# XFX nears $10 billion in annualized volume across US, Mexico and Colombia Research, a Stabledash show. Sep 21, 2026. Brent Traidman. https://live.stabledash.com/shows/research/episodes/cross-border-payments-run-on-cash-parked-in-advance-there-is-gCopPJVcrB4 Co-founder Santiago Alvarado pitches XFX as a principal dealer that cuts the capital cross-border payments lock up, which he calls the main cost of moving money globally. XFX is approaching $10 billion in annualized volume, co-founder Santiago Alvarado says, with operations in the US, Mexico and Colombia. The company launched in September 2023 to provide liquidity for cross-border payments and FX settlement. ## From Bitso to XFX Santiago Alvarado joined Bitso six years ago, when it was mostly a retail exchange, to launch its B2B payments business. He started XFX after that. ## No global ledger for money Alvarado's starting point is that there is no single global ledger. Central banks such as the Fed and Banxico each run their own, and they are connected through Correspondent Banking. He says that system traps, depending on the source, between $4 trillion and $27 trillion just to guarantee execution. He points to the Bank for International Settlements among the sources for the view that 80% of the cost of global money movement relates to tied-up capital. He also argues that automated market makers only work for long-tail assets and could never serve deep markets like FX, because they would have to rebuild correspondent banking on-chain. ## Principal, not agent XFX operates as a principal dealer holding inventory risk across currencies and venues to meet fifteen-minute settlement SLAs, running delivery versus payment with no prefunding required, Alvarado says. He says that changes the math for payments institutions. A firm processing $100 million a month that wants to reach $1 billion would otherwise need to grow its capital base 10x linearly. "With us, you don't need to do that," he says. ## Expansion and tokenized treasury XFX plans to launch in Brazil, Singapore and Europe before the end of the year. In Mexico it is starting to use EtherFuse's MXNB stable bond for its own treasury, and may find other uses for it later. Alvarado expects tokenized money markets and stable bonds to let the industry rearchitect settlement chains for global money movement, which he calls a massive unlock. For XFX, the case comes down to moving more volume with less parked capital, and the company is already testing that idea in its own treasury. ## Key takeaways 1. XFX, launched in September 2023, is approaching $10 billion in annualized volume in the US, Mexico and Colombia, and plans Brazil, Singapore and Europe before year-end. 2. Santiago Alvarado says Correspondent Banking traps between $4 trillion and $27 trillion just to guarantee execution, and cites the Bank for International Settlements as tying 80% of money movement costs to tied-up capital. 3. XFX acts as a principal dealer with 15-minute settlement SLAs and no prefunding, which Alvarado says lets a payments firm grow from $100 million to $1 billion a month without a 10x larger capital base. ## Chapters - 0:00 Bitso's B2B payments work led to founding XFX - 3:08 No global ledger means trillions locked in correspondent accounts - 6:11 The capital tax drives most cross-border payment costs - 7:53 Back-end complexity keeps growing while front ends get simpler - 12:09 Settlement chains should be flexible enough to match each user's cost of capital - 15:10 XFX nears $10 billion annualized volume a year after launch - 17:02 Exchanges, PSPs and market makers use XFX to scale without capital - 20:18 XFX sits close to the metal as a principal liquidity provider - 25:26 Tokenized money markets and stable bonds will reshape settlement ## Transcript **Drew Rogers** (0:16) Santi, welcome to the show. Great to see you. Santi, great to see you, man. Welcome to Stable Ash Live. How's it going? **Brent Traidman** (0:25) Thank you. Thank you for having me. All all good here. How how about you guys? Great. We're happy to have you. I love your background. Where in the world are you finding yourself today? Lima, Peru. Great place to be. Is it foggy, or has the sun cleared it up? **Santiago Alvarado** (0:40) Well, I mean, it it is supposed to be foggy, but El Nino is like... It's it's doing weird stuff to the weather. So it's like kind of sunny, foggy. So the weather is kinda weird for this time of the year. Yeah. Yeah. That's good. **Zach Fowler** (0:56) Quick quick, like, admin request. If you could put your... Just, like, kinda get your laptop camera a little... Andre's helping us. There we go. Perfect. You're good. You're... Alright. So I think what I what I wanted to at least kick this off with and help frame us a little bit was LinkedIn stalking you here a little bit before this. And we, first off, have loved the Bitso team and wanted to dive into a little bit of the the background there. I'm sure there's so many