Interview with the Founder of Kravata: A Latin American Perspective on Stablecoin Entrepreneurship

2025.06.12

Interview with the Founder of Kravata: A Latin American Perspective on Stablecoin Entrepreneurship

The real competitors are not other similar companies, but cash and the informal market.

2025.06.12 - 08:07:36

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Navigating Web3 tides with focused insights

The real competitors are not other similar companies, but cash and the informal market.

Source: Zhiwubuyan

【Opening Remarks】

Overnight, stablecoins have become the talk of the town. What are stablecoins, and could they disrupt the traditional financial system?

Stablecoins aren't some sudden viral trend but a behemoth that has grown alongside the industry. They've recently been thrust into the global media and public spotlight due to regulatory catalysts—such as the passage of the U.S. GENIUS Act—and the public listing of Circle, a major stablecoin issuer.

Therefore, Hazel and co-host Ivy launching this podcast on crypto payments, Zhiwubuyan: OurTwoCents, is not a whim. At this pivotal moment, we firmly believe a historical turning point has arrived. From niche experimentation to an indispensable part of everyday life globally, in the coming years we will witness blockchain truly rewriting global payment rules, spawning multiple unicorn companies in the payments space, improving the efficiency of global value transfer, and providing financial tools with global reach to populations ignored by traditional banks.

Beyond payments themselves, we’ll also explore adjacent areas such as RWA (real-world assets), AI Agent payments, and other emerging innovations. Ultimately, we aim to focus on the intersection of crypto and the real world—with stablecoins serving as a key medium.

Hazel and Felipe first met at a think tank conference in Moscow. Due to sanctions, Visa and Mastercard were unavailable in Russia, giving Hazel—a Chinese national living in Europe accustomed to seamless payment access—a firsthand experience of being “unbanked.” This is, however, the daily reality for many people across Asia, Africa, and Latin America. Felipe founded Kravata after recognizing the transformative potential of stablecoin payments in a country where less than 50% of people have bank cards and credit card penetration is below 10%, and across a continent with similarly underserved populations.

1. Episode Overview

In this debut episode, we welcome Felipe Montes, founder of Colombian stablecoin payments company Kravata, to discuss Latin America’s payment ecosystem and what Kravata is building.

Kravata.co is a Colombia-based fintech operating across Latin America, offering fiat-stablecoin exchange and payment services. Headquartered in Bogotá, it raised $3.6 million in seed funding earlier this year, with investors including Circle Ventures—the investment arm of Circle, the issuer of the regulated stablecoin USDC.

The podcast “Our Two Cents” explores new frontiers in payments and how blockchain is reshaping global finance. This is the first English-language episode of the show.

Guest: Felipe Montes

Founder of Kravata, X: @FelipeMontesJ

Felipe Montes is co-founder and CEO of Kravata, a Latin American B2B “Crypto-as-a-Service” (CaaS) payments company headquartered in Colombia. He has been involved in crypto since 2013 and brings diverse experience from academia, government, and consulting.

Host: Hazel Hu

Lead host of the podcast “Zhiwubuyan,” with over six years of experience as a financial journalist. Core contributor to the Chinese Public Goods Foundation (GCC). Focused on real-world adoption of crypto. X: 0xHY2049; Jike: Yi Zhi Bu Zou Xin De Yue Yue

Host: Ivy Zeng

Co-host of “Zhiwubuyan,” formerly worked in VC post-investment management, discovered her passion for payments through pop-up city projects, currently leads growth for Latin America at a neobank. X: IvyLeanIn; Xlog: ivyheretochill

2. Latin American Market Context

Hazel: What is the current state of payments in Colombia? What are the most commonly used payment tools for individuals and businesses?

Felipe: Colombia has a population of 48 million, with over 50% unbanked, leading to widespread cash usage nationwide. Digital wallets are increasingly entering the market—Nequi and Daviplata (affiliated with the largest banks)—allowing users to open accounts and make payments using only their phone number. These are becoming the most common payment methods. There's also PSE (Programa de Servicios Electrónicos), operated by the ACH group, similar to the U.S. ACH system. PSE supports real-time bank transfers and currently handles about 32% of e-commerce payments, though primarily for deposits (cash-in), not withdrawals (cash-out). Credit card penetration is very low—under 10%—a regional trend across Latin America, though debit cards are used. A new government initiative called Breve is launching soon—it will be a real-time payment system enabling instant interbank settlements with both cash-in and cash-out capabilities. Other methods include QR codes and mobile wallets, with roughly one-third of transactions processed digitally via payment gateways.

