Paradigm Bets on Brazil: The New Battleground for Stablecoins is Not in the U.S

Original Title: "Paradigm Invested in Brazilian Stablecoin Company, But Why Brazil?"

Original Author: Eric, Foresight News

Recently, the Brazilian stablecoin company Crown completed a $13.5 million Series A funding round led by Paradigm, with a valuation of $90 million. The Block's press release clearly emphasized that this is Paradigm's first investment in a Brazilian company. This funding round is also Crown's second round of financing within two months; in mid-October, Crown had just completed an $8.1 million seed round led by Framework Ventures, with participation from Coinbase Ventures and Paxos.

This may not be front-page news, but there are two points in the news that are worth noting: Why Crown? And why Brazil?

Why is Crown Worth Investing In?

Analyzing a matter usually requires considering both internal and external factors.

On the external factors, the author believes that investment opportunities for domestic stablecoin issuers in the U.S. have become increasingly scarce. Tether and Circle have already captured the vast majority of the market, making it necessary for investment institutions to target external markets if they want to find greater Alpha. Moreover, there are not many targets where foreign capital can invest in companies related to domestic fiat currencies, and stablecoins can have a market domestically.

Brazil is a rare "treasure land" on the American continent that meets most conditions, and we will discuss why later.

Returning to Crown, according to disclosed data, the total amount of Crown's Brazilian real (BRL) stablecoin BRLV is just over 100 million, which is worth less than $20 million, and the trading volume in the past 30 days is only $56,000. This indicates that the market for domestic currency stablecoins in Brazil is not large, especially since Crown is currently only targeting institutional clients.

Clearly, the logic behind investing in Crown is betting that the team behind it can achieve results in this market in the future.

Crown's co-founder and CEO John Delaney was previously a lawyer in the international finance sector and is also the former COO of the well-known Brazilian company Xerpa, which received investment from Founders Fund. Xerpa launched the "Earned Wage Access" platform in 2019, allowing employees to withdraw their earned wages at any time (instead of waiting until the end of the month), helping to avoid high-interest loans. This service is particularly popular in Brazil's high-interest and financially pressured environment and is seen as a tool for employee financial well-being. The company charges a small fixed fee and does not involve interest.

Co-founder and Chief Engineer Vinicius Correa was an early engineer at the Brazilian digital bank Nubank. Nubank's investors are also quite prestigious, with participating institutions including Sequoia Capital, Tiger Global, Goldman Sachs, Founders Fund, Tencent, and Berkshire Hathaway, having raised a total of $2 billion across multiple rounds. Nubank went public on the New York Stock Exchange in 2021 with an IPO valuation of $41.5 billion and currently has a market capitalization of nearly $80 billion.

Founding partner and head of ecosystem Alex Gorra was the managing partner of the family office Brainvest, which manages $5 billion in assets, and has previously held positions at ARX Investments, UBS, Rothschild Bank, and JPMorgan. COO Bruno "BL" Passos led cross-functional teams at Hashdex.

Crown's founding team can be described as a star team, with both founders having participated in the process of building Brazilian companies from 0 to 1. Although the current data for BRLV does not look good, it does not prevent them from raising a total of over $20 million in financing within two months.

Additionally, the Crown team stated in their blog that the launch of BRLV essentially also sees the contribution of USDT and USDC in purchasing government bonds. Issuing stablecoins locally in Brazil can also provide purchasing power for government bonds, thereby stabilizing the economy and further stimulating the use of stablecoins, which is a win-win situation. If dollar stablecoins merely help the U.S. "extend its life," then real stablecoins can be said to genuinely help the country.

Why Bet on Brazil?

In terms of the fiat currency underlying stablecoins, there seem to be many better options than the Brazilian real, so why choose Brazil?

You might not believe it, but this country, which many 80s and 90s kids last heard of because of football, has become one of the largest and globally leading innovation centers in Latin America, with over 1,500 fintech companies and more than 100 million users.