kind of stories and perspectives and things that you that you've built by by being so influential there. Maybe we kick off with, like, a little bit of your background and journey with Bitso, and then, yeah, how that how that really brought you into XFX and the problem that you guys are solving there. Sure. **Santiago Alvarado** (1:46) Yeah. So I I actually joined Bitso, like, six years ago when when Bitso was pretty much a retail focused exchange, right, to to launch the b to b side of the business. And the b to b side of the business was very payments oriented since the beginning. Our customers were monitors, meters, PSPs, processing payments in and out of Latin America. And one of the biggest challenges that we faced is getting that business was the lack of consistency and liquidity between crypto and stablecoins Latin American fiat currencies. We operate mostly in Mexico, but we had operations in Colombia, Brazil, and Argentina. And this became a challenge as you start to get into, like, the billions in profit volume and when you started to target more of a institutional type segments, you need to have that consistency in liquidity. Right? So so myself and my cofounders my cofounder, the CEO, he used to lead the the market team at at Bitso, which is the team in charge of the liquidity in the exchange. And our CTO, he used to lead the engineering team at Bitso. We decided to create XFX to address this problem from a more, like, first principles... Perspectives. **Zach Fowler** (3:08) And how would you... What would you describe those first principles as? Like when you break those things down? **Santiago Alvarado** (3:15) Yeah. So... Well, actually, let me ask you a question. If you had to choose, like, one thing as to, like, why global money movement is inefficient, why would you say that it's? **Zach Fowler** (3:26) Probably a lot to do, at least from what we've been learning, **Santiago Alvarado** (3:29) a lot to do with the governments **Zach Fowler** (3:33) and the regulatory differences between these different currencies. Is was... Is that the right answer? **Santiago Alvarado** (3:40) One of them. Yeah. Yeah. That's pretty much it, to be honest. Like, it... It's related to that. It it has to do that. There's no one single global ledger. Yep. Right? You have sovereign banks. It's... You have the Fed. You have Banjico in Mexico. You have, like, Basel in Brazil. They they are... They all have their own sovereign ledger. Right? Their own segregated, distinct ledger. And the way that these ledgers are interconnected is via correspondent banking system. Right? And that correspondent banking system basically traps, depending on the source, between 4,000,000,000,000 to $27,000,000,000,000 just to guarantee execution. And the the main source of inefficiency is, as a consequence of that, is cost of capital. Right? So if you actually want to address the main source of inefficiency in global money movement, you have to address the cost of capital, or to be more precise, the tied up capital in no slow cost to accounts. Now you could argue, well, is in blockchain kind of like a global ledger? The answer is yes. It is, and it works great for single currency transactions. Right? Meaning, say I have USDC, and I send USDC to you, that's perfect. Right? That's that's an atomic transaction. There's no back end rebalancing that needs to happen. But say that there's a Mexican pesos stablecoin. Right? I have a million USDC, and I want you to receive 20,000,000 Mexican pesos. You have to reinsert a tied up capital problem because someone needs to lock in the price. Right? Mhmm. Now there have been programmatic attempts to fix this, right, like automated market makers, and they work, but they only work for long tail assets. Right? Because they they ultimately require wallets. Right? They they they need liquidity pools, right, to to be able to rebalance across those liquidity pools. So they only work for long tail assets. They could never work for very deep markets like the FX markets because you would basically have to replicate that that correspondent banking or the nostril bostril pro... On chain. Right? So getting back to what we're trying to fix at XFX is we're trying to to build a system that basically has one one objective, which is how can we process the maximum amount of volume with the minimum amount of capital in the system? Mhmm. That's that's the whole thesis. **Brent Traidman** (6:11) And this is where you talk about the capital tax is part of all that that's tied up. Exactly. **Santiago Alvarado** (6:19) This is this is this is exactly that, the capital tax. **Brent Traidman** (6:24) Yeah. When you use that term... Because I I saw you using that term, and I like that. Like, how do you... You may have just done it, but how do you define that capital tax? Is this something that you feel like you coined, or is this **Santiago Alvarado** (6:36) you've heard it around in the in the field? Well, I