On Feb. 14, 2023, Milena Mayorga, the Salvadoran ambassador to the United States, announced that her country is considering opening a second bitcoin embassy in the Lone Star State. Mayorga said that Texas is “our new ally” and the goal is to expand “commercial and economic exchange projects.” Ambassador Milena Mayorga Fosters Growing Relationship Between […]
- Latin America
Mastercard, Binance to launch their second prepaid crypto card in Latin America
Crypto adoption and usage in Brazil are higher than the global average.
Credit card giant MasterCard has teamed up with the world’s largest crypto exchange Binance to launch another prepaid crypto card in Latin America.
On Jan. 30, Binance announced the launch of the Binance Card in Brazil. The new card is issued by Dock, a payment institution regulated by the Brazilian Central Bank.
It will allow new and existing Binance users in the country with valid national IDs to make purchases and pay bills with crypto assets. The card is in a beta testing phase and will be “widely available in the coming weeks,” according to Binance.
Brazil is the second country Binance has launched the product following Argentina in August 2022. According to the announcement, Brazil is among the top ten markets for Binance globally.
Olá, Brasil! #Binance Card has just launched in Brazil - another step towards crypto adoption pic.twitter.com/UJRmpMhpbQ— Binance (@binance) January 30, 2023
In a press release shared with Cointelegraph, Guilherme Nazar, General Manager at Binance Brazil, said the card is a “significant step in encouraging wider crypto use and global adoption,” adding:
“Payments is one of the first and most obvious use cases for crypto, yet adoption has a lot of room to grow.”
The card will allow real-time conversion from 14 crypto assets to fiat at the point of sale. Perks include up to 8% cashback in crypto on eligible purchases and zero fees on some ATM withdrawals.
According to Mastercard’s 2022 New Payments Index, Brazil leads the global average for crypto usage and adoption. In the global survey of more than 35,000 respondents, it found that 49% of Brazilians have made at least one crypto-related transaction in the past year, compared to the global average of 41%.
Related: Coinbase CEO urges Bitcoin legal tender for Brazil, Argentina — Reaction
In December, outgoing President Jair Bolsonaro signed a bill to legalize the use of cryptocurrency as a payment method within the country.
The new legislation has not legalized Bitcoin as tender as in El Salvador but includes many digital assets under the definition of legal payment methods. A licensing regime for virtual asset service providers was also established.
Bitcoin adoption of Guatemalan merchants grows one BTC tattoo at a time
The Central American country of Guatemala is getting inked on the path to greater Bitcoin merchant adoption.
Bitcoin (BTC) use in Guatemala is on the up. The Latin American country that borders El Salvador boasts Guatemalan-grown Bitcoin companies such as Ibex and Osmo, several Bitcoin Beach-inspired projects including Bitcoin Lake, and now, free BTC tattoos.
A Bitcoin merchant adoption competition hosted by Osmo Wallet in 2022, a Guatemala-based Bitcoin company, led to the free ink promotion. Cointelegraph spoke to Piero Coen, the co-founder of Osmo Wallet, and Steven Marroquin, the owner of Soul’s Anchor, a tattoo parlor in Guatemala City.
Coen explained how it that the mission is to get more people to use Bitcoin:
“So we ran a competition amongst merchants to see who would process the most volume in Bitcoin sales in 2022. Turns out Soul's Anchor Tattoo Shop in Guatemala City, who started accepting Bitcoin payments using Osmobusiness back in October, won the competition.”
Merchant adoption is nothing new in Guatemala. So they thought about how to make things more exciting. They decided that offering free Bitcoin tattoos to customers might be a Bitcoin-friendly marketing tactic. “It was a huge hit. All the slots filled up in hours!” He explained.
Guatemalan Bitcoin believers and Bitcoin tourists streamed into the store to ink their favorite Bitcoin meme, quote or art onto their skin. Steven Marroquin, Souls Anchor owner, explained, “It’s been around seven months since we officially accepted Bitcoin and have two to three customers per month.” It's a small amount, but payments are on the rise, he reports:
“The first months we had only one customer, and even though it’s still a few percentages of our income, probably 1%, we are happy have started accepting it.”
