Author: danny

A while back I went to Mexico and was lucky enough to meet a Cantonese restaurant owner there over a meal.

His surname is Huang, and his ancestors are from Taishan. He took me to his restaurant – not big, maybe 80–100 square metres, on a busy street. Inside there's a Guan Gong altar, a God of Wealth, and a faded photo of his old home in Guangdong: a watchtower, banyan trees, a pond, a narrow village road. His Mandarin isn't great, his Spanish is fluent, and his Taishanese has faded to a handful of family phrases.

When I asked how his ancestors sent money back to the mainland, all he remembered was an uncle coming to the shop and his old father handing over a cloth letter bag, saying "send it home".

Just those three words opened up the centuries‑long history of Latin America's remittance houses.

If you want to understand what stablecoins really are in Latin America, don't start from the crypto‑adoption playbook. That's the language the crypto industry uses to pitch Wall Street. Crypto asks, "where am I adopted?"

In places where cash flow depends on relatives overseas sending money home regularly, crypto isn't the point. The point is: money must get home.

1. What Taishan people first understood wasn't finance – it was home

Taishan people understood very early that money travels a long way. From the villages west of the Pearl River Delta, a generation boarded ships for "Gold Mountain" – to Cuba, Peru, Panama, Mexico. Many first put down roots on the U.S. West Coast; later, when the Chinese Exclusion Act came and borders eased, they went wherever there was work, spilling into northern Mexico. Mexicali, Tijuana, Sonora, Mexico City – all carry the traces of Cantonese.

They brought with them only their strength, their trade skills, a few relatives, a letter of introduction. Up in northern Mexico they built railways, grew cotton, opened general stores and restaurants. Later came the café de chinos, homes where Cantonese, Taishanese and Spanish were mixed together. A kid might be called José Wong on paper, called Ah‑wa by the elders at home, speak Spanish at school and hear Taishanese at home, worship ancestors during Chinese New Year and go to church on Sunday, grow up to run a restaurant or a small import business. That's not a romance; that's how to survive.

Immigrants have a knot they can never untie: they are abroad, but their obligations are all back in the old home. Parents must be supported, younger brothers must go to school, the ancestral house must be repaired, clan donations must be made, red‑and‑white rituals require contributions. So the money had to cross the ocean.

But back then there was no app, no SWIFT, no Alipay, not even a Western Union store. So there were silver letters (yinxin). (aka qiaopi, Cantonese people call them silver letters.)

A silver letter was no ordinary letter home. Half of it was a letter, half of it was money; half was greetings, half was an invoice; half was concern, half was settlement. The letter would say: how is Mother's health, how is the harvest, has younger brother started school, write back once the money arrives. The money tucked inside could be several months' wages, or an entire year of scrimping and saving. Today we call stablecoins "money with message" – silver letters were money with message long ago, except back then the message was written on paper, the money was carried by people, and the trust was vouched for by fellow villagers.

Someone might say silver letters were just about "trust". That's too glib. It didn't rely on some abstract notion of trust; it was an enforcement mechanism that worked inside a closed society. Who you were, who your father was, which village you came from, which street your shop was on in Mexico City, which clan association you were connected to – if you dared swallow the money, it wasn't just a single complaint from a customer. The whole countryside would know you were untrustworthy. Your business, your relatives, your surname, your position in the association – all would be dragged down with you.

That was the core of silver letters: non‑compliant yet highly enforceable (ah, a bit like a CEX); not a bank, yet bound by credit constraints; not decentralized in the slightest, yet utterly reliable among people who knew each other. What it solved wasn't just "can the money move", but the harder part – how a person who had left home could make the far‑off village acknowledge that the money had already arrived.

2. Latin America was always a continent of remittance letters

Pull the lens away from the Chinese community and pan across the whole of Latin America, and you'll see that silver letters aren't uniquely Chinese; they're the norm, just with a different name in each place. Mexicans, Salvadorans, Hondurans call it remesa; Venezuelans don't care what it's called, as long as the money from relatives overseas can be turned into medicine, rice or cash; Argentines call it dollar income, freelance payment, dólar crypto or USDT, or simply say "don't give me pesos"; Chinese call it silver letters. The names vary wildly, but the substance is the same: one person sweats over there, another person lives day to day over here; money earned in one currency system has to pass through another currency system and land as money that can buy food, pay school fees, buy medicine and cover the rent.

That is the oldest, most original demand for cross‑border payments. Fintech didn't create it; fintech spent a hundred years catching up to it.