mean, I actually don't know if we can take trade for for **Brent Traidman** (6:44) I won't put you on the spot for claiming it, but it's a good term regardless. **Santiago Alvarado** (6:48) Yeah. I mean, might have had, but but I don't want to take Sure. Credit. We we... But but regardless of who who owns it, who who came up with the term, there's multiple sources. You can quote, like, Bank of International like, percent of the cost of global money movement is related to title capital. Right? And the cost is either the the interest or the carry cost of the capital sitting idle in North Strabostro accounts, that's one. It's the FX threats, or it's the treasury operations to actually manage all the FX risk to manage all that money move. Right? That's 80% related. That that's that's 80% of **Santiago Alvarado** (7:42) So that... If you actually want to really have a big unlock in global money movement efficiency, you have to address this problem. **Drew Rogers** (7:51) Yeah. **Brent Traidman** (7:51) So I'm thinking about where you started, and you were saying you've been with some of the people who are on your team now. You guys did amazing things at Bitso. What are some of the lessons you carry forward, either because it was like, we figured this out, it really worked, or we wanted to change this and do it differently this time around? Okay. That's **Santiago Alvarado** (8:12) a great question. So many things racing **Zach Fowler** (8:14) through his brain. **Santiago Alvarado** (8:18) I mean, there's so many things around, like, how how the system actually... The the architecture of the system that are not obvious. Like, you actually have to be in the trenches to understand all of these concepts. Right? And funny enough, like, when you ask... Sometimes when we were fundraising, when some of the of the VCs asked my partner, when did you start XFX? He actually says six years ago. Right? Because we've been working in this thing so much for so long and learning about how actual actual money movement happens behind the scenes. And it's so convoluted. Right? So maybe, like, user... I and think that most of the innovation has has actually happened at the top layer. Right? Like, user experience might have gotten easier at the top layer, but complexity behind the scenes keeps get... Keeps growing. Right? Interoperability is not getting easier. It's getting worse. Right? Like, there's, like, more chains, more assets, interoperability between on chain and fiat, more regulations to comply with, so it's getting trickier. Right? **Zach Fowler** (9:39) Yes. Was there was there a moment when this... Like, the non obvious... I I really relate with that. Like, sometimes it takes being in a business, in a real situation, in real time to look at what's in front of you and be like, okay. This is... No one would really see this opportunity, but it's incredibly broken, or there's, like, really clear things that need to go get built to solve this. Was there was there a moment or a meeting or a situation that comes to mind where it was like... Maybe... Or maybe an accumulation of them where it was like, okay. We really need to go build this business to solve this specific problem. Was it was it like more of a moment thing or kind of a slow burn for you? That that that's a that's a great question. I think I think it's it's it's like **Santiago Alvarado** (10:30) it has to be an accumulation of of moments and kinda like eureka moments and and and consistently applying first principles to things that just didn't make sense. Right? And ultimately, if if if you think of, like like, how do settlement chains work and how unfair they are. Right? Because, like, look... Think about, like, the correspondent banking system. Like, the the the party that's the owner of the funds doesn't get the benefits of the float. Right? So let's say that you send a wire. Right? And that wire takes t plus two. Where is that money? It's sitting at a bank that's investing it overnight. Right? And and that's a major p and l driver for some bank. You know? Why isn't that why isn't the value accruing to the actual owner of that fund... Of that money? **Brent Traidman** (11:31) Mhmm. You know? This is There's something sort of innovation is very exciting. I love when founder like you, Santi, points it out and says like, that doesn't really make sense. You say, well, all these little guys who are actually the owners of the fund are not getting those benefits. It's very exciting when we start to have financial innovations that are pointing out these sort of problems that I think to most people who have not thought deeply enough about these issues remain unseen, invisible. It's sort of a a systematic thing you don't even question. Of course that's how it works. It's like you're making it visible. You're saying like, hey, there's a problem here. **Zach Fowler** (12:09) I don't wanna Can we just like... Can we try to be as clear and simple as possible and maybe