Coen explains that “It’s still super early” for Bitcoin adoption in Guatemala, and “Most business owners are still unsure about accepting and holding onto Bitcoin because of the volatility.”
By allowing instant Bitcoin to fiat currency conversion at the payment merchant terminal, merchants can sidestep the volatility. Instant BTC to fiat conversion is a growing trend in the Bitcoin payments space, as companies such as Strike–headed up by Jack Mallers–and CoinCorner offer similar solutions. Bitcoin as a means of exchange is burgeoning and Coen is optimistic about its future:
“Bitcoin adoption in Guatemala City is on the rise, every day we see more and more people are getting into it, learning about it, and stacking up on Sats."
Rikki, one-half of the Bitcoin Explorers couple who spent 45 days living off Bitcoin only in El Salvador, recently traveled around Guatemala, paying his way in Bitcoin. Rikki told Cointelegraph the level of “adoption of Bitcoin in Guatemala has really surprised us,” referring to himself and his partner Laura.
“Locals are curious, they want to learn about Bitcoin and see it as an important alternative to credit cards whose fees are very high in the country.”
Indeed, by accepting Bitcoin, business can save over 50% on transaction costs when compared to accepting credit card payments, “So the incentives are there,” Coen explained.
Related: As Bitcoin debuts in El Salvador, Honduras and Guatemala study CBDCs
Rikki added that “orange-pilling” efforts by Guatemalan-based companies, such as Ibex and Osmo, “are pushing to raise awareness of the technology.” The couple also visited the Bitcoin Lake, a Bitcoin-beach-style community project, where a Guatemalan mayor is mining Bitcoin in his office, before getting inked themselves as part of the promotion.
“We found the tattoo idea very cute. It is a company that wants to reward its shopkeeper who has received the most Bitcoin transactions by promoting its business.”
Bitcoin and crypto tattoos are increasingly common, as crypto advocates choose to brand themselves with their coin of choice. However, crypto tattoos can sometimes go very, very wrong.
Take Mike Novogratz, the Galaxy Digital founder, as an example. His Terra (LUNA) tattoo is a constant reminder that investing requires humility. The LUNA token crashed by over 99% in price in 2021. Fortunately, the Bitcoin tattoos are safe, for now, thanks to a January price pump.
The driving forces behind crypto adoption in Latin America in 2022
Inflation has fueled crypto growth in the region, stimulating asset tokenization and remittance infrastructure development.
Inflation, cross-border payments, assets tokenization and nonfungible tokens (NFTs) were among the major drivers for crypto adoption across Latin America in 2022, sources in the region told Cointelegraph, with exciting examples of progress across many countries.
Latin America made up 9.1% of the global crypto value received in 2022, reaching $562 billion between July 2021 and June 2022 — representing growth of 40% in the period. Four Latin American countries ranked among the top crypto adopters in the latest Chainalysis Global Adoption Index.
Major developments have contributed to these results over the past 12 months. Authorities have been working on central bank digital currencies (CBDCs), implementing standards for business operations, and clarifying regulations. Meanwhile, many companies in Latin America have been exploring ways to utilize blockchain technology and digital assets to solve the various challenges that countries in the region face.
"The region is ripe with opportunities for cryptocurrency adoption," noted a spokesperson for cryptocurrency exchange Bitso, which operates in Brazil and Argentina, among other countries in Central America, adding that:
"For both Argentina and Colombia, the impacts of inflation have driven many to use cryptocurrency. [...] For Colombia, remittances are another significant driver of adoption, even surpassing coal as a driver of dollar revenue in 2022 according to a Banco de Bogotá report."
Institutional adoption and regulatory developments have paved the way for Mercado Bitcoin to issue Brazil's first stablecoin, the MBRL, which is backed one-to-one by the Brazilian fiat currency through a partnership with Stellar. The country's central bank is scheduling for 2023 the test of its digital currency, and for 2024, its full release to over 200 million people. Also, a recently approved bill will regulate virtual assets providers after years of discussions in Congress.