How big is this market? In 2025, remittance inflows to the whole of Latin America and the Caribbean will be around US$173.7 billion. Mexico alone took US$64.7 billion in 2024, almost all of it electronic, the vast majority sent from the United States. In 2025 Mexico's number fell a bit, but it's still over US$60 billion pressing down. This is not pocket change. This is the pay slip for millions of households, the fiscal transfer for a host of small towns, the lifeblood of foreign exchange for several countries.

That's why Latin America understood stablecoins far earlier than many developed countries – not because they love blockchain or believe blockchain will change the world, but because they know all too well the pain of "money stuck between two worlds and unable to get through".

3. Remittance is not a payment; it's the cash flow of a family far away

The payments crowd loves to talk about "rails" – card schemes are rails, bank transfers are rails, Pix, SPEI, UPI are rails, blockchain is also a rail. But immigrants and workers don't talk about rails. They only ask one thing: has the money arrived?

Sent today – when will it arrive? Sent US$100 – how much will the other end actually get? Will it arrive by the weekend? Is there a queue? Will the exchange rate slash me? Who do I turn to if something goes wrong?

That's what makes remittance different from ordinary payments. An ordinary payment is buying something; remittance is a lifeline. You're at a convenience store buying water, the card is declined – just swap to another card. But a person sending money home to Mexico on a Friday night might be sending Monday's rent, a child's school uniform, an old mother's medicine. A failure isn't a UX problem; it's a life problem.

That's why remittance companies have never sold just "transfers". They sell certainty: the money will definitely arrive, the amount is clear, the receiver knows where to collect it, and if something goes wrong, someone answers the phone. Western Union, MoneyGram, Ria and all the local cash agents – their fees aren't cheap, yet they've survived for decades, precisely because immigrant families have a hard‑wired need for "certainty", not some technical arbitrage. (Compare that with crypto P2P markets – ha, good luck.)

If stablecoins want to squeeze into this market, just shouting "I'm cheap on‑chain" isn't enough. Cheap is only the entry ticket. The real test is: can you turn that cheapness into money that the receiver can see, touch and withdraw in n days? A Mexican family doesn't need USDT – they need pesos. A landlord in Brazil doesn't need an on‑chain hash – they need the ping of a Pix credit. An old lady in Venezuela doesn't need the Tron network – she needs something she can swap for medicine. That relative back in a Guangdong village couldn't care less about the reserve structure of USDC; all he wants to know is: has the money arrived?

What the on‑chain world can solve is only the middle stretch.

4. Stablecoins aren't crypto adoption – they're remittance infrastructure

Plenty of reports casually say stablecoin adoption is high in Latin America. That conclusion is only half right. What's really happening isn't "Latin America adopted stablecoins"; it's that Latin America was already carrying a mountain of cross‑border funds, and stablecoins happened to fill the most painful gap.

Where does it hurt? Banks are slow, expensive, work office hours, demand accounts, ask a million questions. Traditional money transfer operators are reliable, but their fee model is like Pinduoduo – every layer takes a slice. Cash networks are convenient but opaque. P2P is nimble but deep water. Exchange controls chop the official rate and the real rate in two. The local currency depreciates again and again – nobody wants to linger in pesos for a second longer.

In places like that, USDT and USDC are not understood as "crypto assets" at all. They are dollars you can load onto a phone and carry with you. The flavour varies from country to country.

Argentines buy USDT mostly just to dodge the next peso devaluation cut, parking money paid by overseas clients in a shell that looks more like dollars. For swathes of the middle class, freelancers and small business owners, it's the digital version of dollar cash.

Venezuela is a different way of surviving. After inflation pulverized trust in the local currency, dollarization grew organically on its own. But proper dollar bank accounts aren't available to everyone, and banks aren't trusted by everyone either. So stablecoins became a layer of informal dollars: relatives abroad can send them, people at home can receive them, street vendors can price in them, and P2P can turn them into local money.

Colombia and Peru sit in the middle. They don't have Argentina's anxiety about full dollarization, nor Venezuela's full‑scale collapse. But they have migrants, cross‑border workers, the platform economy and small import merchants. Here, stablecoins travel along routes of remittance, freelancer payments, B2B settlement and platform payouts.

Brazil is different again, because it has Pix. Instant, cheap small‑value local payments are so handy that stablecoins can't possibly tell a "I'm faster" story there. In Brazil, stablecoins either go upstream – cross‑border, foreign exchange, corporate settlement, imports, platform treasury – or they go outward, connecting people who earn abroad and spend locally. In Brazil, stablecoins aren't a local payment revolution; they're a layer of cross‑border dollars.

In plain terms, that's where they sit – nowhere near the level of a blockchain revolution changing the world.

