How did Latin America become a major player in the cryptocurrency landscape?

Fractured Latin America is turning its attention to cryptocurrencies. What is happening in these countries?

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Second Catenaanalysis research, Latin America is the seventh largest crypto economy globally, accounting for 7.3% of the market. Residents of the region often use digital assets as a store of value in the context of devaluing national currencies and as a weapon against authoritarianism.

Experts also point out that, by the end of 2023, a shift towards the mass adoption of blockchain and cryptocurrencies in everyday life will be underway, and Latin America will play a leading role in this. From mid-2022 to 2023, 51% of residents in the region purchased various items with digital currencies.

Source: Catenaanalysis

Circle attributes this dynamic to its strong developer base. Around one million people in the region are actively involved in offshore development. These developers have a significant impact on the local market, increasing the value and accessibility of Latin America’s financial sector.

“Taken together, Latin America’s established market demand, political support and widespread use of the dollar make the region a natural location for broader stablecoin adoption.”

Circle research

However, many other reasons have contributed to the active introduction or abandonment of cryptocurrencies in Latin America.

The most important countries in the implementation of cryptocurrencies: an overview

There are significant differences in patterns of digital asset use across jurisdictions in the region.

El Salvador

El Salvador is the first country in the world to recognize Bitcoin (Bitcoin) as legal tender. As part of his policy of supporting cryptocurrencies, the current president of the country, Nayib Bukele, promised to buy one BTC per day.

Now the Latin American state has accumulated more than $300 million in Bitcoin in two years. Bukele doesn’t seem to have any intention of selling Bitcoin – him he insists that BTC allows to develop tourism, innovation and the economy.

Additionally, El Salvador has launched several cryptocurrency initiatives. These include obtaining citizenship by investing in cryptocurrencies and mining BTC using volcanic energy.

Argentina

Last year, cryptocurrency advocate Javier Milei became President of Argentina. He promised to significantly reduce the public sector of the economy and government spending, fight triple-digit inflation, eliminate the Central Bank and replace the peso with the US dollar.

He is considered an outspoken opponent of central banks and supports Bitcoin, believing that the significant advantage of digital gold is its limited supply. After Milei’s victory in the presidential elections, the Bitcoin exchange rate against the Argentine peso approached an all-time high.

Since then, the country has seen an active increase in cryptocurrency loyalty. Currently, the country’s regulation of the digital assets sector is making progress. Therefore, in January, the Argentine government, led by the president, decided not to introduce a new tax on previously undeclared cryptocurrencies.

Additionally, Argentine regulators are discussing the regulation of Bitcoin and other digital assets with authorities in El Salvador. The countries intend to create a financial alliance in which Bitcoin will play a key role.

Representatives of the Argentine regulator praised the authorities of El Salvador for creating favorable conditions for the use of the first cryptocurrency and for developing legislation that allows cryptocurrency startups to grow in the country.

Paraguay

In October 2023, Bitcoin miner Sazmining launched the first agricultural company in Paraguay that runs entirely on renewable energy. The miner chose Paraguay for its vast energy potential and low tariffs.

Since, Paraguay has actively revised its policy towards Bitcoin miners, offering them more comfortable working conditions. This decision was made after considering a bill to ban mining, temporarily introduced in early April.

This strategy will allow the State to attract additional funds to finance infrastructure projects without increasing energy tariffs for the population. Therefore, Paraguay is easing its policy towards cryptocurrency miners, which could contribute to the development of the country’s mining industry.

Brazil

Second Kaiko, digital currency trading volume in Brazil increased by 30% in 2024. In the January-April period, the volume of cryptocurrency transactions exceeded $6 billion. Brazil ranks seventh in the world ranking of countries in terms of the volume of transactions with cryptocurrencies paired with fiat currency.

Source: Kaiko

Against the backdrop of widespread interest among citizens in cryptocurrencies, the Central Bank of Brazil is actively developing the regulation of digital assets. It is expected to be operational by the end of 2024.

The country’s authorities intend to launch a program to gradually introduce regulation of digital asset transactions. Initially, the Central Bank is implementing a plan to register crypto companies. They must obtain a license and enter a unique database of virtual service providers (VASP).

In the second phase, greater control over virtual currency transactions will begin. Particular attention will be paid to the supervision of stablecoins.

Mexico

In 2018, Mexico became the first country in Latin America to begin regulating cryptocurrency exchanges and other platforms used for cryptocurrency transactions.

Chainalysis experts say that Mexico is now the second-largest country in the world when it comes to cross-border crypto transactions. Approximately $61 billion worth of assets are transferred each year, mostly from the United States.

Updates on the legal regulation of cryptocurrencies in Mexico are needed. However, the country’s authorities are actively working on digital weight.

“Industry players will likely be interested to see whether that share will increase in the coming years, both for Mexico and other Latin American countries with large remittance markets.”

Research on the analysis chain

The regulator intends to implement functions such as automation mechanisms and programmability with the help of the asset. In 2023, the Bank of Mexico pushed up the timeline for the digital shot put from 2024 to 2025.

summing up

Ripio CEO Sebastian Serrano he admits that Latin America is becoming a development center for the global cryptocurrency market. Retail investors are showing the most significant interest in the tokens. Companies are also gradually switching to this tool, which allows for the free movement of capital around the world.

Therefore, the use of cryptocurrencies in Latin America will increase in the coming years. Brazilian importers are already using virtual currencies to pay Chinese suppliers of goods.

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