Ueno’s collapse exposed the fragility of digital banking in Paraguay, as customers scrambled for access to their money and stablecoins offered a lifeline.

The collapse of Paraguay’s digital lender Ueno Bank last week left nearly three million customers — roughly 60% of Paraguay’s adults — unable to access their accounts.

Paraguay’s Central Bank placed Ueno into resolution on Nov. 3 after its solvency ratio fell below half the legally required minimum. An investigation uncovered questionable lending practices and deficiencies in credit documentation and accounting.

The collapse also triggered a political crisis, with thousands taking to the streets to protest and President Santiago Peña attempting to resign before being impeached and arrested on charges of breach of trust and using his office for personal gain.

Paraguay’s peer-to-peer crypto market immediately reflected the turmoil, with some sellers asking for a USDt premium of up to 13%. “USDt is a lifeline for hundreds millions of people in the world,” Tether chief executive Paolo Ardoino said.

For many, the incident sparked uncertainty over savings, wages and the money needed to cover everyday expenses. With the local guaraní (PYG) currency falling 12.3% in a week, some turned to stablecoins to maintain the value of their funds, or just to keep payments moving along.

David Eisenmann, founder and chief executive of Paraguayan crypto exchange X4T, tells Magazine the timing made the liquidity need even more pronounced.

“The intervention came in the first days of the month,” he says, “exactly when salaries, rent and supplier invoices are due,” adding that many business owners “couldn’t make payroll.” For some, USDt was “suddenly the most liquid money” they had:

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