Opinion: Timothy Chen, Head of Global Strategy, Mantle
Crypto adoption accelerates in Southeast Asia and Latin America, but deeper structural issues persist. The premise of financial sovereignty through blockchain remains appetizingly incomplete.
Millions of people hold digital assets, but they cannot seamlessly integrate them into their daily lives. This paradoxical cutting – digital wealth without practical utility – represents the critical infrastructure gaps that emerging markets suffer most.
The world’s non-banked ones may now hold tokens, but they still lack essential access to simple financial tools, from cross-border payments to sustainable yield options. At the same time, emerging markets foresee the world’s progress – the majority of our savings are in the silly, not in Fiat.
Crypto’s Capital Access Issues
In emerging markets, Stablecoins act as a lifeline and provide regulatory arbitrages that allow for dollarized savings accounts. For the first time users of these countries can join the largest and strongest capital markets: the United States. The next step is to access US Treasury invoices as a secure yield product. So we could see continued growth in tokenized funds like BlackRock’s Buidl.
This isn’t a 10x better product for users dominated by existing USD, but for non-draried users, especially in emerging markets, Stablecoins is a life changer.
Users in these markets will strip their savings in stables, but there is no way to actually pull those savings out, as there is no sufficient path to unlock or use the lamp.
Users from emerging economies are enthusiastically using cryptocurrencies to avoid devaluing local currency, but have entered one-way financial systems, namely digital assets that do not have functional off-ramps.
It is ironic that the US has $100 billion in Bitcoin Exchange Trade Funds (ETFs) that can be sold with immediate liquidity, but there is no good lamp for stubcoin holders in emerging markets. This asymmetry leaves behind the theoretical Crypto promise of financial sovereignty in the regions that require it most.
Payment as a genuine inclusion frontier
In emerging markets experiencing high inflation, Stablecoins provide important financial stability. However, access and spending on these assets remains a dangerous journey through a patchwork of banks, payment rails and peer-to-peer (P2P) networks.
The prominent embrace of stubcoin infrastructure in a regulated climate led by US President Donald Trump, together with players such as meta, visas, stripes and fidelity-renewing exploration, presents the most pressing proposal to cross-border blockchain borders.
These fundamentally represent the centralized adaptation constrained by legacy architectures. This is a blockchain-leaning approach as an incremental enhancement of existing rails rather than a reimagining of financial infrastructure. Limitations remain to perpetuate exclusive access in emerging markets.
Another central issue is regulation. Over the past five years, many crypto services in Latin America and Southeast Asia have provided a way for users to exchange local currency for stablecoin in USD. However, banks were uncomfortable with such services, and these players constantly shuffled their bank accounts to keep them operational.
Last mile-off ramping is also a major issue in markets such as Africa and South Asia, where users lack stable internet, smartphone access or simple banking services. These are the most profitable users.
Finance design that works for the majority of the world
The emerging economy is the perfect testbed for the practical utility of blockchain beyond ideological decentralization. Just as Chinese users have moved directly to adopting mobile messaging and digital payments within a decade, emerging markets are poised to lead the global adoption of banking from crypto origins.
The transition from 5% to 50% or more of Onchain’s financial activity begins where traditional systems are at their weakest. Southeast Asia and Latin America are frontiers where Crypto Neobanks goes beyond speculation to address real-world economic challenges. Today’s preferred regulations and infrastructure allow more users to access Stablecoins for their daily lives.
But one important part remains missing. This is the bank account tier. Most existing services offer freestanding wallets and debit cards for off-lamps, but there is no easy way to on-lamp.
Essential for a full-loop financial system
The Smart Money app integrated with the Modular Layer-2 Ethereum network can represent an architecture blueprint for solving these structural challenges. Owning an infrastructure stack allows for better unit economics and allows for deposits via familiar, familiar bank transfer rails.
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Today, most solutions offer only half of the journey. It allows users to convert local currency into digital assets, but creates the “Hotel California” effect, which does not allow these assets to easily return to the real economy. This one-way approach undermines practical utility, especially in emerging markets where daily spending needs are associated with local commercial transactions.
Creating a unified account of FIAT and Crypto with real spending capabilities and a full loop system allows for a complete financial cycle from salary receipts to daily spending. The ultimate expression of this full loop possibility is to capture payroll direct deposits to these unified accounts. It is a true financial “Holy Grail” that eliminates the lasting friction of moving between traditional and digital financial systems.
Until income is widely received on stubcoins, the world needs these robust interfaces between systems, like evolutionary bridges, rather than as a fundamental alternative to traditional finance. The Bank First Model is poised to leverage existing user habits and grasp the imminent changes in financial activity towards the blockchain.
Fair and decentralized financial access to all
Just as Neobanks today rethinks banking in the mobile era, crypto neobanking must also be generated from the first principles. A holistic on-chain financial architecture that enables a full-loop off-ramping experience is essential to address the needs of new markets.
It is as much a product design challenge as technical. The vision is to create a seamless interface that blends Defi and Fiat, providing fair access to finance for everyone, including how Windows operating systems simplified computing through the user interface, and how Apple arrived in the smartphone era by making complex technologies accessible and intuitive.
Opinion: Timothy Chen, Head of Global Strategy, Mantle.
This article is for general informational purposes and is not intended to be considered legal or investment advice, and should not be done. The views, thoughts and opinions expressed here are the authors alone and do not necessarily reflect or express Cointregraph’s views and opinions.
