Stablecoins and DLocal: Disruption, Opportunity, or Both?

As many of you know, DLocal is one of the largest positions in my portfolio, and I’ve been consistently vocal about why I believe it offers one of the most compelling risk-reward profiles in the market.

Lately, however, stablecoins have become a major topic of discussion — driven by increasing adoption, regulatory developments, and their potential to reshape cross-border payments.

Given the overlap with DLocal’s core business, it’s time to take a closer look at how this emerging trend could impact the company.

Introduction

Over the past few years, DLocal has built a strong reputation as a leading cross-border payment platform focused on connecting global merchants with consumers in emerging markets. By streamlining complex local payment methods, managing compliance, and offering fast settlement in regions that are traditionally difficult to navigate, DLocal has carved out a unique competitive position.

However, as the digital payments landscape evolves, one trend has started gaining particular momentum: stablecoins. These blockchain-based assets, designed to maintain a stable value (typically pegged to fiat currencies like the U.S. dollar), have moved well beyond the crypto niche. They are increasingly being used as tools for cross-border transactions, remittances, and payment settlement — especially in regions with volatile currencies or weak banking infrastructure.

With this shift comes a fundamental question: Could stablecoins disrupt DLocal’s core value proposition, or are they an opportunity the company could leverage to extend its lead?

This article aims to explore that question in depth.

I’ll walk you through how DLocal operates today, what stablecoins could change in the broader cross-border payments landscape, and how these changes might affect DLocal — both positively and negatively.

Understanding the intersection between fintech and blockchain has never been more important.

Let’s dive in.

DLocal’s Current Business Model

To understand how stablecoins might impact DLocal, it's important to first understand how the company operates today.

DLocal is a cross-border payments platform that enables global merchants — such as Amazon, Google, Meta, Spotify, and Uber — to accept payments from, and send payments to, users in emerging markets. These are regions where accessing global financial infrastructure is often difficult due to fragmented local payment systems, currency controls, regulatory complexity, and underbanked populations.

Two Core Offerings:

DLocal operates through a “one DLocal” platform, which provides two main services:

• Pay-In (Acceptance): Enables merchants to accept payments from local consumers in their preferred method (e.g., local cards, mobile wallets, cash vouchers, bank transfers).

• Pay-Out (Disbursement): Allows merchants to send payments to individuals or businesses (e.g., freelancer payouts, gig economy earnings, or vendor payments).

DLocal effectively acts as a localized middleman, handling:

• Local acquiring and payment processing

• FX and currency conversion

• Compliance with local financial regulations

• Settlement and reconciliation

The Value Proposition

What makes DLocal indispensable to global merchants isn’t just its technology stack, it’s the complete infrastructure it offers for entering and scaling across complex emerging markets. DLocal’s core value lies in eliminating the operational and regulatory friction that typically comes with cross-border expansion into Latin America, Africa, and Asia.

Traditionally, expanding into emerging markets required merchants to integrate with local payment processors country by country, navigate a maze of regulatory requirements, and build in-house capabilities for FX management, compliance, fraud prevention, and tax reporting. DLocal removes all of that complexity through One dLocal, its proprietary platform that enables seamless access to over 40 markets via a single API integration.

This approach bundles a wide array of services — payment processing, FX handling, compliance, fraud management, tax support, and more — into one streamlined solution. Merchants don’t need to establish local entities or negotiate with local banks. Instead, DLocal offers ready-made access to hundreds of local payment methods and deep connectivity with financial institutions and regulators.

That’s what sets DLocal apart from both global players like Stripe and Adyen (which primarily focus on developed markets) and regional providers like EBANX or PayU (which often lack the same scale and breadth). DLocal’s infrastructure is purpose-built for fragmented, high-friction regions — giving it a structural advantage that’s difficult to replicate.

The platform’s deep local integration ensures high authorization rates, optimized conversion, and lower FX costs through transaction batching. Its dynamic routing engine, for example, directs payments to the most efficient acquirer to balance cost, latency, and approval rates.

