Latin America Crypto Adoption

Cryptocurrency has become a popular investment option in recent years in Latin America. With the advent of blockchain technology, investors have seen the opportunity to make money from their funds by investing in cryptocurrencies like Bitcoin and Ethereum. Regulators have also become aware of cryptocurrencies and are working on creating guidelines that would provide clarity to participants in the crypto space. This will help investors in making informed decisions when they pour their money into digital assets.

Latin America is a region of the world that has been known to be a hotspot for crypto adoption. This is because, even with its economic problems, there is an inherent need for people to transact with each other without having to rely on banks or other financial institutions. Crypto adoption has seen a spike in Latin American countries. Chainanalysis highlights the role of LATAM, mentioning it as the 7th largest crypto market since the citizens of this place have received $562 billion in crypto from July 2021 to June 2022.

It should also be noted that Latin America had a history of strong dictatorships which have left many citizens without access to basic necessities such as food and clean water. This makes cryptocurrencies like Bitcoin appealing because they provide an alternative way to buy goods and financial inclusion when the traditional systems are not available or trustworthy enough.

In this article we will examine the role of crypto in Latin America's countries, focusing on Brazil, Cuba, Salvador, Panama, Venezuela, Peru, Mexico, and Ecuador. At the same time, we pay attention to the role of governments in terms of crypto adoption and how they treat digital currencies.

Argentina

According to Bloomberg Linea, the adoption rate in Argentina was expected to jump from 5.5% of the population to 18.4% in 2022, making it one of the fastest-growing markets for cryptocurrency and blockchain technology. Argentina's crypto adoption is on the rise. The country's citizens are increasingly using digital currencies to pay for goods like pizza and video games, and the government has taken steps to make it easier for them to do so.

Argentina's inflation rate has been an issue for many years now, but it seems as though cryptocurrency adoption is helping to address that problem. Nevertheless, some economists say that it will only lead to hyperinflation because of all the money that flows into crypto without any way of managing or regulating it. However, others argue that this will help stabilize currency values over time. People will have more options than just using dollars when making purchases with their crypto and digital assets. Experts say it is better to have something to choose from instead of having just one kind of currency available at all times.

Brazil

Brazil is one of the largest economies in South America. Brazil has a relatively young population that is largely urbanized and Internet-connected, which makes it an ideal market for cryptocurrency. Just recently, Roberto Campos Neto, president of the Central Bank of Brazil, announced a digital Real project. The Brazilian central bank digital currency (CBDC) plans to be launched in 2024. Moreover, Campos Neto highlighted the advantages that digital currency will bring as soon as it will be integrated with traditional finance structures and DeFi centric crypto markets.

The Brazilian Senate has passed new income tax regulations, potentially subjecting citizens to pay up to 15% tax on earnings from cryptocurrencies held on international exchanges.

While there are many obstacles facing cryptocurrency adoption in Brazil including regulation, the community predicts that Brazil will continue to be an important market for both crypto investors and developers because of its size and economy. Many people in Brazil who have access to technology but do not have bank accounts or credit cards. They can be integrated into a financial framework if they use cryptocurrencies like Bitcoin or Ethereum. Even better, if that would be Bitcoin Lightning Network, which helps to optimize amounts of transaction fees and energy waste even more.

Cuba

Cuba is embracing cryptocurrency like never before. In November 2020, then-U.S. President Donald Trump banned the use of Western Union, the main company that was facilitating remittance payments to Cuba. This accelerated the use of sites like BitRemesas to send money to the island; it also prompted many Cubans to start using virtual currency as an alternative method of sending funds home — to family members living elsewhere or even just taking some money out of the country for personal use. So far it seems that around 100 000 or so Cubans are using some form of cryptocurrency as part of their financial lives — a very promising sign for what could be a larger trend in Cuba in general and keep the country's remittance market alive.

On April 27, 2022, the Cuban central bank issued regulations requiring virtual asset service providers to obtain a license for cryptocurrency use. The bank will evaluate requests based on legality, socioeconomic interest, and project characteristics, granting licenses valid for one year initially.

El Salvador

The Salvadoran economy is based on agriculture and tourism, with a large portion of the population still in poverty. Over the past few years, there has been a great deal of growth in financial inclusion and access to digital payments, as well as a growth in the number of mobile phone users. With these developments comes an increased need for secure digital assets that can be utilized to pay bills, send money home, or make purchases online.