As a capitalist country, Brazil's banking sector has long been dominated by five major banks (Itaú, Banco do Brasil, Bradesco, Caixa, Santander), which account for over 80% of assets, far exceeding the U.S. (about 50%). Traditional banking services are rigid and costly (annual credit card interest rates often exceed 300%), and there is severe bureaucracy, leading to tens of millions of low- and middle-income individuals and unbanked people (historically reaching 55 million) being excluded from the system.

However, this has also created a huge demand gap, with fintech companies like Nubank entering the market with no-fee credit cards, providing simple and low-cost services to quickly fill the market void.

Although the Brazilian central bank cannot change the monopoly of traditional banking, it has unexpectedly taken the initiative to promote competition and inclusion, even becoming a classic case of global digital financial regulation. Its biggest contribution was the launch of the instant payment system Pix in 2020. Pix supports free and real-time transfers 24/7, with transaction volumes exceeding one trillion reais by 2025, covering over 90% of the population. Pix quickly replaced cash and credit cards upon its launch, becoming the preferred payment method for 76% of Brazilians, significantly enhancing financial inclusion and providing low-cost infrastructure for fintech (such as integrating Pix for payments and credit innovations).

You may often see news in the Web3 industry about various trading platforms or crypto payment tools integrating Pix. It is indeed not easy for a central bank in a capitalist country to lead the launch of a payment system capable of shaking the existing banking system, but this "beneficial" direction has allowed local fintech companies to have better development prospects by reaching more users.

Because of this, new financial forms like cryptocurrencies are highly accepted in Brazil. With a population of over 200 million, a smartphone penetration rate of nearly 90%, over 180 million internet users, and an average internet usage time of over 5 hours, young digital natives, especially Generation Z, have a strong demand for mobile finance. Last September, Circle directly began supporting the exchange of reais for USDC.

The popularity of dollar stablecoins in Brazil has been analyzed in many articles as being due to the instability of the Brazilian currency, but according to various investigations by the author, even including this reason only accounts for a small part. It now seems that if this reason were valid, investment institutions like Paradigm would not place such heavy bets on Brazilian fiat currency stablecoins and fintech companies.

In fact, Brazil did experience multiple episodes of hyperinflation in the 1980s and 1990s, even reaching extreme monthly inflation rates of 80%. However, in recent years, although the volatility of the real is still considerable, it has achieved good results in stabilizing currency value and reducing inflation for a country like Brazil. By 2025, Brazil's inflation rate is expected to hover between 4.5% and 5%, which, although still above the central bank's target, is significantly better compared to neighboring Argentina.

Some local residents holding dollar stablecoins in Brazil do so to hedge against the depreciation of the real, especially in the context of the Federal Reserve's interest rate hikes in recent years, but more often it is for practical purposes such as foreign trade, tax avoidance, facilitating capital flow, and trading cryptocurrencies.

According to Chainalysis data, Brazil ranks fifth globally in cryptocurrency adoption, following India, the U.S., Pakistan, and Vietnam. Its cryptocurrency inflow from July 2024 to July 2025 reached $318.8 billion, far ahead of other Latin American countries.

Additionally, data provided by cryptocurrency market maker Gravity Team indicates that Brazil has adopted stablecoins as tools for investment and cross-border payments, with stablecoins currently accounting for about 70% of the indirect capital flow from local trading platforms to international trading platforms.

At this point, some may wonder, since there is already a national-level payment tool like Pix, what is the significance of stablecoins?

The BRLV launched by Crown has a feature not explicitly stated on its official website but mentioned in the press release: it will share government bond interest income with stablecoin holders, which in Brazil is 15%. Although it is impossible to distribute all of it to holders, even half of that would be a very attractive yield.

In the future, BRLV could also integrate with the Pix system. For ordinary people, even the impoverished, there may be no motivation to exchange for stablecoins, but for those with wealth, stablecoins not only do not affect payments but can also "earn interest" just by holding them. In the future, seamless trading with dollar stablecoins could be possible, and even participation in DeFi. In short, various imaginative scenarios will certainly create sufficient demand and use cases for stablecoins in this land.

In most countries with weaker national strength, unable to maintain the stability of their currency for long periods, and with scarce foreign exchange reserves, dollar and dollar stablecoins are a lifeline for the people, while Brazil happens to be one of the exceptions.

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