Merchants are willing to pay a premium for this all-in-one solution — not only because it accelerates their time to market, but because it saves significant cost and effort compared to building these capabilities internally or integrating with local providers one by one.

Over time, DLocal’s value proposition becomes even more compelling through scale. As transaction volumes grow, the company gains further cost advantages, which it can reinvest into product innovation or pass on as competitive pricing. This creates a flywheel: more merchants bring more volume, which lowers costs and strengthens its position as the go-to platform for emerging market payments.

In short, DLocal isn’t just selling payment rails — it’s selling access to complex markets with minimal friction, and doing so with a platform that becomes more valuable over time.

Business Model Summary

• Revenue Model: DLocal earns revenue by charging a take rate on the Total Payment Volume (TPV) it processes. This includes fees on pay-in and pay-out transactions, a spread on foreign exchange conversions, and charges for value-added services such as installment payments, chargebacks, and compliance tools.

• Asset-Light Approach: DLocal does not lend, hold customer deposits, or take balance sheet risk. Its focus is on high-margin transaction enablement, operating as a technology-first platform rather than a financial intermediary.

This model has historically delivered strong growth and high profitability, fueled by secular trends in e-commerce, digital services, and financial inclusion across developing economies.

But as stablecoins emerge as a potential new infrastructure layer — offering instant, low-cost, and decentralized settlement — questions arise about how this technology might interact with, or even challenge, DLocal’s role in the cross-border payment ecosystem.

That’s where we’re headed next.

What Are Stablecoins?

Stablecoins are a type of cryptocurrency designed to maintain a stable value by pegging their price to a reference asset, most commonly the U.S. dollar. Unlike highly volatile cryptocurrencies like Bitcoin or Ethereum, stablecoins are intended to serve as a reliable medium of exchange and store of value.

There are several types of stablecoins, differentiated by how they maintain their peg:

1. Fiat-Backed Stablecoins: Backed 1:1 by reserves in a traditional bank (e.g., U.S. dollars, euros). Examples: USDC (by Circle) and USDT (Tether)

These are the most widely adopted stablecoins and are commonly used in both crypto and fintech ecosystems.

2. Crypto-Collateralized Stablecoins: Backed by other crypto assets, over-collateralized to account for volatility. Example: DAI

3. Algorithmic Stablecoins: Maintain price stability using supply and demand algorithms, often with no real backing. These are highly risky and have largely failed (e.g., TerraUSD).

In the context of payments and financial infrastructure, fiat-backed stablecoins are the most relevant and widely used.

Use Cases in Emerging Markets

Stablecoins are becoming increasingly relevant for real-world financial applications, particularly in emerging markets. Key use cases include:

• Cross-border payments and remittances: Offering near-instant, low-cost alternatives to SWIFT and traditional remittance systems.

• Store of value: Allowing users in high-inflation economies to preserve purchasing power in stable, dollar-linked assets.

• Payment settlement: Enabling B2B and B2C disbursements, especially by fintech and crypto-native platforms operating across borders.

Why This Matters for DLocal

Stablecoins address several inefficiencies in the traditional cross-border payment system:

• Faster settlements

• Lower transaction costs

• Greater transparency

• 24/7 availability

These features are particularly well-suited to the same emerging markets where DLocal operates. In theory, if regulatory environments become more permissive and on/off-ramps improve, stablecoins could allow some merchants — or even end users — to bypass intermediaries like DLocal.

But that’s only one side of the coin. In the next section, we’ll explore both the potential risks and the strategic opportunities stablecoins present for DLocal’s business model.

Opportunities Stablecoins Present for DLocal

While stablecoins are often seen as a disruptive force, they could also unlock new growth avenues for DLocal — especially if the company chooses to embrace rather than resist the shift (something we know is happening).

