The US administration criticized Brazil's wildly successful instant-payment system, PIX, for harming companies like Visa. This stance reveals how deeply entrenched financial incumbents have captured US policy, actively resisting innovation that has made payments faster and cheaper in many other developed countries.
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To enter Brazil's highly protected banking sector, Nubank employed a patient, two-track strategy. They launched a credit card for immediate market entry while simultaneously spending four years navigating complex politics to obtain a full banking license, which required a presidential decree to bypass constitutional restrictions on foreign ownership.
When governments become top shareholders, corporate focus shifts from pleasing customers to securing political favor and appropriations. R&D budgets are reallocated to lobbying, and market competition devolves from building the best product to playing the policy game most effectively, strangling innovation.
The fastest path to generating immense wealth is shifting from pure innovation to achieving regulatory capture via proximity to the president. This strategy is designed to influence policy, secure government contracts, or even acquire state-seized assets like TikTok at a steep discount, representing a new form of crony capitalism.
By creating a regulatory framework that requires private stablecoins to be backed 1-to-1 by U.S. Treasuries, the government can prop up demand for its ever-increasing debt. This strategy is less about embracing financial innovation and more about extending the U.S. dollar's lifespan as the global reserve currency.
The US banking system is technologically behind countries in Eastern Europe, Asia, and Latin America. This inefficiency stems from a protected regulatory environment that fosters a status quo. In contrast, markets like the UK have implemented fintech-friendly charters, enabling innovators like Revolut to thrive.
The system often blamed as capitalism is distorted. True capitalism requires the risk of failure as a clearing mechanism. Today's system is closer to cronyism, where government interventions like bailouts and regulatory capture protect established players from failure.
The financial system is unprepared for the coming wave of AI agents. These agents will perform tasks and require payment, creating trillions of micropayments. Current infrastructure from Stripe, Visa, or Mastercard cannot handle this volume, creating a massive opportunity for new protocols to facilitate the 'agent economy'.
Remitly thrives by offering a service that is cheaper and more efficient than traditional players like Western Union, yet remains integrated within the established banking system. This unique position allows it to serve users' needs without triggering the regulatory skepticism faced by decentralized solutions like stablecoins.
Nubank identified a massive opportunity not just in a large market, but in an oligopoly where the incumbent banks were among the country's most hated companies. This extreme customer dissatisfaction served as a powerful signal that the market was ripe for disruption by a customer-centric alternative.
The high profits enjoyed by stablecoin issuers like Tether and Circle are temporary. Major financial institutions (Visa, JPMorgan) will eventually launch their own stablecoins, not as primary profit centers, but as low-cost tools to acquire and retain customers. This will drive margins down for the entire industry.