South Americans often grasp this faster than North Americans. North Americans talk about stablecoins starting from regulation: what are the reserves, are they holding short‑dated bonds, does the issuer have a licence, will they drain bank deposits, will they upset monetary policy. South Americans are different; they understand stablecoins through the experience of daily life.

Actually, if you've ever suffered the pain of your national currency shrinking overnight, you understand exactly why ordinary people are dying to get their hands on US dollars; if you've experienced restrictions on buying foreign exchange, you understand why the P2P market was so hot; if you've sent money back to your hometown, you know that 3%, 5%, 8% in fees are not small amounts; if you've seen that the official exchange rate and the street rate are two completely different prices, you understand that "a real, actually exchangeable dollar price" is worth far more than the central bank's quoted rate.

Latin Americans' obsession with the US dollar isn't something taught in finance classes—it's a mental reflex drilled in by one currency collapse after another.

5. Silver Letters, Underground Banks, Stablecoins: Three Different Execution Mechanisms

The media loves to lump Silver Letters, underground banks and stablecoins together under the idea of "trust," then trot out the line "the essence of finance is trust." That's wrong.

Trust is not a single thing. And the trust behind Silver Letters is almost the opposite of the trust in stablecoins.

Silver Letters lean on punishment inside a society of acquaintances. Their enforcement comes from a net you can't escape — you can't run, your relatives can't run, your reputation — none of it can run. It's not about getting you to trust strangers; it's about making sure you dare not betray the people you know.

Underground banks lean on capital pools in two places plus netting on the books. The core has nothing to do with money physically crossing the border every time; it's about having pools on both ends so the books balance: on the Mexican side, someone wants to swap dollars or pesos for RMB; on the Chinese side, someone wants to swap RMB for dollars or pesos. The middleman doesn't need to wire money each time — they just offset the claims and obligations on both ends.

Stablecoins lean on the finality of on‑chain settlement. They don't care who your father is or whether you two grew up in the same village. If the address matches, the network confirms and the assets are movable, the value moves.

Same problem, three sets of solutions: Silver Letters rely on people, underground banks rely on ledgers, stablecoins rely on the chain. USDT resembles Silver Letters because both serve people who have left home. USDT doesn't resemble Silver Letters because it strips out that most lethal layer — the web of personal connections.

Silver Letters force you to be embedded in a web of relationships; stablecoins let you jump out of that web. That's their freedom, and that's their ticking bomb.

6. Underground Banks Are Not the Direct Heirs of Silver Letters

Never draw a clean bloodline from Silver Letters to underground banks. The old Taishan Silver Letters and some of today's cross‑border grey money houses — it's less father‑and‑son and more different‑shaped scars grown from the same wound: wherever finance is too slow, too expensive, too distant and too out‑of‑touch with users, they look similar — bypassing banks, leaning on middlemen, using informal ledgers, worming through the gaps between two financial systems.

But Silver Letters served the responsibility that those who left home owed to their entire family. Underground banks more often serve capital mismatches, foreign exchange controls, trade settlement and regulatory friction. Silver Letters began with sending money home; a money house might also begin with sending money home, or it might begin with foreign trade, capital flight, even cleaning dirty money. The moral colour, the era, the source of funds, the risks — none of them are the same.

Once stablecoins entered the picture, things got even messier. USDT doesn't automatically whitewash underground banks; it just makes that old ledger run faster. In the past, money houses relied on cash pools in two places, bank accounts and personal hand‑written ledgers among acquaintances. Today's money houses also have on‑chain wallets, P2P groups, exchange accounts, OTC networks and local payment accounts. Before, the ledger was written on paper; today part of the ledger is etched on‑chain. But on‑chain visibility doesn't mean the money is clean. Stablecoins make legitimate cross‑border funds run faster — and they give grey money a seat on the same express train.

In the eyes of regulators, stablecoins aren't as light‑hearted as "young people buying coins for fun" — they could grow into a parallel foreign exchange system, an international payment corridor that bypasses bank scrutiny, a low‑friction exit that turns local currency into dollar‑denominated assets.

7. What Officials Watch Isn't Adoption — It's Foreign Exchange and Payments

The public looks at stablecoins to see whether they can preserve value, whether the money arrives, and whether they can lose a little less on the exchange rate. Officials are looking at a different ledger: who issues, who custodies, who redeems, who does KYC, who files suspicious transaction reports, who carries consumer protection, who backstops large inflows and outflows of funds, and how to stop them from turning into a hidden corridor for tax evasion, money laundering and circumventing foreign exchange controls. So Latin American officials aren't really "open" or "conservative" about stablecoins — a more accurate way to put it is: they've long realised this thing can't be blocked, so the only option is to bring it inside and regulate it.