1. Faster and Cheaper Settlements

Stablecoins enable near-instant, low-cost global transfers, which could significantly reduce DLocal’s reliance on traditional banking rails and correspondent banking networks. This would:

• Accelerate settlement times between merchants and local payees.

• Lower FX and intermediary banking fees.

• Improve liquidity and working capital efficiency.

For DLocal, using stablecoins for internal settlement flows could reduce friction in operations across fragmented markets.

2. New Product Offerings

Stablecoins could power new product categories within DLocal’s platform, such as:

• On-chain payouts to freelancers, creators, or gig workers.

• Stablecoin wallets integrated with local payment methods.

• Merchant treasury solutions that include stablecoin rails as an alternative to local banks.

This could deepen DLocal’s value proposition in regions with volatile local currencies or unreliable banking infrastructure.

3. Expanded Market Reach

In some frontier markets, stablecoins are already gaining traction as an informal dollar alternative. By integrating stablecoin capabilities, DLocal could:

• Serve crypto-native merchants or Web3 platforms.

• Facilitate commerce in countries where fiat rails are inaccessible or heavily regulated.

• Capture new TPV (Total Payment Volume) from users transacting in digital dollars rather than local currency.

This could help DLocal further differentiate itself as a future-ready platform for global commerce.

4. Strengthening Compliance and Transparency

Some stablecoins (like USDC) offer auditable, transparent on-chain settlement data, which could align well with DLocal’s regulatory and compliance-driven business.

With proper implementation, this could:

• Improve transaction traceability.

• Reduce fraud risks.

• Support compliance reporting to regulators and partners.

If positioned correctly, stablecoins could be framed not as a workaround — but as a tool to enhance operational integrity.

All in all, stablecoins offer real potential for DLocal to improve efficiency, expand services, and tap into new merchant needs — if the company chooses to proactively integrate the technology.

Threats and Risks from Stablecoins

Despite the opportunities, stablecoins also introduce a series of threats to DLocal’s business. If the company doesn’t adapt carefully, these innovations could eventually undermine its role as an intermediary in cross-border payments.

1. Disintermediation Risk

The most direct threat comes from bypassing DLocal entirely.

Stablecoins allow merchants and users to transact directly, without needing an intermediary like DLocal to facilitate FX conversion, routing, or settlement. For example:

• A U.S.-based merchant could pay a Brazilian freelancer in USDC, who then cashes out via a local crypto exchange.

• Platforms like Coinbase, Binance Pay, or Circle could offer B2C payout solutions in emerging markets.

If stablecoin infrastructure becomes more accessible and regulated locally, it could erode DLocal’s value proposition as a payments bridge.

2. Regulatory Arbitrage

While DLocal prides itself on regulatory compliance, crypto-native firms may exploit regulatory gray zones to offer cheaper or faster services. This can create unfair competition:

• DLocal must follow strict rules in each jurisdiction (e.g. AML/KYC, licensing).

• Stablecoin providers and wallets might operate cross-border without equivalent oversight.

Unless regulatory frameworks catch up and are enforced evenly, DLocal could be at a cost disadvantage in some markets.

3. Margin Pressure

As stablecoins reduce the costs of moving money globally, DLocal may face pricing pressure:

• Clients may demand lower fees if stablecoin options are available elsewhere.

• The net take rate could decline as alternative payment methods gain traction.

In this scenario, DLocal would need to scale more aggressively or differentiate through value-added services to maintain its current profitability.

4. Increased Complexity

Ironically, adopting stablecoins too quickly could introduce operational and legal complexities:

• Managing crypto assets adds custodial, cybersecurity, and volatility risks (especially when converting back to fiat).

• Navigating fragmented regulations across 40+ markets could slow rollout or create compliance burdens.

• Financial reporting becomes more complex when dealing with digital assets.

If not implemented carefully, stablecoin adoption could strain DLocal’s internal capabilities.

5. Reputation and Legal Risk

Stablecoins still carry perception and compliance challenges:

• Association with crypto may raise red flags with regulators or conservative enterprise clients.

