ben Reid, Head of Stablecoins at Bitso Business, explained:
Stablecoins are now understood to be a fast, cost-effective solution to this problem, offering an alternative to traditional fiat rails for expanding access to foreign markets.
In this regard, local stablecoins can be seen as the bridge between global capital and local usability. They enable international businesses to collect payments and pay salaries, vendors and customers in local currency and via local payment rails like Pix, in the case of Brazil.
Lucas Giorgio, co-founder of BRLA Digital, explained that drop-off rates can be as high as 80% in Latin America when users are forced to transact in US dollars rather than their local currency.
For Bitso, these local currency stablecoins are a core component of its business strategy for the remainder of the year. It has launched a subsidiary called Juno, that will live underneath its Bitso Business division, that is focused on issuance and management of digital assets like stablecoins.
Bitso Business will also host Latin America's first conference devoted to stablecoins on August 27-28 in Mexico City.
Why the newfound interest in non-dollar pegged stablecoins? Ben Reid, Head of Stablecoins at Bitso Business, explained that the value proposition of stablecoins denominated in local currencies is market access for international players.
, crypto trading on international exchanges (USD-denominated trading pairs tend to be more liquid)
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US stocks took a breather on Wednesday as investors digested a softer-than-expected inflation reading and assessed a US-China plan to salvage their trade truce. The Dow Jones Industrial Average (^DJI) was roughly flat, losing just one point on the day, while the S&P 500 (^GSPC) sagged more than 0.3%. The tech-heavy Nasdaq Composite (^IXIC) led the declines, falling almost 0.6%. Oil surged more than 4% on Wednesday following a Reuters report that the US embassy in Iraq is preparing for a partial evacuation amid security threats. The surge came after the report, citing US and Iraqi sources, said employees were preparing for an ordered departure because of heightened risks in the area. West Texas Intermediate (CL=F) futures gained more than 4% to settle at $68.15 per barrel. Brent crude (BZ=F), the international benchmark, also jumped more than 4% to settle at $69.77 per barrel. Crude had rallied earlier in the session after President Trump said the US had reached a trade framework deal with China. Futures also gained after Trump said in an interview he was less confident that Washington would reach a nuclear deal with Iran, a top oil producer. Yahoo Finance's Jennifer Schonberger reports: Treasury Secretary Scott Bessent told lawmakers he would like to remain in his seat until 2029, but he did not dismiss the possibility of becoming the next chair of the Federal Reserve. He was asked in an appearance before the House Ways and Means Committee if he would rather be Fed chair or Treasury secretary — a possible reference to a media report that his name is now being circulated as a possible replacement for Jerome Powell once Powell's term as chair of the Fed expires next May. Bessent said he has "the best job" in Washington and is "happy to do what President Trump wants me to do," while noting that "I would like to stay in my seat through 2029" to help carry out the administration's agenda. Read more here. President Trump's Truth Social posts aren't moving markets like they used to. At 8:04 a.m. ET Wednesday morning, the President posted on his social media platform, "OUR DEAL WITH CHINA IS DONE, SUBJECT TO FINAL APPROVAL WITH PRESIDENT XI AND ME." A post like that would've moved markets a month ago as stocks were swinging on any and every Trump update. But on Wednesday, futures tied to the major indexes barely budged after Trump's post. Instead, stocks found their direction from economic data. At 8:30 a.m. ET a cooler-than-expected reading of consumer prices for May sent futures higher as investors amped up bets that the Federal Reserve could cut interest rates at least twice this year. This marked the latest sign that markets have moved on from President Trump's trade war dictating every market move. Instead, focus is shifting back to the Federal Reserve and the path of the US economy. "For some period of time, tariffs were the only thing that mattered," Truist Co-CIO Keith Lerner told Yahoo Finance on Wednesday. "And I think we're finding out today a lot of other factors matter." And for now, economists argue the economic picture may be improving. "Combined with the solid May jobs report, the CPI data reduce the chances of a nasty bout of stagflation," Bank of America US economist Stephen Juneau wrote in a note to clients on Wednesday. "That means a lower risk of "bad" cuts (due to a collapse in the labor market) but increased probability of "good" cuts (solid labor market and slowing inflation)." Egg prices fell 2.7% in May to headline a month that saw grocery inflation rise from the prior month but continue to moderate as consumers search for relief from high food prices, which have weighed on household budgets for years. Food at home prices have now increased by less than 0.5% each month since October 2022. Wednesday's Consumer Price Index report showed that the index for food at home rose 0.3% last month, a rebound after recording a 0.4% drop in April to mark the largest monthly decline since 2020. May also marked the 27th straight month that inflation for food at home was below inflation for food away from home, per JPMorgan analyst Ken Goldman. Half of the major grocery store food groups saw an increase in April, and