There are distinct concepts of stablecoins. One defines them as crypto assets backed by fiat currencies, as is the case with the BRZ, pegged to the Brazilian Real, and another states they are currencies backed by other assets, such as gold or commodities, for example.
In addition, there are also algorithmic stablecoins, which work differently and can carry risks – remember the recent case of Terra/LUNA.
But while stablecoins represent less than 7% of the crypto market, they are responsible for trading more than 50% of the value of the entire market. Their use is growing and it is critical that users understand their differentials, risks, and advantages.
Stablecoins as a means of payment
In the assessment of Carlos Russo, CFO of Transfero, stablecoins fully comply with the new web 3.0 environment. “However, how do they fit into the concept of circulating medium?”, he questioned, during the Payment Revolution event, held between September 20 and 21 in São Paulo.
“In the United States, where this market is more developed, stablecoins represent US$ 200 billion of primary issuance”.
During the presentation, he explained the various characteristics of each stablecoin, mentioning that geopolitical factors are determining for users to choose those that best fit their interests. “As a rule, less regulated stablecoins, such as Theter, offer higher risk than more regulated ones, such as USDC”, Russo said.
According to him, regulation is essential to avoid the issuance of uncollateralized stablecoins. “Today, there is transparency, but the user must understand which stablecoins exist, whether they are backed or not, and the risk level. Today they are entering the payment system, and this understanding is crucial”, he said.
Use cases: stablecoins are a new paradigm
Russo mentioned that a relevant example for the Brazilian public, is the exchange of BRZ (pegged to the Real) by Binance USBCoin (in dollars).
“This is the cheapest way, existing in the market, to exit the Brazilian real to the U.S. dollar through the use of two stablecoins”, he said. “It is a much cheaper solution than any other fintech can provide”.
In the case of lending, stablecoins are also gaining importance, as in the operations of startup Credix, a partner of Transfero, which operates in the credit sector.
“The use cases are only growing. This coincides with the growth of web 3.0 and blockchain. Stablecoins will be the foundation, a base to allow all applications to be developed. In fact, we will have the money at the code level. This is the new paradigm we are living”, he pointed out.
According to Russo, the entry of stablecoins into Brazil’s traditional financial market is already happening. “Global companies from emerging countries that do not have subsidiaries in Brazil do not need to open an account to operate here. Brazil has a very efficient payment system, the Pix, which will start to converge with the Central Bank’s project, the Brazilian CBDC (Real digital), and there are solutions to close this gap”, he commented, mentioning that international companies are already using stablecoins in some transactions.
“The freedom for a company to move from the BRZ to another stablecoin pegged to the dollar, 24 hours, seven days a week, is a matter of efficiency and a competitive differential”, said Russo.