The government of Salvador noted that Bitcoin is used by billions of people around the world, and it is becoming increasingly popular as a form of payment globally. Thus, El Salvador was the first country in the world to make Bitcoin legal tender. This means that Bitcoin is accepted as a method of payment. The move was promoted by President Nayib Bukele as one that would deliver multiple economic benefits to the country. Nayib Bukele also said he hoped it would encourage more businesses to come to El Salvador and help boost its economy.

"This is an innovative initiative that will give us a competitive advantage," said President Bukele. "We are proud to be at the forefront of technological development."

Panama

Panama has been considering more extensive legislation to expand crypto usage than any other country. Panama’s lawmakers recently passed a bill in Congress, regulating eight cryptocurrencies: Algorand, Bitcoin, Elrond, Ethereum, IOTA, Litecoin, XDC Network, and XRP Stellar. This is a huge yes for cryptocurrency investors who want to do business with countries that have a strong regulatory system in place.

The purpose of this bill is to encourage more companies related to cryptocurrency to be implemented in Panama. This, in turn, will contribute to the economy either through employment generation or increased demand for real estate. In general, Panama is considering accepting the use of cryptocurrencies within its borders.

Update: In 2023 Panama's Supreme Court has invalidated a law aimed at providing legal status to specific cryptocurrencies. The court's ruling, issued on July 14, declares the entire proposed law unconstitutional, accepting objections raised by the country's president earlier this year. Legislator Gabriel Silva initially introduced the draft law in 2021, and it was passed by the national assembly in April 2022. The law aimed to permit the use of various cryptocurrencies, including bitcoin, for payments.

Venezuela

Venezuela is one of the most economically unstable countries in the world, with a significant gap between rich and poor. Inflation is estimated to be over 1 600%. As a result, people are turning to Bitcoin as a way to protect their savings from hyperinflation. In addition to its use as a store of wealth, Venezuelans are resorting to crypto as a way to pay for goods and services. Over 600 merchants accept Bitcoin as payment for products and utilities, including restaurants, groceries, electronics stores, and more. Crypto adoption in Venezuela has been rapid. The approximate number of crypto users in Venezuela is around 240 000 while the population of the country is estimated at 29 789 730 in 2022.

The situation in Venezuela is devastating. The problem has become so severe that the government has to ration food and other basic necessities on an almost daily basis.

As a result of inflation, people are turning to Bitcoin as a way to protect their savings from hyperinflation. In addition to its use as a store of wealth, Venezuelans are using crypto assets as a way to pay for commodities and things like medicine, food, etc.

The petro (₽), also known as petromoneda, was launched by the Venezuelan government in February 2018. It was intended to be backed by the country's oil and mineral reserves as a means of stabilizing the Venezuelan currency amid U.S. sanctions. However, on January 15, 2024, the token was shut down, and any remaining holdings were liquidated.

Peru

The Peruvian cryptocurrency market has been growing steadily for years. There are two reasons for the increasing crypto adoption in Peru: inflation and political instability. First, Peru has an extremely high inflation rate, which makes it difficult for people to rely on their local currency. This is because they have to constantly keep track of price fluctuations and exchange rates in order to buy things. Cryptocurrencies allow people to avoid those issues and make their own money work for them.

Second, there is a lot of political instability in Peru, with frequent coup attempts and military governments that come into power every few years or so. Cryptocurrencies provide a way for people to store wealth that cannot be seized by a new regime if one comes into power unexpectedly. People are encouraged to invest more heavily in crypto assets rather than keeping their money in banks where it might be captured at any time.

In 2018, Peru announced plans to introduce PeruCoin, a virtual currency valued around $10 USD. However, progress has been minimal since the announcement, leading to skepticism about its legitimacy, with many considering it to be an investment scam.

Mexico

When it comes to crypto adoption, Mexico ranks 16th out of 26 countries in the list, according to Finder’s Crypto Adoption November 2022 report. There were 389 345 people surveyed in 26 selected countries. The report showed that Mexico has a high interest in cryptocurrencies and demonstrates a high likelihood of adopting them in the future.

The Mexican government has been working hard to promote crypto adoption and create a regulatory framework that will allow for more innovation in the cryptocurrency industry. Mexico’s central bank will have its own digital currency by 2024. The Mexican government announced it on social media, although the development was not confirmed by the Mexican monetary regulator, called Banxico. If the plans succeed in 2024, Mexico will be on the list of countries owning their own central bank digital currency (CBDC).

