TLDR
- 14 of 21 currencies traded within 1% of interbank FX rates by March
- LATAM stablecoin FX averaged 22 basis points from bank pricing
- Brazil recorded zero basis point execution costs across providers
- East Africa spreads narrowed by up to 80% due to rising competition
- Zambia and Malawi saw volatility with spreads widening over 700 basis points
Stablecoin foreign exchange is moving closer to traditional banking systems in emerging markets. A new report from Borderless shows that pricing gaps between stablecoins and fiat currencies are shrinking. This trend is clear across Latin America and East Africa.
The firm analyzed over 1.1 million price points across 51 currencies in the first quarter. It found that most tracked currencies traded close to interbank rates. This shift shows stablecoin FX is becoming practical for real payment use.
LATAM sees near parity with bank FX pricing
Latin America shows the strongest alignment with traditional FX markets. Stablecoin trades stayed within about 22 basis points of interbank rates during the quarter. By February, pricing moved even closer to parity.
Brazil stood out with zero basis point execution costs across several providers. This level is often seen in institutional FX markets. The report states, ““This is what institutional-grade stablecoin FX looks like.””
The data shows that pricing is becoming more predictable. It also shows tighter spreads and better execution across platforms. As a result, businesses can rely more on stablecoins for cross-border payments.
Competition among providers is also improving pricing. More participants are offering quotes, and that helps narrow spreads. This creates a more efficient and transparent market structure.
East Africa shows rapid spread compression
East Africa is also seeing strong progress in stablecoin FX pricing. Countries such as Kenya, Tanzania, and Rwanda reported sharp declines in spreads. Gaps between providers narrowed by 60% to 80% during the quarter.
This shift comes as more firms enter the market. Increased competition leads to better price discovery and lower costs. As more providers quote rates, users gain better options.
Borderless noted that the change reflects structural shifts in the market. The presence of multiple providers reduces reliance on single intermediaries. This helps expose true pricing levels across corridors.
While pricing is improving, the focus is not only on rates. The report points to market structure as a key factor. Better competition leads to stronger and more reliable pricing systems.
Thinner markets show volatility and pricing swings
Not all markets show the same level of stability. In thinner markets such as Zambia and Malawi, volatility remains high. Stablecoin FX exposed sharp pricing swings during the quarter.
Execution costs in Malawi tripled within a short period. Zambia recorded spreads widening by more than 700 basis points.
Borderless stated that these movements reflect underlying FX conditions. Stablecoins do not hide volatility in these markets. Instead, they make pricing shifts more visible.
The report suggests that liquidity constraints play a role. Thin markets often struggle with limited supply and demand balance. As a result, pricing can change quickly and without warning.
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