Paradigm Bets on Brazil: The New Battlefield for Stablecoins Isn't in the US

Original Article Title: "Why Did Paradigm Invest in a Brazilian Stablecoin Company?"

Original Article Author: Eric, Foresight News

Recently, the Brazilian stablecoin company Crown completed a $13.5 million Series A funding round led by Paradigm, valuing the company at $90 million. In a news release by The Block, it was explicitly emphasized that this was Paradigm's first investment in a Brazilian company. This funding round also marks Crown's second round of funding completed within two months. In mid-October, Crown had just closed an $8.1 million seed round led by Framework Ventures, with participation from Coinbase Ventures and Paxos, among others.

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

Why Invest in Crown?

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

On the external front, the author believes that investment opportunities for U.S.-based stablecoin issuers are few and far between. Tether and Circle have already captured the vast majority of the market, making it necessary for investment institutions to target external markets to seek greater alpha. There are also few targets that allow foreign capital to invest in companies related to the national fiat currency and have a market for stablecoins domestically.

Brazil is a rare "treasure trove" on the American continent that meets most of the conditions. As for why, we'll get to that later.

First, let's talk about Crown. According to disclosed data, the total supply of the Brazilian real (BRL)-pegged stablecoin BRLV issued by Crown currently slightly exceeds 100 million coins, equivalent to less than $20 million in value, with a trading volume of only 56,000 in the past 30 days. It is evident that the market for Brazil's domestic currency stablecoin is not large at the moment, not to mention that Crown is currently only targeting institutional clients.

Clearly, the logic behind investing in Crown is to bet that the team behind it can achieve success in this market in the future.

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

Co-founder and Chief Engineer Vinicius Correa is an early engineer at the Brazilian digital bank Nubank. Nubank's investor lineup is also quite impressive, with participation from top-tier institutions in a total of $20 billion worth of multi-round financing, including Sequoia Capital, Tiger Global, Goldman Sachs, Founders Fund, Tencent, Berkshire Hathaway. Nubank went public on the NYSE in 2021 with an IPO valuation of $41.5 billion, currently valued at nearly $80 billion.

Founding Partner and Ecosystem Lead Alex Gorra previously served as a Managing Partner at the family office Brainvest, managing $5 billion in assets, and has held positions at ARX Investments, UBS Group, Rothschild Bank, and JPMorgan's management. COO Bruno "BL" Passos has led cross-functional teams at Hashdex.

Crown's founding team can be described as a bona fide dream team, with both founders having been involved in taking Brazilian local businesses from 0 to 1. Although BRLV's data currently may not look good, it did not prevent them from raising a total of over $20 million within two months.

Furthermore, the Crown team stated in their blog that the launch of BRLV essentially stems from seeing the contributions 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, in turn, further stimulating the use of stablecoins, which is a win-win situation. If the US dollar stablecoin is only helping the United States "live on," then the Brazilian real stablecoin can be said to have solidly helped the country.

Why Bet on Brazil?

When it comes to the stablecoin's underlying fiat currency, there seem to be many better options than the Brazilian Real, but why choose Brazil?

You may not believe it when you hear it, the last time you heard about this country might have been due to football if you're from the 80s or 90s. However, it has become one of Latin America's largest and globally leading innovation hubs, with over 1,500 fintech companies and over 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), with assets accounting for over 80%, far higher than the United States (around 50%). Traditional banking services are rigid, costly (credit card annual interest rates often exceed 300%), and bureaucratic, leading to tens of millions of low- and middle-income individuals and the unbanked (historically up to 55 million) being excluded from the system.

However, this has also created a significant demand gap. Fintech companies like Nubank entered the market with fee-free credit cards, providing simple, low-cost services and quickly filling the market gap.

Although the Central Bank of Brazil cannot change the monopoly of traditional banks, it unexpectedly took the initiative to promote competition and inclusivity. It even became 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, 24/7 real-time transfers, with a transaction volume exceeding a trillion reais by 2025, covering over 90% of the population. Pix quickly replaced cash and credit cards upon launch, becoming the preferred payment method for 76% of Brazilians. This significantly increased financial inclusion and provided Fintech companies with low-cost infrastructure (such as integrating Pix for payments and credit innovation).

I'm sure you often see in the news of the Web3 industry various exchanges or Crypto payment tools integrating with Pix. It is indeed quite a challenging feat for a capitalist country's central bank to lead the launch of a payment system that is sufficient to shake the existing banking system, but this "people-benefiting" direction has also allowed local Fintech companies to have better development prospects by reaching more users.

It is for this reason that new financial forms like cryptocurrency have been 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 per day, Brazil's young, digital-native population, especially the Z generation, has a strong demand for mobile finance. Last September, Circle directly started supporting the exchange of the real for USDC.

The popularity of the US dollar stablecoin in Brazil has been analyzed by many articles as being due to the instability of the Brazilian national currency. However, based on the author's investigation from various sources, even if this reason is considered, it only accounts for a very small part. Now, it appears that if this reason were valid, investment firms like Paradigm would not have focused so heavily on Brazilian national fiat stablecoins and Fintech companies.

In fact, Brazil did experience severe hyperinflation multiple times in the 1980s and 1990s, even reaching extreme situations with monthly inflation rates of 80%. However, in recent years, although the real's volatility is still significant, for a country like Brazil, it has achieved good results in stabilizing its currency value and reducing inflation. Brazil's inflation rate hovered between 4.5% and 5% in 2025, still higher than the central bank's target but much better compared to neighboring Argentina.

Indeed, a portion of local residents in Brazil holding USD stablecoins are hedging against the devaluation of the real, especially against the backdrop of the Fed's interest rate hikes in recent years. However, many more do so for practical purposes such as foreign trade, tax evasion, facilitating capital flow, and trading cryptocurrencies.

According to Chainalysis data, Brazil ranks fifth globally in cryptocurrency adoption index, following India, the United States, Pakistan, and Vietnam. Its cryptocurrency inflows from July 2024 to July 2025 reached $318.8 billion, leaving other Latin American countries far behind.

According to data provided by the cryptocurrency market maker Gravity Team, Brazil has embraced stablecoins as a tool for investment and cross-border payments, with stablecoins currently accounting for about 70% of the indirect flow of funds from Brazilian local exchanges to international exchanges.

At this point, some may ask, since Brazil already has a national payment tool like Pix, what is the significance of stablecoins?

An unmentioned feature of Crown's BRLV, highlighted in a press release, is that it shares national bond interest income with stablecoin holders, and in Brazil, this number is 15%. Although it may not be feasible to distribute the full amount to holders, even half would be a very attractive yield.

In the future, BRLV can also integrate with the Pix system. For ordinary people or even the impoverished, there may be no motivation to exchange stablecoins. However, for the affluent, stablecoins not only do not affect payments, but simply holding them can generate interest income. In the future, they can seamlessly trade with USD stablecoins, participate in DeFi, and undoubtedly, various imaginative scenarios will create enough demand and use cases for stablecoins in this land.

For most countries with weak national strength, unable to sustain long-term stability of their own currency, and with limited foreign exchange reserves, the US dollar and USD stablecoins are a lifeline for the people. Brazil, however, is an exception to this.

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