Brazil is the one that sees it most clearly. Brazil's central bank has already stuffed the purchase and sale of virtual assets pegged to fiat, their exchange, and the use of virtual assets for international payments and transfers — all into the regulatory framework for foreign exchange operations. That's a watershed for the whole industry. In the past, stablecoin companies loved to describe themselves as tech platforms, wallets, infra, a settlement layer; but in a market like Brazil, as long as you're actually handling the entry and exit of funds across borders, dollar substitution and local settlement — you can't expect to stand outside the door of financial regulation forever.

Mexico is a different story. It has an enormous remittance market and a bank transfer backbone like SPEI. In 2024 it took in roughly US$64.7 billion in remittances, over 96% from the United States, and more than 99% went through electronic channels. That shows Mexico left the paper‑money era long ago — it's thoroughly digitised. So the opportunity for stablecoins in Mexico has never been "upgrading paper money to electronic." The tough nut it needs to crack is something else: cost, speed, exchange rates, cash pickup, local bank accounts, immigration status, US‑side compliance, Mexico‑side payout — the key is how to stitch all those links together organically.

Argentina's regulators are more pragmatic. They know people are buying stablecoins, and they know dollarisation won't disappear because of a ban. Their dilemma isn't "should people be allowed to want dollars"; it's how to cram exchanges, custody, VASPs, AML and user protection into a regulatory box they can actually manage.

The everyday person asks: how can my money get home faster? The official asks: in the end, will this money path bypass me? If it bypasses me — well, that's your mistake.

Neither side is asking the wrong question.

8. The Real Battlefield Isn't That One Moment On‑chain — It's at Both Ends

The easiest way to overestimate stablecoins is to think "transfer complete" means "payment complete." It's nowhere near that. The chain can prove that a USDT moved from one address to another, but it can't prove the recipient isn't a fraud, it can't guarantee the money is clean, it can't handle a user fat‑fingering the wrong address, it can't prevent a local bank account from being frozen, and it certainly can't let a Mexican family walk into a supermarket to buy groceries with a wallet address.

What stablecoins solve will always be only the middle leg. The hard parts are at the two ends.

One end is where the money comes from: US wages, Mexican cash, Brazilian reais, export revenues, platform payouts, freelancer invoices, salaries from overseas companies.

The other end is where the money needs to go: Pix, SPEI, Mercado Pago, Nequi, Yape, bank accounts, cash pickup, supplier accounts, landlord accounts, the mobile wallet of a family member.

Stablecoins are sandwiched between these two ends, responsible for moving value faster, cheaper and more continuously. But they won't cultivate users, won't apply for licences on their own, won't build out local banking relationships, cash networks or customer service, and they certainly won't create trust.

So the ramp business will increasingly look like hard labour. Once everyone can handle USD‑to‑USDT and USDT‑to‑local‑currency, and on‑chain costs keep falling, making money purely off exchange‑rate spreads and transaction fees will get harder and harder.

Money will flow to the two ends: whoever grips the sender on the US side gets user acquisition; whoever grips the payout on the Mexico side gets retention; whoever defends the Pix exit in Brazil gets speed; whoever holds real dollar liquidity in Argentina gets pricing power; whoever has licences and banking relationships can survive round after round of regulation; whoever has the brand is the one a migrant dares to hand a whole month's salary to.

That's the real opportunity for stablecoins in this remittance story. Not issuing a token, not making a crypto card, not getting the corner café to accept USDT.

What it should grow into is a new‑generation remittance stack. The front end uses the language and scenarios users are irreducibly familiar with — a Spanish‑language app, a counter at a Chinese supermarket, a WeChat mini‑program, a WhatsApp bot, or a local Mexican wallet.

In the middle, stablecoins quietly settle underneath; users have no idea they're using USDT or USDC — just as the families back in the village never knew how the Gold Mountain firm handled the foreign exchange, offset the books and moved money across the Pacific.

The back end is local delivery — landing in SPEI or cash in Mexico, Pix in Brazil, bank accounts or WeChat/Alipay in China, Mercado Pago or cash in Argentina, Nequi in Colombia, Yape or Plin in Peru.

In the user's eyes, there are just four words: the money has arrived.

In the platform's eyes: settlement costs have fallen, capital moves faster, cross‑border payouts can be programmed.

In the regulator's eyes: are you a remittance company, a payment institution, a foreign exchange dealer, a VASP or a bank?

The answer is — I see you're all of them.