Hazel: What are your observations on currency depreciation across different Latin American markets?

Felipe: A key factor in Latin America is the highly fragmented financial system. Each country has its own systems and KYC rules, resulting in poor financial interoperability between nations. There is no liquidity pool among Latin American currencies; cross-border transactions typically require conversion into U.S. dollars (often through U.S. correspondent banks) before converting into the target currency. This process involves multiple steps and layers of intermediaries.

A major reason for adopting stablecoins is simplifying this process to just two steps: convert local fiat to stablecoin via on-ramp, then use local liquidity to off-ramp into another fiat currency.

Another critical driver is hedging against currency depreciation. For example, over the past decade, the Colombian peso has depreciated over 50% against the dollar (from 2,000 pesos per USD in 2014 to 4,170 today). People need alternative savings vehicles, especially since dollar-denominated bank accounts are generally unavailable in most Latin American countries. Converting to stablecoins like DAI, USDT, or USDC via on-ramp helps achieve this. The only way to obtain physical U.S. dollars locally is through exchange houses, but holding cash is impractical for daily spending. Stablecoins offer usability and ease of sending or off-ramping.

In Colombia, large inflows of U.S. dollars from exports and remittances mean supply exceeds demand. Official bank exchange rates are settled with the government. However, unofficial cash dollars from remittances and exports do not participate in this settlement, causing physical dollar prices to trade 2–3% below official rates. This is essentially the inverse of the “kimchi premium.” It creates an arbitrage opportunity in crypto: people buy stablecoins peer-to-peer at below-official prices, exchange them for USD on exchanges, then wire the dollars back officially, earning 1–2% profit after costs.

Regarding cost of living, while 1 USD equals ~4,000 pesos, purchasing power in smaller cities may feel closer to 1,000 pesos compared to the U.S. Prices in major cities are rising due to gentrification driven by foreign residents. A Big Mac costs about $5. Minimum wage is around $400/month. Earning over $4,000/month places someone in the top 1%. Despite high inequality (ranked 7th most unequal globally), Colombia is also rated one of the happiest countries.

Currency depreciation is a widespread trend across Latin America. Countries like Ecuador and El Salvador have fully dollarized. Uruguay is smaller, wealthier, and more stable. Argentina faced over 276% annual inflation in 2023. In Venezuela, the bolívar is losing relevance as people shift to USD (via U.S. bank accounts like Zelle), stablecoins, or physical cash. Even stronger economies like Mexico and Brazil have seen ~20% depreciation over the past decade. The pandemic hit economies hard, and government money printing worsened depreciation. The U.S. dollar is widely seen as a hedge and store of value—similar to gold—but stablecoins add significant usability advantages.

3. Kravata’s Business Model

Hazel: What is Kravata? Can you walk our listeners through the customer journey? For example, if I’m a merchant in Latin America receiving USDC, can you take us through the full flow?

Felipe: Kravata is an infrastructure company that provides APIs, enabling any app, super app, banking app, digital wallet, or business platform to offer stablecoin-based services to end users.

For companies needing cross-border FX, they can connect to Kravata via web app or API to convert between stablecoins and fiat, or even conduct fiat-to-fiat conversions—using stablecoins as the intermediary.

Another model is third-party payment capability. For instance, a company in Mexico wants to pay a company in Colombia but lacks a local account or knowledge. They send Mexican pesos to Kravata, which then pays Colombian pesos to the recipient. Behind the scenes, Kravata converts MXN to stablecoin on-ramp, then off-ramps to COP.

Recently, Kravata has focused on integrating its infrastructure into banks, super apps, and neobanks—financial institutions that want to use stablecoin rails but lack the expertise or internal systems (due to compliance teams, legacy channels like SWIFT, or overly localized operations). Kravata offers a widget that can be embedded directly into their apps. Through this widget, users can convert their local fiat balance (e.g., Colombian pesos) into USD stablecoins, usually USDC, via on-ramp, and later off-ramp back to fiat. USDC is preferred because companies view it as more compliant. Users can save in USD and cash out to pesos when the dollar appreciates.

