Latin American Regulators Weigh Where USDT, USDC Stablecoin Reserves Should Live

The dollar question underneath Latin America's stablecoin boom is not the one Washington is debating. In the United States, the fight is over issuer characteristics: who may issue a token pegged to the dollar, what must back it, and how the reserves get audited. The Federal Reserve and the Office of the Comptroller of the Currency, the regulator that supervises US national banks, cannot simply accept that a token is worth one dollar — a dollar-pegged token is, functionally, a representation of the US currency itself, so control over who may make that promise is treated as core monetary authority. Latin America is regulating something structurally different: mass access to a hard currency that none of the region's governments control. For a saver in Buenos Aires, Bogotá or Mexico City, whether the token behind their savings is USDT, USDC or whichever issuer wins the US policy fight matters far less than two practical things — that the peg holds and that the custodian stays solvent. That asymmetry explains the mistake regional regulators keep drifting toward: importing Washington's dispute over issuer specifications when the local problem is different and harder. Regional market data shows how far dollarization has already run. Argentina remains the world's most dollarized crypto market by share of volume. In Brazil, institutional stablecoin trading volume jumped from 5% of local crypto flows in 2024 to 84% in 2025, while Mexico's Senate is now debating a bill covering peso-pegged stablecoins. The pattern points to a question none of the region's frameworks has yet answered: not which stablecoin wins, but where the dollars backing it should live. A dollar in a New York reserve account does the same job on a user's screen as one held in Buenos Aires or São Paulo — but for a regulator in a region where hard currency has been the state's scarcest resource for decades, only the domestically held dollar is available to the financial system under stress.

Kenya's 30% Reserve Blueprint

If Kenya is any guide, that question will not stay theoretical. In July, Kenya's Treasury proposed requiring stablecoin issuers to hold at least 30% of customer funds in banks domiciled inside the country — a direct attempt to give the domestic financial system a claim on dollar flows it can no longer prevent. No Latin American regulator has proposed anything comparable yet, and the logic behind Kenya's rule — chronic dollar scarcity meeting a financial system trying to claw back control of flows — arguably bites harder in Argentina or Venezuela than in Nairobi. Our reading of the region's frameworks, however, is that none has attempted to solve reserve location so far, and that restraint may be their most underappreciated virtue. Argentina's PSAV regime, Brazil's rules in force since February and the bill before Mexico's Senate all regulate issuance and exchange without dictating where the backing assets sit. Forcing reserves local would carry real costs. It would fragment liquidity that today lives almost entirely in USDT and USDC, strip domestically backed instruments of the convertibility that makes them useful for remittances, and likely push demand toward unregulated rails — peer-to-peer venues and DeFi channels outside the compliance perimeter — rather than compliant ones, a result that defeats the rule's own purpose. The tradeoff differs from past stablecoin failures: unlike algorithmic stablecoins, which broke because their pegs depended on code and reflexive demand, USDT and USDC hold or fail on the solvency of their reserve custodians — which is precisely why custody location has become a policy variable at all. The workable alternative is coexistence: locally reserved and offshore-reserved dollar instruments operating under supervision, interoperable with one another, letting users decide where their dollars live. Readers tracking the market in real time can follow live spot and futures prices on MEXC.

The arc running through both developments is a single shift: stablecoins have stopped being a crypto product and become a dollar-placement decision. The most load-bearing primary record in this story is the chart series compiled by a16z crypto on Argentine stablecoin usage, which documents how users — from small savers to the crypto whale tier — route dollar exposure through pegged tokens rather than banked dollars. That dataset is what converts Washington's issuer debate into a domestic policy problem for the region. Our desk's view: regulators who mandate local reserves will push volumes toward unregulated rails, while those who guarantee interoperability with offshore-reserved instruments keep dollar savings inside a supervised system. The next test arrives when a regional finance ministry drafts its own version of Kenya's 30% rule.