side by side around what typically is happening with that float and with that situation, and like maybe we could use real numbers as an example? Because float is like a huge, huge deal. And I also... I'd love to hear your opinions on the business model of float as more of this stuff comes more real time. But... Yeah. Like, what... What's what's the traditional situation? And then compare that and bring us a little bit into XFX and what you're unlocking with that. **Santiago Alvarado** (12:43) Sure. Okay. So the correspondent banking system, and I'm I'm going to talk in in generalities here, right, to start with. But but generally, the correspondent banking system is fairly rigid. Right? It means that when I send an international wire, it usually takes t plus two to clear. Right? And it goes through a couple of hops depending on the origin and destination of the transaction. Right? Now the the problem there, you you have Swift, and then you have the actual money movement. Right? SWIFT is just a communication system. It doesn't move money. Money is moved through the correspondent banking system. Now the correspondent banking system that holds the funds in in actual accounts, they can invest those funds overnight. Mean, it's huge amounts of money. And they get to invest those funds in overnight instruments. Right? Very liquid instruments overnight. And they earn interest on those funds. Right? I think that... That's kinda like the business model of a correspondent banking system. Right? Now if if you really think about it, how it... How settlement change should work is they should be very flexible, and we should give optionality back to the market. Meaning, if if the the optionality should reflect my yield curve my yield curve or my cost of capital. Say that I'm a PSP, and my cost of capital is super high. Right? So maybe I want deferred settlement, meaning I want to take credit, and I want the money now, and I settle later. Or maybe my cost of capital is very low, and I actually want the yield. Right? And I and I invest it. But then also, why does it need to be overnight? Why can't it be just for an hour? Right? And then we... And that flexibility is a huge analog. Right? And we can start to actually build settlement chains at that level of flexibility and granularity. So getting to build those those, I guess, settlement primitives is something that we're trying to do and not have to be forced to follow this very rigid correspondent banking settlement system, if that makes sense. What was the first step in your mind? **Zach Fowler** (15:10) You know, I'm looking I'm looking at the website as we're talking, we're kinda going through this, like, the product and the use cases here, there are a lot of different ones. Like, you have cross border payments, liquidity, market making, treasury. What was the first step? Because this is a relatively young company. Right? You started this Yeah. Like, than two years ago? **Santiago Alvarado** (15:31) What is September of last year. **Zach Fowler** (15:33) Okay. So very... Yeah. Very young. Like, what what what was the initial... What did you go build first? Like, what was the first step to achieving this? Yeah. So I mean, yeah. Then... Because also what is XFX? Right? So **Santiago Alvarado** (15:49) the the way that I describe XFX is we are the liquidity engine behind global money movement. Right? We provide services for financial institutions, payments institutions, market makers, exchanges. We help them trade and settle with best execution in a capital efficient way. Right? What does best execution mean? It means best price. It means best speed... Settlement speed. It means have... Delivering the best debt for a currency that means... That we support. It means having the best availability for the for the markets where we operate in, and it means no capital lockups. Right? We always operate delivery versus payment. Right? So no prefunding. That... That's what XFX is. Now we... As I was saying, we launched September of last year. We are now approaching around 10,000,000,000 in annualized volume. We operate in US, Mexico, Colombia, and we're going to launch in Brazil, Singapore, and Europe before the end of the year. **Zach Fowler** (17:02) What's been mainly driving when you think about the... You said 10,000,000,000 in volume. Like, what what... If you were to look at that kind of pie chart today versus, yeah, maybe tomorrow as you grow, like, what is really driving most of that right now? Do you mean what what currency pairs? What value proposition? Yeah. Like, yeah, what pairs? What use cases? What what like Yeah. Corridors are you seeing? **Santiago Alvarado** (17:29) Yeah. Let's let's start with with with, like, the use cases on why the customers actually use us. Right? Yeah. So say say... Let's talk about an exchange. What what does an exchange want? They want very liquid books, right, or currency pairs, so customers can actually trade in a very