Ecuador

Ecuador has seen a rise in its middle class, which increased to 37.4% of the population in 2015. These factors have led to a rise in demand for cryptocurrencies, as well as the need for more crypto exchanges and wallets.

The country's economy has also been affected by fluctuating oil prices, which have resulted in a weak U.S. dollar exchange rate that makes it difficult for businesses to import goods from abroad without taking a loss on their investment.

The lack of stable banking systems is another reason why Ecuadorians are turning to cryptocurrency for the safekeeping of their money. In fact, according to the Guardian, 40% of Ecuadorians do not have access to traditional banking services because they live in rural areas where there is no infrastructure available for such opportunities.

Ecuador's Central Bank has emphasized that Bitcoin lacks authorization as a payment method in the country, as its value is speculative and not backed by any authority. Despite not being prohibited, Bitcoin isn't considered legal tender for goods and services, according to the Organic Monetary and Financial Code.

Presidential candidate Andrade Giovanny's proposal to introduce a cryptocurrency alongside Ecuador's US dollar economy has sparked controversy, given the country's adoption of the US dollar in 1999. However, interest in cryptocurrencies has been growing in Ecuador's banking sector since at least 2018.

In a world where the future of cryptocurrency is uncertain, it is important to understand how users in different parts of the world are responding to the technology. While much of the focus has been on Asia and Europe, Latin America’s countries are also an essential part of the cryptocurrency ecosystem. In the last few years, crypto assets have emerged as a solution to many of the problems that have plagued Latin America for decades. The region has seen a resurgence in interest in cryptocurrency as users look for ways to bypass banks and governments, protect their savings from inflation and corruption, and send remittances across borders.

The people of Latin America have suffered greatly over the past two decades due to political turmoil, economic downturns, and high levels of corruption. These factors have led to an exodus from countries like Venezuela and Argentina, which were once considered economic powerhouses within their region.

Despite these challenges, however, there has been an increasing interest from both businesses and individuals in using cryptocurrencies as an alternative means of payment. This interest serves as a testament to how far blockchain technology has come over the past decade and provides a glimpse into what could be possible if other regions embrace it as well.

As can be seen, many of Latin America's states, unlike Western Europe's, are the most inflation-ravaged countries, which makes it difficult for people to make ends meet. In many cases, this means people are forced to turn to alternative financial services in order to survive or even save money. In addition, these nations have been suffering from political instability for several years now — which has made it even more difficult for people to access traditional banking services. Finally, due to a failure when it comes to traditional financial services — many consumers will consider crypto as a beneficial option when it comes time to purchase goods and services. Read how to minimize crypto transaction fees in our article on Crypto Fees.

The Latin America region is a hotspot for cryptocurrency and blockchain development. Cryptocurrency trading in Latin America has seen a growth of 40% between July 2021 and June 2022, based on the “2022 Global Crypto Adoption Index” published by blockchain analytics firm Chainalysis. And according to the International Monetary Fund, Latin American nations will continue facing high inflation for some time.

Hence, there is an opportunity for crypto companies looking to expand into Latin America. However, before doing so — they must first understand the cultural nuances and risks associated with the region.

Why is crypto popular in Latin America?

The recent instability of local currencies, coupled with the high inflation rates, has led many Latin Americans to see cryptocurrencies as a safer alternative to fiat currencies. The volatile Latin American currencies seem not reliable for people.

Which country is No 1 in cryptocurrency?

Brazil is a major player in the cryptocurrency scene in South America. The country has experienced a surge in cryptocurrency adoption, and according to Moralis Academy, more than 25% of Brazilians say they plan to buy crypto in 2023.

What's driving the immense growth of crypto in Latin America?

For instance, in the case of Argentina, a country that has seen its economy decline steadily since the early 2000s, cryptocurrency adoption has been growing steadily since 2016. According to several kinds of research, Argentines have been turning to cryptocurrencies because they believe them to be safer than their local fiat currency.

Does Mexico have crypto?

Mexico's leading cryptocurrency exchange, Bitso, has seen an increase in trading volume of 342% in the months between September 2019 and May 2020. The exchange also announced it had surpassed 1 million users on its platform, with 92% of them being Mexican.