• Stablecoin collapses (like TerraUSD) have tainted the public’s perception of digital assets.

• Legal disputes (e.g., around consumer protections, AML compliance, or patent issues) could increase if DLocal integrates stablecoin rails prematurely.

While stablecoins offer long-term potential, they could challenge some of DLocal’s current competitive advantages.

Whether stablecoins become a threat or a growth catalyst will depend largely on how the company chooses to engage with the technology.

Is DLocal Ready for Stablecoins?

While many companies are only now exploring how to integrate stablecoins into their platforms, DLocal has been experimenting with them for years — quietly building the expertise and infrastructure necessary to capitalize on this trend as it gains momentum.

Since stepping in as CEO, Pedro Arnt has been clear in his belief that stablecoins will play a crucial role in the future of cross-border payments.

In a recent interview, Pedro outlined how DLocal is already playing a dual role in the stablecoin ecosystem:

“We’re a participant in the launch of Circle’s global network. DLocal is a significant provider of fiat liquidity in emerging market currencies because of our pay-in business... For someone who wants to get settled in fiat from a stablecoin in any of these currencies, we can be very competitive there... We’re already piloting with a few remittance partners that, rather than send us fiat via slow wire processes, settle to us in stablecoin. We can then execute payouts instantly in local currency.”

This not only positions DLocal as a key on-ramp and off-ramp partner for global stablecoin flows, but also unlocks immediate operational benefits like faster settlement and improved working capital cycles.

He also pointed to why stablecoins are gaining traction now when earlier crypto efforts failed:

“If initially the crypto world was Dodge City in the Wild West, we’re now seeing the emergence of New York City in the crypto space... You’re seeing the emergence of larger, more compliant, more regulated providers. That makes treasuries and businesses more comfortable with stablecoins, especially in fragmented banking environments.”

In other words, stablecoins are no longer just a crypto niche — they’re becoming an institutional-grade tool, and DLocal is already integrated into that evolution.

A Quiet Head Start

DLocal’s involvement with stablecoins isn’t new. The company has previously disclosed its use of blockchain-based settlement rails and stablecoin integrations in select markets, particularly where local banking infrastructure is underdeveloped or traditional FX rails are inefficient. Although these efforts haven’t been at the center of DLocal’s investor communications, they’ve been a real part of its operations behind the scenes.

As far back as 2021, DLocal’s management referred to pilot programs using stablecoins to move funds faster and more securely between countries. These trials were particularly useful in cross-border corridors that operate 24/7, where traditional banking systems are either closed on weekends or offer slow, friction-heavy settlement processes.

While the company does not yet rely heavily on stablecoins across its entire network, its experience in this space provides a real advantage — not just from a technical readiness standpoint, but also in terms of regulatory understanding and risk management.

A Natural Fit for DLocal’s Model

Stablecoins align well with DLocal’s core business model:

• The company specializes in cross-border transactions in emerging markets.

• These markets are often constrained by capital controls, limited banking hours, or high FX conversion fees.

• Stablecoins can enable faster, cheaper, and 24/7 settlement, exactly what many of DLocal’s clients — including global merchants — are looking for.

In this context, DLocal doesn't need to reinvent itself. Instead, it can gradually expand its stablecoin offerings, where appropriate, to improve speed, reduce costs, and deliver more flexibility to merchants and end users.

Risk-Aware and Selective

Importantly, DLocal has not rushed into stablecoin adoption without caution. Unlike crypto-native platforms, it operates in a heavily regulated space where compliance and capital protection are key priorities.

That means its use of stablecoins is selective and infrastructure-driven, not speculative. The company’s goal isn’t to offer crypto exposure — it’s to enhance the reliability and efficiency of its core product: enabling local payments in hard-to-reach places.

This measured approach is a strength. By focusing on practical applications — such as weekend settlement, avoiding banking holidays, and real-time treasury flows — DLocal is building durable solutions, not chasing hype.