efficient manner. Right? So an an exchange would either plug to our APIs, get very liquid books against USD, against MXN, and therefore, they can actually provide very efficient trading to their customers, or even get **Zach Fowler** (18:05) RSQ quotes for their very large institutional customers. Right? That's one. So if we see, like, right here. Right? Like, you have Sablecoin liquidity. I don't know. I... I'm forgetting who it was, but, yesterday, we saw an announcement with... I think it was an exchange, but it was, like, introducing some sort of owned on and off ramp and and bridge or something. It was like their thing. Like, you're kind of saying with a product like this, you can equip exchanges to, like, build these types of things in house effectively? **Santiago Alvarado** (18:33) Correct. So say that whichever... Put a name to it. Whatever big exchange wants to launch, say, in Mexico or in Colombia, and they could plug into our APIs and source very competitive deep liquidity against those fiat currency. So if you're a payments institution and you're processing a $100,000,000 a month in volume and you're doing extremely well, right, and you want to go from a 100,000,000 to to 1,000,000,000 a month in volume, That would actually mean that you need to grow your capital base 10 x linearly. Right? With us, you don't need to do that. You can actually continue to grow without having to grow your capital base, either by by by by raising equity or getting a debt... A credit line. Right? You can actually do that with us. Yeah. Or you're a market maker and you want to increase your return on equity, you can actually trade with us, and you're probably going to increase the return on equity because you're gonna have less capital tied up in transit... In transit, so you're going to be able to to turn your same cash inventory faster **Zach Fowler** (19:45) with us. Right? No capital tied up in Classic. Cool. So exchanges in your mind for the for the liquidity side, exchanges seem like the perfect **Santiago Alvarado** (19:55) customer or or adopter of of volume there. Well, I... It's it's it's interesting. I I I think we have a a fairly a fairly equal distribution across those segments. Meaning, FIS, like, FX brokers themselves is our liquidity, payments institutions, market makers, exchanges. **Zach Fowler** (20:18) Sometimes in my view, in in the conversation, and this is kind of my my take, because we cover we cover so many different pieces of this this puzzle, if you will. And when it comes to effects and a lot of these terms, it's like it's sometimes really hard to know who is actually responsible for the relationship of moving the pair versus, like, doing the... It's kind of a a very simple... Like, if if I go to the coffee shop and I swipe my credit card, like, the merchant isn't actually processing the payment, and maybe even the point of sale isn't actually processing the payment. It's actually some unheard of payments company I'll never know about. Like, it's sometimes hard to know who you're really interfacing with. And where that starts and stops because some people will say, like, oh, we do FX or we can move between this or that. Like, what are you seeing in that type of conversation? Like, what... What's the current vibe as a builder in terms of even people claiming that they're doing certain things or offering certain products, like, what... Do you have any opinions on that? Yeah. **Santiago Alvarado** (21:31) I mean, the the... Well, I mean, let let... Let's talk about the layers in the stack. Right? So at the top layer, you have... Let's call them the the end users. And the end user can be an individual. Right? It can be an SME. It can be a corporate, whatever. Right? Below that, you have the the the companies that service those guys. Right? You you can have, like, a... An... A card acquirer. You can have a money transmitter that's processing remittances for, yeah, from The US to Mexico. Right? Like, those companies services them. Then below that, or or maybe even a bank, right, a retail bank servicing. Then below that, you maybe have infrastructure players, call it issuers. Right? Like, say, Rain, for example, or maybe AirWallex. Right? And be... Below that, you have different components of the stack. Maybe even the ones that hold the license such as, like, banking as a service, that institution. Right? Like, we see ourselves at very down close to the metal. Like, we are actually that... A liquidity provider just providing the the the liquidity services to to any of these players. Right? And how can you actually tell that we are there? It's because we actually hold inventory risk. Right? We are a principle in the flow. We are not offloading that risk to someone else. Yeah. Right? When someone trade with us, we are actually... **Zach Fowler** (23:03) Are the counterparty that actually has the currency to trade with. Can you can you maybe just like double click and break down the the