Kravata has also added virtual accounts. App users, leveraging existing KYC data, receive a U.S. bank account number and a European IBAN. This allows them to receive international wire transfers directly into their in-app USDC widget. This gives the application cross-border payment and remittance functionality. With received USDC, users can either pay third parties internationally or off-ramp to local fiat. Kravata also issues a prepaid debit card funded with USDC, usable anywhere.

Additionally, balances in these accounts can be linked to yield-generating protocols. Depending on agreements with clients (i.e., the app), yields can range from conservative options (like Treasuries) to higher-yielding DeFi protocols (currently offering 4% to 8–9% APY). Kravata takes a small cut but passes most of the yield to users to enhance product appeal. This represents Kravata’s full suite of API offerings.

Ivy: Does Kravata convert USDC back to local fiat? How does that process work? Do you partner with banks?

Felipe: Kravata handles various stablecoins and tokens, but maintains close ties with investor Circle. Its corporate entities in Colombia, Mexico, Chile, Poland, and the U.S. hold accounts with Circle. Kravata obtains licenses in jurisdictions with clear regulations and partners with third parties for liquidity where regulation is ambiguous.

In Colombia, Kravata primarily uses an internal liquidity ledger. Its B2B cross-border payments generate off-ramp demand, while the embedded widget solution drives on-ramp demand (for savings). It internally settles these flows—using USDC/USDT from off-ramp users to pay on-ramp users, and vice versa—reducing costs. When demand imbalances occur, it works with banks for FX conversion. It can convert local fiat to USD and mint USDC as needed, or redeem USDC and perform local FX trades to replenish fiat reserves.

Kravata’s operations are built on four core models:

Compliance: A team dedicated to KYC, KYB (Know Your Business), transaction monitoring, customer tiering, and algorithmic blockchain analysis.
Liquidity: An operational team of Python developers and neural networks managing settlements and optimizing exchange routes.
Custody: Providing segregated wallets for clients, with flexible pricing models (based on AUM, transaction volume, or active wallets).
Hyper-local Payment Methods: Offering cash-in/cash-out via traditional fiat rails in each country through API integration. All products are built on these models developed since 2022.

Ivy: Besides Colombian pesos, what other currencies does your on/off-ramp support? And which blockchains?

Felipe: Currently, Kravata supports USD, Mexican Peso, Venezuelan Bolívar, Colombian Peso, and EUR, along with stablecoins like USDC and EUROC. It enables all combinations of conversions between these fiat and stablecoins.

For stablecoins, USDT is supported on Ethereum, Tron, Solana, and Polygon. USDC is available across multiple chains.

Ivy: What’s your latest transaction volume or annual on/off-ramp volume?

Felipe: Over the past two years (2023–2024), Kravata has processed $260 million cumulatively, with peak monthly volumes exceeding $50 million. Most volume comes from on-ramp and export-related services.

Ivy: You mentioned serving cross-border merchants—what types of businesses are your customers?

Felipe: Kravata initially served crypto-native clients—exchanges, OTC desks, and digital wallets. Then shifted toward traditional payment companies. End users include firms in service imports/exports (more than physical goods), payroll providers, franchise operators paying fees (e.g., Visa/Mastercard), lending protocols raising funds internationally to lend locally, and food companies sourcing supplies across borders.

With the rollout of embedded widgets, we’re now integrating with banks, neobanks, and neo-brokers.

Overall, our client base spans four main sectors: crypto-native firms, fintechs, retail businesses, and traditional financial institutions.

Hazel: What are your primary revenue sources? How many employees do you have?

Kravata has 28 employees. Since early 2023, it has generated $2.2 million in revenue. Income streams stem from multiple channels within its infrastructure model:

On-ramp and off-ramp fees
KYC service fees
Custody fees
Virtual account fees
Card fees
Yield-sharing fees

4. Competitive Landscape

Hazel: We must discuss competition—payment is fiercely competitive. Recently, Stripe opened stablecoin financial accounts, and Bridge is partnering with Visa. Does that concern you?

