Circle Expands To Brazil & Mexico, Will It Boost USDC Adoption?

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As a seasoned analyst with over two decades of experience in the financial sector, I’ve seen the evolution of digital currencies from a distant dream to a tangible reality. Circle’s latest expansion into Brazil and Mexico is not just a leap forward for the company, but a significant stride towards the integration of blockchain finance with traditional banking systems globally.

The company known as Circle, responsible for the USDC (United States Dollar Coin) stablecoin, has recently expanded into both Brazil and Mexico. This strategic step signifies a significant advancement in delivering quicker and more affordable digital dollar services to businesses within two of Latin America’s largest economies.

Insight Into Circle’s Latest Expansion

The company has integrated national real-time payment systems in both countries, PIX in Brazil and SPEI in Mexico. This move has made USDC accessible through local banks. Hence, it eliminates the need for costly and slow international wire transfers.

Furthermore, local financial institutions in Brazil and Mexico now offer the option for businesses to buy USDC directly using Brazilian Real (BRL) or Mexican Peso (MXN). This means they no longer need to first exchange their funds into USD. This new feature comes with multiple advantages.

  • First and foremost, it cuts down the time that is required to get USDC. All transfers will now take a few minutes and not days as it used to be.
  • Second, it assists the businesses in avoiding costs of converting one currency to another.
  • Third, it facilitates international transactions by utilizing a digital dollar that is easily recognized across countries

US Dollar Coin (USDC) can now be accessed in Brazil and Mexico through local bank transfers and the domestic high-speed payment networks: PIX in Brazil and SPEI in Mexico.

Read more about the new possibilities USDC unlocks for businesses in the region.

— Circle (@circle) September 17, 2024

This development is particularly important for businesses operating in Latin America, as a large portion of their transactions involve the use of US dollars. Notably, Mexico stands as one of the U.S.’s major trading allies, with annual trade volumes exceeding an impressive $800 billion.

Similarly, a significant portion of Brazil’s international trade is conducted using the U.S. dollar, given that annual trade between the U.S. and Brazil amounts to approximately $120 billion. Therefore, utilizing USDC for transactions can streamline and reduce costs for all involved businesses.

Remittance Market

The growth of USDC (Circle’s stablecoin) as a payment option in Mexico seems particularly advantageous for the remittance sector. By the year 2023, Mexico had received over $63 billion in remittances from the United States alone, representing approximately 3.9% of Mexico’s GDP. Compared to traditional methods, stablecoins like USDC are less expensive, with a total charge typically amounting to only 63.5%. As you can see, this represents a significant reduction in fees.

As a researcher, I’m aligning this action with Circle’s forward-thinking approach to merge blockchain finance with conventional banking systems. Jeremy Allaire, Circle’s CEO, expressed optimism about our venture’s future expansion. He anticipates that an increasing number of local banks and payment systems worldwide will embrace blockchain technologies, as the benefits of internet-based transactions become increasingly apparent.

Simultaneously, this action aligns with the stablecoin issuer’s decision to partner with Sony Block Solutions Labs for the purpose of integrating the linked USDC into the recently introduced Ethereum Layer 2 platform developed by Sony, named Soneium.

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2024-09-17 21:16