word principle, and, like, even what that term means in this context. And then the invent... I think the word inventory you used, I haven't... That's the first time I've heard that term in this context. What does it mean to be responsible on the on the transaction? **Santiago Alvarado** (23:26) The the two two basic concepts. Right? The first is you can be... You can either be an agent. Sometimes in our industry, they are called orchestrators. **Zach Fowler** (23:35) Right? Yeah. Or you can The word agent is becoming really dynamic now. Yeah. We're even talking about Western Union, and they call, like, all of their different... Or, like, MoneyGram, they, like, call all their different outposts, like, agents, and it's just becoming extremely confusing. Yeah. So... Okay. So you have orchestrators, agents. **Santiago Alvarado** (23:54) In this context, when I say agent, I mean agency trading. Agency trading is basically you are a pass through entity that doesn't hold principal risk, meaning you you get a request for a trade, and you pass it on to a principal dealer. **Zach Fowler** (24:11) Right? Huge difference from a compliance and licensing. Like, it's a big deal to to... Yeah. It's a big deal. You're... **Santiago Alvarado** (24:19) Exactly. So orchestrators, for instance, in our case, are not in the flow of funds. Right? And then if you're a principal, you are actually receiving the funds and managing that cash inventory. Say, for example, I I have to vote... I need to manage inventory, cash inventory in different currencies across many venues to make sure I can meet my settlement SLAs to all of my my customers. Right? So say that that my my... The settlement SLAs that I have to my customers is I want to be able to sell within fifteen minutes. Right? That means I need to be able to preposition cash across the different venues that I support or different currencies that I support domestically to make sure that I can meet those settlement SLAs. I'd be able to rebalance my positions throughout the day to meet those settlement SLAs. Does that make sense? Yeah. But you're fine. That cash that cash inventory, and manage their currency risk. Sure. Sure. **Zach Fowler** (25:26) Okay. So how would you like to attempt to put a bow on this on this conversation? I feel like we... I guess what we'll have to do is have you back for part two or three of this. Because I know we we we... I know personally, I opened to many many of these threads that we mostly tried to close, but we do have to wrap here here in a in a couple nights. What do we miss in terms of, you know, what you want to share with what you're building and the... Really, when when you think about the the thing that gets you most excited about the future, it sounds like you're expanding a lot, and you're opening new markets and corridors. Like, what do you want people to know about what what... Where you're going next or where you've been? Up to you. I mean, maybe even beyond what we're doing at XFX, I think that **Santiago Alvarado** (26:19) the industry is in a super exciting place. Right? The fact that we that we now have tokenized money markets or or stable bonds and that we can actually use them as part of the settlement chains and that we can rearchitect settlement chains for global money movements, I think it's going to be a massive unlock. Right? And I think we're going to see this this change happen sooner rather than later because the value is so great. Yeah. That that would be, I guess, maybe the way that I would put a vote to this conversation. **Zach Fowler** (26:54) Putting out my Dave Taylor bat signal for stable bonds. **Santiago Alvarado** (26:59) Do you have you guys I've worked with the distribution. Those Yeah. Really like those. Of course. Yeah. **Zach Fowler** (27:05) They did a good job. I think they they coined the term stable bond, so I I kind of assumed that you might be in touch with them. How do you work with EtherFuse? What does that look like? Well, we're we're starting **Santiago Alvarado** (27:18) for for Mexico, actually. **Zach Fowler** (27:21) MxNJ. I'm sorry. You just **Santiago Alvarado** (27:24) to use them for ourselves. Right? But then eventually, we'll figure out how to to to also use them for potentially other stuff. Right? But for now, we're using them for for... We'll use them for our treasury. I think this is an MXNB **Zach Fowler** (27:41) EtherFuse cannon. I think that's what that was. Well, cool, man. Santi, this is really insightful. I love the layers of the stack. I love, like, the definition of principle and and where you sit in in this... From what I... From from the more I... The more and more I learn about FX, the more I realize the... It's one of the biggest addressable markets in the space. So you're, you know, excited to continue following along and learning from you. Thank you for the time. Thank you. Thank you for having me. It's been a pleasure. **Santiago Alvarado** (28:14) Cheers. Bye.