Strengthened by AZA Finance

DLocal’s recent acquisition of AZA Finance (pending regulatory approval) further strengthens its position in the stablecoin space.

AZA is a well-established provider of cross-border financial infrastructure in Africa and Asia, and it brings over a decade of experience using digital currencies to bridge payment gaps in emerging markets. Its Founder and CEO, Elizabeth Rossiello, has been a leading voice in the global fintech and blockchain community, and her team brings deep knowledge of stablecoin settlement systems.

As she recently explained, AZA’s stablecoin use isn’t about regulatory arbitrage — it’s about solving real-world problems like weekend and holiday settlement gaps. For instance, during U.S. or regional bank holidays, AZA uses stablecoins to continue processing millions of dollars in remittances without waiting for traditional bank rails to reopen. This directly aligns with DLocal’s value proposition: enabling uninterrupted, low-friction, cross-border commerce in underserved regions.

Beyond the operational synergies across Africa and Asia, AZA’s experience adds strategic depth to DLocal’s stablecoin ambitions. With both companies aligned in their cautious but forward-leaning views, this acquisition looks like a well-timed move that will accelerate DLocal’s evolution in global payments.

In summary, with years of behind-the-scenes experience and a clear incentive to improve cross-border liquidity, DLocal looks well positioned to ride the stablecoin wave — if and when it truly takes off at scale. The infrastructure, mindset, and market fit are all in place.

Scenarios and Final Thoughts

Let’s break down a few possible scenarios:

Bull Case: Strategic Enabler, Competitive Edge

In a scenario where stablecoins gain regulatory clarity and broader institutional adoption, DLocal stands to benefit as an early mover with real-world operating experience. Its existing infrastructure, deep emerging market connectivity, and compliance-first mindset position it to become a trusted partner in a more tokenized cross-border payment environment.

If stablecoins achieve widespread acceptance in countries with volatile currencies or capital controls, DLocal could emerge as the preferred enabler for global merchants seeking scalable and compliant access to these difficult geographies — effectively enhancing its long-term moat.

Base Case: Gradual Integration, Complementary Tool

In the more likely near-term scenario, adoption proceeds cautiously and unevenly across regions. DLocal continues to integrate stablecoin functionality selectively, on a market-by-market basis — using it to enhance settlement efficiency and support new merchant use cases without fundamentally altering its business model.

The pending acquisition of AZA Finance supports this path. AZA brings crypto-native infrastructure and regional expertise, particularly across Africa and parts of Asia, complementing DLocal’s broader platform without increasing execution risk. Stablecoins, in this case, become a value-added layer, not a disruptive force.

Bear Case: Regulatory Pushback or Market Disruption

There are still risks to monitor. If global regulators impose strict limitations on private stablecoins — or if central bank digital currencies (CBDCs) take precedence — innovation at the settlement layer could stall. Meanwhile, crypto-native platforms that operate in regulatory gray zones could pressure DLocal’s margins by offering cheaper or faster alternatives.

However, these remain long-term structural risks, not immediate threats. DLocal’s regulated approach and operational caution offer insulation in the near term. These developments are important to watch, but they don’t currently undermine the company’s core business model.

Final Thoughts

Stablecoins may not overhaul global payments overnight, but their long-term potential is hard to ignore — particularly in regions where traditional infrastructure remains slow, costly, or unreliable. DLocal’s approach reflects both strategic foresight and operational discipline: integrating stablecoins where they add real value, while continuing to build trust with merchants, regulators, and financial institutions.

For now, stablecoins serve more as an enabler than a threat. But if broader adoption takes hold — driven by regulatory clarity and merchant demand — DLocal is well-positioned to capitalize, backed by a leadership team that understands both the promise and the pace of change.

The path may be gradual, but the direction is clear.

While I don’t view stablecoins as a short-term threat, they remain a relevant factor to monitor when assessing the durability of DLocal’s competitive edge.