Stablecoin FX nears 'institutional-grade' parity with bank rails in LATAM and East Africa: report

Stablecoin-based foreign exchange continues to transition from a mere niche workaround to production infrastructure across key emerging markets across Africa and Latin America, as exchange rates between stablecoins and local currencies compress, according to a new report. 

Fourteen of 21 tracked blockchain-based currencies were within 100 basis points of interbank rates by March, analysts from payment infrastructure provider Borderless wrote. Trading close to interbank rates refers to the exchange rate banks pay when buying or selling a local currency, and within 100 basis points means the price slips no more than 1%.

The firm’s Q1 dataset — built on more than 1.1 million rate observations across 51 currencies — points to a shift already underway: the decision to route payments over stablecoins is no longer theoretical, but increasingly practical.

LATAM trend

The change is most visible in Latin America, the team at Borderless told The Block.

Stablecoin FX in the region traded within roughly 22 basis points of interbank rates throughout the quarter, tightening to near parity by February.

In Brazil, execution costs hit zero basis points across multiple providers. It’s important to note that this level is usually associated with institutional FX markets.

"This is what institutional-grade stablecoin FX looks like," the report reads.

With that in mind, Borderless notes that this growing stability goes beyond promotional rhetoric about stablecoin. Rather, these fiat-pegged tokens are continuously providing enterprise-grade payment flows with predictable pricing, tighter spreads, and even deeper market competition.

Africa’s pulse

A second pattern is also emerging across East Africa, where pricing is converging quickly.

Across Kenya, Tanzania, and Rwanda, gaps between providers narrowed by as much as 60%–80% over the quarter, a signal that competition is compressing what had previously been a persistent premium on stablecoin rails.

According to Borderless, the effect is less about absolute pricing and more about market structure.

As more providers quote rates, price discovery improves, and the cost of relying on a single intermediary becomes visible.

Thinner markets

However, a third tier tells a different story.

Stablecoin rails are exposing underlying FX volatility rather than smoothing within thinner markets such as Zambia and Malawi.

Execution costs in Malawi tripled mid-month, while Zambia widened more than 700 basis points within weeks.

Borderless stated that those swings are more than just anomalies. Indeed, the team said stablecoins are highlighting parallel market dynamics and liquidity bottlenecks usually shrouded by fixed pricing and opaque spreads in traditional banking channels.

Broader picture

While stablecoin FX approaches parity with legacy banking rails in these emerging markets, global adoption and regulatory debates remain major focus points.

Recent projections suggest stablecoin payment volumes could approach $1.5 quadrillion by 2035. This would put fiat-pegged crypto on track to rival Visa and Mastercard rails, Chainalysis wrote in an April 8 report.

At the same time, White House economists have argued that stablecoin adoption poses limited risk to bank lending amid Congressional negotiations on yield and rewards. The report arrived as U.S. regulators move to formalize oversight with new Treasury proposals targeting anti-money laundering and sanctions compliance.