South America’s two largest economies are accelerating their move toward digital asset alternatives, with Brazil and Argentina emerging as the latest flashpoints in the region’s push into financial technology.

The shift was underscored this week after the International Monetary Fund (IMF) said crypto rails now carry the majority of Brazil’s cross-border fund transfers. At nearly the same time, reports surfaced that Argentine banking groups are developing their own peso stablecoins, despite an existing central bank ban on private banks offering crypto services directly. Together, the developments show how stablecoins are moving from a niche payments tool into a more visible part of the region’s banking and policy debate.

Brazil’s cross-border transfers increasingly rely on crypto

In its latest Financial System Stability Assessment of Brazil, the IMF said digital assets, especially stablecoins, have become the main way money is moved into and out of Brazil. The report said usage has risen steadily since 2017 and has now overtaken conventional channels.

The IMF’s first such review of Brazil’s economy since 2018 also pointed to lower transfer costs and tax advantages as factors behind stablecoin adoption among companies and retail users.

IMF raises concerns over oversight and supervision

The fund said it found correlations between stablecoin demand and broader economic indicators, including the S&P 500, the VIX volatility index, Bitcoin’s price, exchange rates, interest rates, and tax policy changes. According to the IMF, these links show how digital assets have become embedded in Brazil’s wider economic structure.

At the same time, the IMF warned that the Central Bank of Brazil has not fully covered several areas in its supervision of virtual asset service providers. The issues raised included:

• Inadequate legal protection for users
• Unclear standards for handling assets held in custody
• Travel Rule inadequacies
• Weak fund-transfer tracing and anti-money-laundering standards

Brazil’s Congress is already working on legislation to bring digital assets under clearer legal coverage. Bill 4308/2024 is expected to define legal boundaries for stablecoins, although there is already a domestic push not to classify them as electronic money.

The IMF said closing these gaps will require Brazilian regulators to share reporting responsibilities with counterparts abroad.

Argentine banks prepare peso-backed tokens

In Argentina, two banking conglomerates are reportedly preparing peso-pegged stablecoins aimed at institutions rather than everyday savers, according to Iproup. The planned tokens would be used for treasury operations, payments triggered by on-chain events, and collateralized lending.

One of the groups is BIND Group, which manages more than $2 billion in assets and owns BIND Banco Industrial. It is building its token through BEN, an in-house virtual asset service provider. The move follows earlier reports that the banking group had entered a partnership with Circle to serve institutional clients.

The other group is The Petersen Group, which owns and operates several regional banks. It is advancing a separate product called DIPE, with support from Lirium, a crypto-as-a-service firm. The project already has a whitepaper.

Existing restrictions and possible regulatory changes in Argentina

Argentina’s central bank has barred private banks from offering crypto services directly since May 2022, which is why both institutions are routing their plans through subsidiaries.

Those workarounds may become less relevant if the central bank follows through on reports that it is considering lifting the ban. However, the situation remains unsettled. Argentina’s securities regulator has blocked the argt peso stablecoin, saying it was a security offered without the required compliance.

The case for local-currency stablecoins

The broader regional debate centers on whether Latin America should continue relying on dollar-backed stablecoins or build domestic alternatives.

Writing for the World Economic Forum, Ripio founder and CEO Sebastián Serrano said dollar-backed coins such as Tether’s USDT have become popular in Latin America as a hedge against inflation. But he warned that reliance on foreign-issued digital dollars weakens policymakers’ ability to manage domestic money supply. Serrano argued instead for stablecoins backed by local currencies.

The scale of adoption highlights the stakes. The Digital Chamber said stablecoin transaction volume across Latin America reached $324 billion in 2025, up 89% year over year. It added that stablecoins accounted for more than 90% of crypto flows in Brazil and more than 60% in Argentina. The report also said 71% of Latin American institutions already use stablecoins for cross-border payments, the highest rate of any region.