Felipe: Not at all. Our strategy is to collaborate with these large players, leverage their technology, while Kravata handles local execution. This business requires deep local expertise in compliance, banking relationships, cultural understanding, corporate structures, and navigating informal markets (which make up 50% of the economy). Large firms struggle to do this alone—just look at Citibank, Scotiabank, and other foreign banks struggling in Latin American retail banking.

The real competitors aren’t other startups—it’s cash and the informal economy, where people store savings in physical U.S. dollars. That’s the massive market opportunity. Companies that understand this will thrive.

Kravata positions itself as middleware, helping banks and fintechs rapidly adopt stablecoin services. We enable clients to integrate stablecoin rails in 6 months or less, avoiding the multi-year effort of rebuilding from scratch. We provide licenses, integration solutions, channels, white-labeling, compliance frameworks, and educational support.

Ivy: Beyond global players, let’s focus on Latin America. What’s the current landscape for fintech/crypto payment startups there? Is it crowded?

Felipe: There are fewer companies in this space than a few years ago. Initially, large exchanges like Bitso, Binance, Ripio, Mercado Bitcoin, and Buda dominated. Then came market makers and OTC desks serving crypto arbitrageurs and traders needing off-ramps. Starting around 2022, consumer apps focused on saving digital dollars (like DollarApp, Lithio) began growing. Recently, major financial institutions and neobanks (e.g., Bancolombia partnering with Wibmo, Lulo Bank) have started embedding crypto options into their apps—signaling to regulators that crypto and stablecoins are becoming part of the financial system.

Kravata’s role is to serve as middleware, enabling other institutions to quickly integrate stablecoin services without lengthy development cycles.

Hazel: All these systems we're discussing still rely on Visa and Mastercard, right? Will the entire system remain dependent on legacy rails?

Felipe: To fully operate independently of traditional systems, the entire supply chain would need to run on stablecoins—farmers paid in stablecoins, suppliers paid in stablecoins, etc. Right now, conversion to fiat remains necessary because most countries’ regulations require traceability and mandate payments in local currency. This ties into debates around local stablecoins and CBDCs.

Visa and Mastercard are likely here to stay. They’re already entering this space with systems like Visa Direct and B2B Connect, which use blockchain-like layers to transmit cross-border settlement data—even if not always using stablecoins.

However, in regions like Latin America, Southeast Asia, and Africa, there’s a huge market among the unbanked, informal workers, and cross-border transactions that don’t involve cards. Stablecoins can play a major role here. As previously stated, the true competitor isn’t necessarily cards—it’s cash.

5. Regulatory Environment

Hazel: What’s the local regulatory situation like? Specifically for Kravata—what licenses are required to operate in Colombia?

Felipe: Local regulation in Latin America has evolved significantly since 2021:

Brazil has comprehensive crypto laws, with central bank support for blockchain initiatives.
Chile passed a fintech law offering financial intermediary and custody licenses—Kravata has applied for these. Chile is considered the region’s regulatory leader.
Mexico has an earlier fintech law with money transmission licenses and a “vulnerable activity registry” for crypto firms.
Bolivia initially banned crypto but has lifted the ban and is moving toward regulation.
Peru recently authorized its largest banks to custody and sell digital assets.
Argentina is becoming more open to regulation.
El Salvador offers VASP (Virtual Asset Service Provider) licenses—many Latin American firms are obtaining them. Bermuda also offers various licensing options.

Generally, three types of licenses are relevant:

Emission License: For issuing tokens or stablecoins.
Fiat On/Off-Ramp (VASP) License: For exchanging between crypto and fiat.
Money Transmission License: For payment services.

Kravata is acquiring fiat on/off-ramp and money transmission licenses. We’re not pursuing emission licenses because we focus on distribution and transmission—not issuing our own tokens.

Ivy: How do you build relationships with these traditional financial institutions and regulators? They’re completely different from Web3.

Felipe: Building relationships in Web3 is often more open than in traditional finance. In banking, if you’re outside the inner circle, open-mindedness and warm introductions are crucial. Kravata has advisors who were former bank executives. My prior role as Deputy Minister of Education helped me build connections with the banking association president and government officials who can facilitate introductions. Establishing trust requires face-to-face meetings, shared meals, and consistent engagement.

