The Bank of Mexico’s new stability report says that liquidity, contagion, and regulatory-arbitrage concerns are on the rise as more people in Latin America start using cryptocurrencies.
In a new report on financial stability, Mexico’s central bank said that “stablecoins pose significant potential risks to financial stability.” They said this was because stablecoins are growing quickly, are linked to traditional banking, and there are gaps in global regulation that might lead to arbitrage and make market stress worse.
Diverging global rules increase arbitrage risks
improve remittances and liquidity in decentralisedThe Banxico analysis says that stablecoins are still very subject to stress since they depend heavily on short-term US Treasurys, the market is concentrated with two issuers controlling 86% of the supply, and there have been times when stablecoins have lost their value.
The central bank said that without coordinated international protections, huge redemptions or issuer failures might spread to other funding markets.
Banxico also pointed out that different regulatory approaches are becoming a bigger risk. For example, the EU’s MiCA and the US’s GENIUS Act have different requirements for reserves, redemptions, and depositor protection, which creates gaps in the law that could encourage arbitrage between jurisdictions.
Banxico said that stablecoins can make settlements faster, lower the cost of transfers, and help remittances and liquidity in decentralised finance. But it plans to preserve a safe gap between the regular financial system and virtual assets since they could make other markets more volatile.
Mexico’s cautious stance contrasts regional adoption trends
Mexico doesn’t use crypto very much. The Global Crypto Adoption Index from Chainalysis says that the country dropped from 14th place in 2024 to 23rd place in 2025.
Mexico is generally cautious about crypto, and the central bank’s warning shows this. Even while exchanges like Bitso have grown, the country hasn’t passed any major new laws about digital assets and still uses its 2018 Fintech Law as the main set of rules.
Brazil and Argentina lead as regional activity surges
Brazil and Argentina are the most advanced countries in Latin America when it comes to using cryptocurrencies.
Chainalysis’ 2025 Geography of Crypto Report says that from July 2022 to June 2025, Latin America had about $1.5 trillion in crypto transactions. By December 2024, monthly activity had grown from $20.8 billion in mid-2022 to almost $88 billion. The amount was consistently over $60 billion in the last few months of 2024 and the first few months of 2025.
The analysis says that Brazil was by far the most active country in Latin America, receiving $318.8 billion in crypto value from July 2022 to June 2025. This was over a third of all activity in the region. Argentina came in second with $93.9 billion in transaction volume. The central banks of the two biggest countries are also doing more to control digital assets.
Brazil’s central bank made the laws final in November. These rules put crypto firms under banking-style oversight. For example, they regard stablecoin transactions and some self-custody wallet transfers as foreign currency operations.