As Inflation Soars, Stablecoins Emerge as Unlikely Pillars of Financial Stability

Stablecoins are increasingly blurring the lines between traditional banking and digital finance as institutions and regulators adapt to their growing influence. Latin America, a region grappling with inflation and currency instability, has emerged as a testing ground for stablecoin integration. Nubank, the largest digital bank in the region with over 100 million customers, announced in September 2025 its plans to pilot stablecoin-based credit card payments. This initiative, spearheaded by Nubank’s vice-chairman Roberto Campos Neto—a former governor of Brazil’s central bank—aims to leverage blockchain technology to connect digital assets with traditional banking services. The move reflects a strategic shift from treating stablecoins as speculative tools to positioning them as infrastructure for everyday transactions and credit systemsNubank Tests Stablecoin Credit Card Payments as Latin America Embraces Digital Dollars^[1].

The adoption of stablecoins in Latin America is driven by macroeconomic challenges. In Brazil, 90% of crypto activity in 2025 involved stablecoins, with USDT and USDC dominating transactionsNubank to Pilot Stablecoin Payments With Credit Cards in Brazil^[2]. Neighboring Argentina saw 72% of crypto purchases in 2024 attributed to stablecoins, as citizens sought alternatives to a currency depreciating at over 100% annual inflationLatin America’s Largest Digital Bank Nubank Eyes Dollar-Pegged Stablecoins^[3]. Venezuela, where inflation reached 229% in May 2025, has seen stablecoins replace the bolívar in daily commerce, with 47% of sub-$10,000 transactions conducted in digital dollarsNubank Tests Stablecoin Payments via Credit Cards in Brazil^[4]. These trends highlight stablecoins’ role as a hedge against inflation and a medium for cross-border remittances, particularly in regions with weak financial infrastructure.

Regulatory developments are further legitimizing stablecoins as part of the financial ecosystem. The U.S. GENIUS Act, signed into law in July 2025, established a federal framework for stablecoin issuance, mandating reserves, transparency, and redemption guaranteesWhy Stablecoins Are Gaining Momentum Right Now^[5]. This legislation, coupled with the EU’s MiCA framework, signals a global shift toward regulated stablecoin adoption. In Brazil, where the central bank has signaled openness to integrating digital assets into payment systems, Nubank’s pilot aligns with broader efforts to tokenize financial services. However, challenges persist, including regulatory uncertainty around capital treatment for tokenized deposits and the need for interoperable infrastructure to reconcile blockchain with legacy banking systemsStablecoins Need Real Infrastructure as Adoption Surges in 2025^[6].

The push to mainstream stablecoins is not without risks. Critics highlight vulnerabilities such as liquidity management, counterparty exposure, and overreliance on U.S.-pegged tokens, which could undermine financial sovereignty in adopting economies. For instance, Nubank’s pilot must address how to reconcile stablecoin balances with fiat credit lines in real time while ensuring compliance with Basel Committee guidelines on capital buffers for tokenized assetsNubank to Test Stablecoin Credit Card Payments in Brazil | HODL FM^[7]. Additionally, the concentration of stablecoin supply in a handful of issuers—Tether’s USDT and Circle’s USDC dominate the market—raises concerns about systemic fragility if one issuer failsCompanies Plan Stablecoins Under New Law, but Experts Say Hurdles Remain^[8].

Despite these challenges, the momentum behind stablecoins is undeniable. Ripple’s ongoing efforts to secure a charter from the Office of the Comptroller of the Currency (OCC) and Tether’s proposed USAT initiative underscore the sector’s potential to redefine cross-border payments and lendingAPAC Leads Global Crypto Adoption, Driven by South and Southeast Asia^[9]. The Bank of England’s exploration of wallet caps to manage stablecoin risks further illustrates how central banks are adapting to this new paradigmStablecoin Adoption by Country: Where the Growth Is^[10]. As institutions like Nubank test the boundaries of stablecoin integration, the financial system faces a pivotal question: Will stablecoins evolve into a parallel infrastructure for global finance, or will they remain a niche tool for specific use cases? The answers will depend on how regulators, banks, and technologists balance innovation with stability in the years ahead.