Trace Finance Raised $32M to Bridge FX, Stablecoins, and Brazilian Banking

Cutting the bank chain

Bernardo Brites says a transaction from BRL into US dollars usually involves four or more banks. With Trace Finance, he says, a Pix transaction can be settled locally against liquidity pools the company holds elsewhere. He calls it very similar to the Wise model, "but we're doing that on steroids," built for very large enterprise grade transactions.

Brites says 99% of payments are still off-chain and only 1% are on-chain, and that Trace decided it could serve both. He adds that local stablecoins are a big theme this year and that Trace already has pilots in place.

Brazil's new rules

Under the new regulation from Banco Central do Brasil, virtual asset providers are capped at $100,000 per transaction and cannot process third-party payments. The central bank also said FX cannot be done with crypto, not only stablecoins, which Brites reads as meaning it has to go through banks.

Because Trace Finance operates under a bank infrastructure, Brites says it does not face those caps. He expects more and more big players to consolidate into bank structures. He also notes that BRL cannot leave Brazil, so people hold dollars with a Brazilian bank that has an account at Bank of New York Mellon.

Expansion and scale

Trace Finance is expanding from Brazil into the US, Mexico, Colombia, Chile and APAC. Bernardo Brites points to Korea, Bolivia and Peru as markets with capital controls or a need for local currency conversion. He says Trace spent the first quarter of the year automating everything that was unautomated so it can take in the next $100 billion without breaking the pipes.

Advice to founders

Bernardo Brites says Trace is still profitable and is not in a rush to burn cash. He advises founders to build product and community rather than launch something just to announce it, and to get regulated at both ends of a transaction corridor. He says Trace will announce a lot of partnerships going forward.