The key is demonstrating that the company is led by mature, business-savvy professionals who understand compliance and risk—not just young tech developers. Compliance officers play a vital role in banking partnerships. Kravata sponsors and participates in risk and compliance events, sometimes with international organizations, positioning ourselves as a highly compliant local partner.

Banks often perceive new transaction businesses like crypto/payments as small compared to their massive credit and lending operations. The challenge is convincing them that collaboration won’t jeopardize their core business. This requires showcasing strong standards, compliance procedures, risk management, and SLAs. Building this trust takes time, but once achieved with a few banks, others follow more easily. Key milestones include embedding services into regulated neobanks and partnering with large incumbent banks.

Hazel: What kinds of questions do they usually ask?

Felipe: Banks ask everything. For example, they question the risks of users holding USDC. We explain USDC’s reserves, where the dollars are held, audits by firms like Deloitte, and reference well-known names like Bank of New York Mellon or BlackRock. Still, they often perceive it as high-risk.

You also need to educate banks on blockchain analytics. Many aren’t familiar with blockchain explorers. You must explain that blockchains aren’t anonymous, wallets can be blacklisted, and tools like Chainalysis and TRM Labs exist. Demonstrating Kravata’s compliance workflows is a frequent topic. Sometimes, banks even propose using Kravata as their compliance provider—but if we also handle their transactions, that creates a conflict of interest.

6. Fundraising and Future Outlook

Hazel: You received investment from Circle. I know you also raised from IOSG, a Chinese crypto investor—familiar name for Chinese audiences. How did you connect with them?

Felipe: I was introduced to the IOSG team through an angel investor from Angel Dao who had previously invested in Kravata. After initial online calls, I met some team members in person. I believe IOSG appreciated our explanation of why Web 2.5—embedding payment and savings services into existing apps—is the right path for Latin America today, as the market isn’t yet ready for complex Web3 activities like DeFi using MetaMask. They saw that Asian VCs value under-penetrated markets and capital-efficient growth models—exactly what Kravata’s infrastructure approach offers, while solving Latin America’s market fragmentation. IOSG made their investment decision quickly—within about a month.

Hazel: You’re also seeking Chinese or Asian investors for your next round.

Felipe: Yes, Kravata is actively targeting Asian investors for our next round. Two main reasons:

Market Understanding: Asian investors deeply understand Latin America because Southeast Asia shares similar characteristics. They can offer valuable insights based on regional experiences.
Global Connectivity: There’s enormous growth potential in linking commerce and transactions between Asia and Latin America. Building these bridges is critical for the future.

Ivy: After closing your next round, what will be your top priority?

Felipe: The top priority post-funding is embedding our widget into apps reaching approximately 100 million users across Latin America. The goal is to connect LatAm users to stablecoins through applications they already use and trust.

Ivy: My final question: what advice do you have for Chinese crypto/fintech companies considering entering the Latin American market?

Felipe: Advice for Chinese companies entering Latin America:

Find Local Partners: Essential for understanding the market, accessing infrastructure and channels, and navigating regulation.
Understand Currency Volatility: Don’t simply copy Asian models; understand the drivers of local currency fluctuations.
Focus on Infrastructure: Infrastructure plays may offer more long-term defensibility than B2C apps, which require deep consumer behavior insights.
Clarify Market Strategy:

If your strategy is cost-driven (common among Chinese exporters), you must understand the informal economy to access the real mass market.
If pursuing high-value, high-quality offerings, you’ll need connections to reach affluent niche segments.

Build relationships first: In Latin America, personal relationships matter greatly. Going solo is difficult—you need partners. Given fewer established pathways, lobbying and meeting influential figures may be harder than in other regions.

Hazel: Any recommendations on who we should interview next? Or questions you’d like to ask others?

Felipe: I have many questions about China’s market. I’m particularly interested in understanding how Alipay grew so successfully, especially its use of blockchain in enterprise applications. I feel Western markets haven’t fully grasped these cases. I’d also recommend looking at other successful Chinese companies—not as big as Alipay but still important players, like Reap.

For Latin American guests, I recommend those working on local stablecoins, B2C apps (e.g., Lithio, DollarApp, El Dorado), and infrastructure providers (blockchain or API-based).

Interview with the Founder of Kravata: A Latin American Perspective on Stablecoin Entrepreneurship

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