"Brazil has been a major player in the crypto economy story in Latin America for several reasons: institutional adoption, regulatory advances, and general public buy-in. In that sense, public sector involvement is inevitable - this represents an extremely positive move, which enhances the crypto-active industry while providing greater security for investors," noted Fabrício Tota, director at Mercado Bitcoin.
Colombia also plans to introduce its digital currency, aiming to increase transparency and prevent tax evasion, which is estimated to account for nearly 8% of the country's gross domestic product. In Chile, the central bank has delayed plans for the issuance of the digital Chilean peso for deeper analysis of benefits and risks.
To fight inflation in Argentina, cities such as Buenos Aires and Mendonza started accepting cryptocurrencies for tax payments. At the same time, Santa Fe Province plans to implement crypto mining activities to raise funds for rail infrastructure upgrades. These may be timely initiatives given that Argentina's inflation rate is forecast to be 73.5% at the end of 2022, according to FocusEconomics panelists.
"Argentina is becoming a hub for bringing tech development and resources to Latin America from the rest of the world," said Ryan Dennis, senior manager at Stellar Development Foundation. "This naturally flows into blockchain development with a large number of startups in the country and thus a growing number of developers and founders working together in blockchain and crypto."
Latam's crypto space has also benefited from tokenization of investment products, allowing many to access products that were previously only available to large investors. "Tokenization of digital assets has been growing over the past years," including assets such as corporate bonds and real estate debts, noted Dennis.
Another reason contributing to the rise of tokenization of financial assets is the high-interest rates in the region. Most Latin American countries have double-digit interest rates, which prompts investors to seek assets with predictable returns and less volatility. This is an ideal scenario for financial companies working on tokenization and decentralized finance (DeFi) solutions.
Music and art tokenization are also trending in Latin America. "One revolution that has happened in LatAm is giving artists a window into the world of Web3," Dennis explained. "There are a lot of artists that have been able to get out of their local communities and country to become internationally renowned. That’s huge."
Crypto industry challenges in the region are similar to those seen worldwide: A lack of education about blockchain technology, insufficient regulation, and a deficit of trust. "The firms and projects that will lead the crypto in Latin America next year will be the companies thoughtfully addressing the need for increased transparency and trust," noted Bitso's spokesperson.
Argentina’s province to issue US dollar-pegged stablecoin
The bill also authorizes local artists to issue nonfungible tokens (NFT) to promote financial and cultural inclusion.
The province of San Luis in Argentina approved a legislation allowing the issuance of its own stablecoin pegged to the United States dollar. The token, dubbed the "Activo Digital San Luis de Ahorro", will be available to all citizens of the province over the age of 18 and 100% collateralized in liquid financial assets of the province.
The bill authorizes the province to issue the stablecoin up to 2% of its annual budget. It also stipulates that assets can be transferred between parties, but it does not specify which chain will be used for the transactions. The province of San Luis is home to over 430,000 people.
The stablecoin issuance is only one of the initiatives described in the bill called “Financial Innovation for Investment and Social Economic Development”, which aims to promote development in several sectors in the province through blockchain technology, including generating value and improving auditing procedures.
Related: Argentina’s fan token sinks 31% after World Cup loss against Saudi Arabia
Alongside the stablecoin, the bill allows local artists to issue nonfungible tokens (NFTs) with the goal of promoting financial and cultural inclusion. The bill stated:
"The "SAN LUIS ART DIGITAL ASSETS" will be art collections from the Province, giving local artists the opportunity to digitize their work and have it launched on the digital market through an internal web platform for purchase and sale. For the creation of these collections, NFT (Non Fungible Token - Token No Fungible) technology will be used, making this work of digital art unique, granting ownership and authenticity to the artist or holder of the digital asset."
A complex economic scenario is driving crypto adoption in Argentina, where two digit inflation has sparked company and government initiatives into cryptocurrencies and blockchain technology. As of year-end, FocusEconomics panelists expect inflation to be at 73.5% in Argentina.
A Chainalysis' report revealed that over 30% of consumers in Argentina already use stablecoins to make everyday purchases, most likely for small retail transactions, under
Brazilian crypto industry gets regulatory clarity amid global uncertainty
The recent regulatory framework from the Brazilian Congress will benefit the country’s financial institutions and bridge local liquidity with global markets.
