A recent report by Borderless reveals that stablecoin-based foreign exchange transactions are rapidly becoming widespread in several emerging markets across Africa and Latin America. The analysis highlights that the gap between stablecoin and local currency exchange rates has significantly narrowed, positioning these transactions as serious competition for traditional payment infrastructures.
Spreads narrow as stablecoins close in on interbank rates
The study, grounded in over one million price observations from the first quarter of the year, found that in 14 out of 21 tracked blockchain-based currencies, the difference between stablecoin transaction prices and the interbank rate fell to within 100 basis points. This translates into pricing discrepancies below one percent for stablecoin forex transactions—a notable shift, indicating greater pricing efficiency.
Latin America stands out as a region where this trend is especially pronounced. Throughout the quarter, the spread between stablecoin trades and the interbank rate in the region averaged just 22 basis points, with the gap virtually disappearing by February. In Brazil, some service providers have managed to entirely eliminate trading costs for stablecoin transactions, reaching zero basis points. While these tight spreads are predominantly seen in the corporate finance sector, the report notes that the market dynamic is spreading.
The report comments, “This picture illustrates how stablecoin-based foreign exchange markets have advanced at the institutional level.”
The analysis goes further, stating that stablecoin payments have evolved beyond mere pilot campaigns to become a tangible market force—narrowing spreads, increasing market predictability, and enhancing competition outside of traditional narratives.
Market structure evolves in Africa amid lingering volatility
East Africa is also experiencing rapid convergence in pricing. Service providers in Kenya, Tanzania, and Rwanda reduced spreads between stablecoin and fiat transactions by 60 to 80 percent during the quarter, reflecting a dramatic compression in the persistent price premium that once characterized stablecoin dealings.
Elsewhere on the continent, however, the situation remains more volatile. In countries such as Zambia and Malawi, the lack of sufficient liquidity has widened currency gaps in the stablecoin market compared to traditional banking. For example, Malawi’s transaction costs tripled mid-month, while Zambia’s rates expanded by over 700 basis points within a few weeks.
Borderless notes, “These abrupt movements in stablecoin markets are not mere short-term anomalies. Rather, they reveal underlying market forces and liquidity constraints that are not visible within the conventional banking system.”
The report also concludes that stablecoin-based currency transfers are now approaching the cost levels of established banking channels. Nevertheless, questions remain about global stablecoin acceptance and the ongoing debate surrounding regulation.
Looking ahead, Borderless forecasts that payment volumes using stablecoins could reach as much as $1.5 quadrillion by 2035. At these levels, stablecoin-based systems could potentially rival legacy card networks like Visa and Mastercard in scale and influence.
In the United States, meanwhile, White House economists have asserted that stablecoin adoption does not pose a significant risk to bank lending. As discussions continue in Congress over potential rewards and interests, the U.S. Treasury is reportedly working on new oversight measures focused on anti-money laundering and sanctions compliance in the sector.
