The latest stability report released by the Bank of Mexico raises concerns about regulatory-arbitrage, contagion, and liquidity risks as the adoption of cryptocurrency is accelerating throughout the Latin American region.
In a recent financial stability report, the central bank of Mexico issued a caution that “stablecoins pose substantial potential hazards to financial stability.” This warning cited their swift expansion, their connections to conventional finance, and worldwide regulatory voids that might amplify market stress and facilitate regulatory arbitrage.
The substantial dependence of stablecoins on short-term U.S. Treasury instruments, the high market concentration where 86% of the supply is controlled by merely two issuers, and historical instances of stablecoin de-pegging all emphasize the ongoing vulnerability of the sector to financial duress, according to the Banxico report.
The central bank cautioned that without synchronized international protective measures, widespread redemptions or the failure of an issuer could overflow into more expansive funding markets.
Banxico additionally emphasized the disparate regulatory methodologies as an increasing element of hazard, observing that frameworks such as the U.S. GENIUS Act and the EU’s MiCA (Markets in Crypto-Assets) impose distinct requirements for depositor protection, redemption, and reserves. This divergence is creating regulatory loopholes that could motivate arbitrage between different jurisdictions.
Banxico acknowledged that stablecoins can be used to enhance settlement efficiency, decrease transfer expenditures, and bolster liquidity in decentralized finance, along with supporting remittances. Nevertheless, a careful separation between virtual assets and the conventional financial system is planned to be maintained by the bank, citing the potential for these assets to induce strain in larger markets.
Mexico’s Crypto Adoption Slips as Central Bank Maintains Cautious Stance
Cryptocurrency adoption in Mexico is considered to be comparatively low. As per the Global Crypto Adoption Index published by Chainalysis, the nation’s ranking in adoption declined to the 23rd position in 2025, a decrease from the 14th position held in 2024.
The caution issued by the central bank reflects the generally reserved position of Mexico concerning cryptocurrencies. Notwithstanding the emergence of exchanges such as Bitso, no substantial new legislation for digital assets has been introduced by the country, and it continues to depend upon its 2018 Fintech Law as the foundational regulatory structure.
Brazil and Argentina Emerge as Latin America’s Crypto Adoption Leaders
While a reserved position on digital assets is maintained by Mexico’s central bank, the adoption of these assets has been embraced by other nations in Latin America.
The Chainalysis 2025 Geography of Crypto Report indicates that approximately $1.5 trillion in crypto transaction volume was generated by Latin America between July 2022 and June 2025. Monthly activity is shown to have surged from $20.8 billion in mid-2022 to almost $88 billion by December 2024. Furthermore, volumes consistently exceeding $60 billion were recorded across several months in early 2025 and late 2024.
According to the report, Brazil was the clear leader in Latin America, receiving $318.8 billion in cryptocurrency value from July 2022 to June 2025, which represents nearly one-third of all regional activity. Meanwhile, Argentina was ranked second, recording $93.9 billion in overall transaction volume.
A more proactive position in regulating digital assets is also being adopted by the central banks of the two primary nations.
In November, rules were finalized by Brazil’s central bank that bring cryptocurrency firms under a banking-style supervisory framework. This includes classifying specific self-custody wallet transfers and stablecoin transactions as foreign exchange activities.
In Argentina, a nation that has been afflicted by accelerating inflation, the central bank is reportedly considering whether conventional financial entities should be permitted to trade cryptocurrencies. This potential shift is being discussed as a reversal of the prohibition that was implemented in 2022, as indicated by a report from La Nacion on Friday.