As the global crypto community is still licking its wounds from the FTX collapse, a liquidity crisis continues to spread around centralized exchanges and decentralized finance (DeFi) alike.
It is soon to be decided whether the coming regulation triggered by FTX’s bankruptcy will bring a silver lining to crypto.
The Chamber of Deputies of Brazil, the lower house of the country’s federal legislative body, has passed a regulatory framework that legalizes the use of cryptocurrencies as a payment method within the country.
It is estimated that 10 million Brazilians, or about 5% of the population, trade crypto assets.
The largest centralized exchange in Brazil is a local business called Mercado Bitcoin, with roughly three million users. International players like Coinbase or Gemini do not have such a relevant presence in Brazil.
Thus, global bankruptcies like FTX’s have not affected the blockchain market in Brazil as strongly as in the United States or Europe.
Recent regulatory news from Brazil gives a ray of hope as other countries around the world are targeting the cryptocurrency industry without making any distinction between good and bad actors, especially in the U.S. and Europe.
In a blog post titled “Bitcoin’s last stand,” the European Central Bank warned banks against interacting with digital currency as it could taint their reputation, claiming BTC is hardly used for legal transactions and that the regulatory attention it is currently receiving from lawmakers around the world could be “misunderstood as approval.”
The U.S. Commodity Futures Trading Commission (CFTC) continues to aggressively police new digital commodity asset markets. According to a report from the CFTC, a total of 82 enforcement actions were filed in 2022’s fiscal year, imposing $2.5 billion in “restitution, disgorgement and civil monetary penalties either through settlement or litigation.”
Although the framework voted by the Brazilian Congress doesn’t make Bitcoin legal tender as it was achieved in El Salvador, legalizing crypto as a payment method is a positive step toward encouraging local businesses to adopt and transact using crypto.
Salvadoran President Nayib Bukele announced that the country would be implementing a Dollar-cost average trading strategy to accumulate Bitcoin. After buying a large chunk of its Bitcoin reserves at market heights, El Salvador currently finds most of its crypto investment to be underwater.
Current crypto landscape in Brazil
Brazil has been steadily preparing for the regulation of tokenized assets and the current administration has taken a positive stance on financial innovation for the last couple of years, but no one was expecting it to be voted on so suddenly.
The Brazilian Securities and Exchange Commission is pursuing changes in the country’s legal framework concerning its regulation of cryptocurrencies. In 2021, the securities regulator approved a sandbox structure for the testing of blockchain companies and solutions.
The Central Bank of Brazil also shared its objectives to create the country’s sovereign digital currency pilot before the end of the year.
Recent: FTX collapse won’t impact everyday use of crypto in Brazil: Transfero CEO
Luis Felipe Adaime, CEO of Moss.earth — a Brazilian climate tech that develops blockchain-based solutions to help companies offset carbon — told Cointelegraph:
“The Central Bank innovated massively in 2020 with the ‘PIX,’, an electronic instant payment method that has gained wide acceptance in the country. Considering the success it’s had so far I would imagine that the next natural step would be to have the ‘PIX’ on-chain.”
Brazil’s legal framework states that the central bank will determine the rules, and a license will be required for any firm that exchanges fiat for crypto or offers crypto custody and crypto-related products.
“Licence requirements will limit who can participate and run these kinds of operations, the process of approval by the central bank might constrain the market.” Thiago César, the CEO of fiat on-ramp provider Transfero Group, told Cointelegraph, adding, “There is no reason why the president will not sanction this law, this is the final step and he will probably do it as there is big pressure from the central bank to accept the legal framework.”
The current president of Brazil, Jair Bolsonaro, has relied on the Ministry of Economy and the advice of technical nominees for such complex economic decisions and is likely to approve the framework before leaving office on Jan. 1, 2023.
A clear regulatory framework will bring more legal certainty for some institutional players to participate but by no means was Brazil hindered in terms of innovation within this field.
Banks and financial institutions might venture into new product offerings such as credit lending with crypto and maybe even crypto remittances with this new regulated environment in Brazil. Three major banks in Brazil were already offering crypto-related products before Brazil’s Congress passed the bill.
