E-commerce Giant Mercado Libre Rolls Out a Stablecoin Targeting 52M Users in South America

The new stablecoin, MELI, is dollar-denominated and can be accessed through the Mercado Pago mobile app. Although the stablecoin appears to comply with local Brazilian regulations, the new offering is expected to be widely adopted across South America.

E-commerce giant Mercado Libre has ventured into the world of stablecoins with the launch of a dollar-pegged stablecoin for users of its digital bank, Mercado Pago, in a move that could significantly expand the footprint of blockchain technology in Latin America.

The new stablecoin, dubbed MELI, is accessible through the Mercado Pago mobile app and is designed to be fully compliant with local Brazilian regulations. However, the offering is expected to be widely adopted across South America, with experts estimating that up to 52 million active users in the region will have access to the stablecoin.

Brazil and Argentina are expected to play key roles in the adoption drive, given their large populations and high levels of Mercado Pago usage. The digital bank has seen impressive growth since 2021, and the introduction of stablecoins is likely to further boost user metrics.

Mercado Libre is also offering a sweetener to encourage stablecoin adoption, announcing the removal of transaction fees for users while imposing a 1.5% fee for other digital assets. Notably, Mercado Libre has tapped digital asset service provider Ripio for market making, a company that is known for its partnership with global stablecoin issuer Paxos in the Latin America ecosystem.

Users of the digital bank can buy the Meli Dollar stablecoin with their fiat balance without incurring any additional fees. Apart from improving the state of e-commerce transactions on its platform, the new rollout could introduce the concept of digital assets to new demographics in Latin America.

Moreover, the launch offers users a new option to protect their wealth from the sky-rocketing inflation of their local currencies by turning to the dollar’s stability. In recent years, Argentina has recorded high levels of inflation, exceeding 50% in both 2022 and 2023.

Meanwhile, Brazil and Uruguay have also faced their share of currency devaluation, making the dollar-pegged stablecoin an attractive proposition for many Latin Americans seeking to preserve their purchasing power.

However, critics have raised concerns about the increasing cryptoization of Latin American economies, highlighting the potential challenges that central banks in the region may face in exercising monetary authority.

El Salvador's adoption of Bitcoin as legal tender has already sparked discussions at the World Bank and the International Monetary Fund (IMF) about the possibility of a digital asset chain reaction in the region.

Mercado Libre's stablecoin venture is not a first-time endeavor in the realm of digital assets. In 2020, the e-commerce company participated in Facebook's (NASDAQ: META) Diem stablecoin initiative.

The company fully entered the digital asset space in 2022 with the rollout of MercadoCoin as a customer loyalty program. But Mercado Libre’s integration with digital assets has not been without its setbacks.

In 2019, the company banned digital currency listing on its e-commerce platform following a capital injection from a $750 million investment from PayPal (NASDAQ: PYPL).

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