Namaste Yogis. Welcome to the Blockchain & AI Forum, where your technology questions are answered! Today we answer the question what’s happening in the crypto space in Latin America. As a bonus, a proverb is also included.
While traveling throughout South America, I have noticed merchants advertising the acceptance of crypto (Bitcoin) as payment. Rather than cite anecdotal evidence, I’ll share the findings of an authoritative study, titled Blockchain LATAM Report, Key Ecosystem and Regulatory Updates in Latin America, by Patrick O’Neil, Sherlock Communications, Managing Partner. I’ll start with a macro-overview of the report and conclude by highlighting the two countries, Argentina, Brazil, and Mexico.
Crypto adoption continues its rapid ascend in Latin America. Five Latin American nations rank in the top 20% percentile worldwide of crypto adoption according to ChainAnalysis, a crypto analytics consultancy:
• Brazil – 7th
• Argentina – 13th
• Colombia – 15th
• Mexico – 25th; and
• Peru – 35th
Over the last two years banks, fintech companies, centralized exchanges, and hedge funds have facilitated crypto adoption, leading to broader adoption. Additionally, financial authorities in the region are experimenting with the Central Bank Digital Currencies (CBDCs). That’s a topic for another post.
MACRO FACTORS DRIVING CRYPTO ADOPTION IN SOUTH AMERICA
Crypto is gaining traction for a combination of factors. The authors cite several drivers that are generally applicable plus a few specific to Latin America.
• Asset protection from inflation, particularly in Argentina.
• Cross border payments (de-dollarization of international trade is an accelerating worldwide trend as nations seek to avoid the possibility of ever-growing USA sanctions, which are now imposed on 29% of the world!
• Asset tokenization and its corresponding ability to fractionalize assets. With asset tokenization small investors can access investments that were previous only available to deep pocketed persons and institutions and/or assets that are typically not liquid, e.g., real estate.
• The value proposition of stable coins, and their utility for remittances.
ARGENTINA
Less than 2% of Argentine citizens owned crypto as of 2023; hence, it’s a small percentage. However, the numbers are growing quickly and doing so despite the previous government’s efforts to make it difficult. Under the new president Milei, who is crypto friendly, crypto is poised to accelerate sharply. Two additional points. First, Binance the world’s largest crypto exchange, recently became the principle sponsor of the Argentina professional soccer/futbol league; thus, marketing is only beginning. Second, Argentina is among the world leaders in paying workers in crypto, specifically stable coins.
BRAZIL
Inflation and devaluation drive crypto adoption in Brazil. By certain measures, Brazil leads the USA in crypto adoption. For instance, Brazil approved Bitcoin and Ethereum ETFs in 2021; the USA in 2024. Crypto ownership soared from 2M to 16M in three years! Almost 10% of all adults now own crypto. Rio De Janiero has positioned itself as the crypto capital of Brazil and has aggressively courted investors and conferences. I attend a conference last year–impressed!
MEXICO
Driven in part by remittance, Crypto is on the march in Mexico. Mexico jumped from 44th place to 25th in two short years, according to ChainAnalysis. Mexico is also building a crypto movement, as evidence by it being the first Latin American nation to form a Blockchain Association. Mexico houses the first Latin American “unicorn”, Bitso, valued at $2.2B. Bitso is a crypto exchange with 5M+ users. It has a strong presence in Argentina, Brazil, Colombia, and El Salvador.
Time to end, with this proverb from Belize, where they say: “the drum speaks to those who listen.”
Until next time,
Yogi Nelson
Blockchain & AI Forum 