the other half saw a decline, reversing the downturn consumers saw across five categories in the prior month. Read more here. Tesla (TSLA) CEO Elon Musk's recent feud with his former ally President Trump put the spotlight on the risk of the electric vehicle stock's "Musk premium." Wall Street analysts and investors have varying opinions of Tesla and its controversial chief executive. But they agree on this: Tesla stock trades at higher levels than other electric vehicle companies. In other words, it trades at a premium because of Elon Musk. "If Elon Musk was gone tomorrow, [the] stock could get cut in half," Roth Capital Partners analyst Craig Irwin told Yahoo Finance. "There's no question there's a Musk premium in the shares." Irwin holds a Buy rating on Tesla stock. Others have different values for the Musk premium, ranging as high as 90%. Musk's foray into politics, particularly his recent feud with President Trump, showcased how quickly the premium on Tesla shares can erode. Read the story here. Yahoo Finance's Jennifer Schonberger reports: Read more here. Quantum computing stocks jumped in early trading Wednesday after Nvidia (NVDA) CEO Jensen Huang made bullish comments about the technology at the chipmaker's GTC Paris developer conference. Quantum Computing (QUBT) rose more than 31% after market open, while Rigetti Computing (RGTI) jumped more than 18%. IonQ (IONQ) rose over 8%. The companies make quantum computing hardware and software. By comparison, the S&P 500 (^GSPC) was up about 0.2%. Huang told a crowd Wednesday that 'we are within reach' of using quantum computers for 'areas that can solve some interesting problems in the coming years.' 'Quantum computing is reaching an inflection point,' he said. Read more here. US stocks were muted at the open on Wednesday as investors digested a softer-than-expected consumer inflation reading and assessed a US-China plan to salvage their trade truce. The Dow Jones Industrial Average (^DJI) slipped less than 0.1%, while the S&P 500 (^GSPC) was roughly flat. The tech-heavy Nasdaq Composite (^IXIC) climbed about 0.2%. Platinum (PL=F) extended gains Wednesday, rising to its highest level in four years after trading sideways for about a decade. Platinum prices were up 4% Wednesday morning to trade at $1,261.40 an ounce. Prices of the metal, which is used in electric vehicles, jewelry, and industrial applications, have soared 40% year to date. Bloomberg reports that strained supply has caused prices to increase, particularly as President Trump's tariffs disrupted trade flows and output declined in South Africa, the world's largest platinum producer. From Bloomberg: Read more here. Inflation didn't pickup as much as Wall Street expected in May. The latest data from the Bureau of Labor Statistics showed that consumer prices increased 2.4% over the prior year in May, an increase from April's 2.4% and in line with economists' forecast for 2.4%. But all other closely watched metrics from the release came in below expectations. On a month-over-month basis, prices increased 0.1%, lower than the 0.2% estimated by economists and the 0.2% increase seen in April. On a "core" basis, which strips out the more volatile costs of food and gas, prices in April climbed 0.1% over the prior month, lower than April's 0.2% rise and below consensus projections for a 0.3% increase. Over the last year, core prices rose 2.8%, unchanged from the prior month and below Wall Street's expectations for a 2.9% increase. The largest tech stocks in the market are once again leading the market higher. And in recent weeks, investor excitement surrounding Big Tech has trickled down to newly issued public offerings, such as stablecoin issuer Circle (CRCL) and Nvidia-baked CoreWeave (CRWV). Yahoo Finance's Josh Schafer writes in today's Morning Brief: Read more here. Economic data: Consumer Price Index (May); Real average hourly earnings (May); MBA Mortgage Applications (week ending June 6) Earnings: Chewy (CHWY), Oracle (ORCL), Vera Bradley (VRA), Victoria's Secret (VSCO) Here are some of the biggest stories you may have missed overnight and early this morning: The biggest IPOs look a lot like the biggest stocks in the market CPI inflation seen as rising in wake of 'Liberation Day' tariffs Musk feud shows how Big Tech can't count on Trump's favor US-China talks deliver plan for restoring trade truce Musk says he regrets some Trump posts: 'They went too far' General Mills is said to weigh sale of China Häagen-Dazs stores China rare-earth magnet maker gets green light for US exports Nvidia CEO: Quantum computing is at an inflection point Here are some top stocks trending on Yahoo Finance in premarket trading: GameStop (GME) stock fell 4% before the bell on Wednesday after posting its first quarter earnings the day prior. The US video game retailer announced net sales of $732.4M, down from $881.8M in the same period of 2024. Tesla (TSLA) stock rose 1% in premarket trading, after CEO Elon Musk backtracked on his comments towards President Trump. Musk said: 'I regret some of my posts about President @realDonaldTrump last week,' he said on his social-media platform, X. 'They went too far.' Victoria Secret's (VSCO) shares rose by 1% ahead of its earnings release on Wednesday. The retailer, which recently reported a cyberattack, is expected by analysts to reoort revenue of around $1.35B. Yahoo Finance's Allie Canal reports: Read more here. Gold prices are edging higher even after the US and China talks delivered a plan to ease trade tensions, a sign the market is not yet convinced of a breakthrough. Futures rose 0.7% to around $3,366 an ounce in early trading on Wednesday. Bloomberg reported: Read more here.
