The Bank of Mexico (Banxico) has issued a warning in its new financial stability report, stating that “stablecoins pose significant potential risks to financial stability,” citing their rapid growth, interconnectedness with traditional finance, and global regulatory gaps that could incentivize arbitrage and amplify market stress.
Stablecoin Risks Highlighted
The Banxico report emphasizes several vulnerabilities underscoring the sector’s exposure to stress:
- Heavy reliance on short-term US Treasurys.
- High market concentration, with just two issuers controlling 86% of the supply.
- Past depegging episodes of stablecoins.
The central bank warned that without coordinated international safeguards, mass redemptions or issuer failures could potentially spill over into broader funding markets.
Banxico also flagged diverging regulatory approaches—such as the EU’s MiCA and the US GENIUS Act—as a growing risk. These different requirements for reserves, redemption, and depositor protection create regulatory gaps that could incentivize arbitrage across jurisdictions.
While acknowledging that stablecoins can improve settlement efficiency, reduce transfer costs, and support remittances and liquidity in decentralized finance, Banxico plans to maintain a cautious distance between the traditional financial system and virtual assets due to their potential to cause stress in broader markets.
Mexico’s Cautious Stance vs. Regional Boom
Crypto adoption in Mexico remains relatively low, with the country falling to 23rd place in the 2025 Chainalysis Global Crypto Adoption Index (down from 14th in 2024). The central bank’s warning reflects Mexico’s cautious stance; despite the rise of exchanges like Bitso, the country primarily relies on its 2018 Fintech Law as the main regulatory framework.
In contrast, other Latin American countries have fully embraced adoption:
- The Chainalysis 2025 report shows Latin America generated nearly $1.5 trillion in crypto transaction volume from July 2022 to June 2025.
- Brazil leads the region, receiving $318.8 billion in crypto value (nearly one-third of regional activity).
- Argentina ranks second with $93.9 billion in transaction volume.
The central banks of the two leading countries are taking a more proactive regulatory stance. Brazil recently finalized rules placing crypto companies under banking-style supervision, treating stablecoin and certain self-custody wallet transfers as foreign exchange operations. Argentina is reportedly considering allowing traditional financial institutions to trade cryptocurrencies, potentially reversing its 2022 ban.