Who is set to benefit the most from this new regulation?
Despite GDP stagnation in the past two decades, Brazil has had a relatively benign low-inflation scenario — especially when compared to neighboring Argentina and Venezuela — and has implemented significant financial innovation in recent years.
Positive regulation might allow listed funds and publicly traded instruments to purchase their crypto locally instead of going outside of the country.
Investment funds in Brazil are only allowed to buy crypto assets on regulated exchanges. This created a scenario in the past, where a fund that wanted to allocate part of its investments in crypto had to resort to international exchanges that were regulated in a different jurisdiction.
Anything that bridges liquidity between multiple jurisdictions and Brazil is a very interesting opportunity. An international investor would face a less complicated bureaucratic process and local businesses could access more capital.
“I believe Brazilians have benefitted strongly from financial and tech innovation like the rise of fintech and the adoption of blockchain, with wider access to cheaper credit, growing investments and trading in crypto,” Adaime stated.
DeFi initiatives involving Brazilian stablecoins like the Celo Brazilian real (cREAL) and the Brazilian Digital Token (BRZ) are making foreign direct investment easier by enabling international stablecoin holders to fund local small and medium enterprises.
Related: Luiz Inácio Lula da Silva wins Brazil’s presidential race — What does this mean for crypto?
Brazil is a very financially secluded market from the rest of the world due to the restrictive nature of its local currency. “The only currency that can be used in Brazil is the Brazilian real so there are no USD purchases or foreign currency bank accounts. This makes the local currency quite strong.” Cesar added:
“Naturally, local players are expecting regulators to be tough on international players so that they have a better fighting chance.”
International exchanges in Brazil such as Binance, ByBit and Crypto.com were expanding fast and storming the market with better product offerings, more liquidity and books that are more liquid and globally integrated.
A group of local exchanges has been vocal about international exchanges operating in Brazil without any type of regulation. Those local exchanges played a big part in pushing the vote by Congress to happen as soon as possible.
Web3 projects focus on education to bring Latin American women to the sector
Women in Latin America are showing an increased interest in Web3 as organizations aim to drive participation through educational content and scholarships.
Interest in Web3 continues to grow despite the crypto bear market. A recent article from McKinsey noted that venture capital investments in Web3 exceeded $18 billion during the first half of 2022. Findings from Cointelegraph Research also show that Web3 attracted the most interest from venture capitalists in comparison to other blockchain sectors during Q2 of this year.
While notable, a lack of diversity has become apparent within the Web3 sector. For instance, it was found that only 16% of nonfungible token (NFT) creators are women. Although this number is low, women are taking an interest in owning digital assets. Given this, industry experts believe that a lack of education around Web3 is creating a barrier to entry for women, especially for those who are from underrepresented regions, such as those from Latin America.
Initiatives to bring Latin American women to Web3
Sandy Carter, senior vice president and channel chief of Unstoppable Domains — an NFT domain name provider and digital identity platform — told Cointelegraph that she has seen increased demand for Web3 content from women living in Brazil, Columbia and several additional Spanish-speaking countries, including Spain.
“On March 8, 2022, Unstoppable Domains launched ‘Unstoppable Women of Web3,’ which is a diversity and education group focusing on training talent to equalize the playing field in Web3. Following this, a number of Latinas reached out requesting Web3 content in various languages,” she said.
Recent: Crypto adoption: How FDIC insurance could bring Bitcoin to the masses
In order to cater to these requests, Carter explained that Unstoppable Domains recently initiated a goal to onboard 5 million Latin American women into Web3 by 2030. Carter added that this initiative is being launched in partnership with H.E.R. DAO LATAM — a women-led developer decentralized autonomous organization (DAO) championing diversity — along with the Spanish-language crypto education platform CryptoConexión. She said:
“Education is the first step to building a more inclusive Web3. We have partnered with women from 25 different groups to help create educational materials around Web3 in Spanish. We are also distributing over $25 million worth of free NFT domains to five million Latinas to help them build and control their digital identity as a gateway into the sector.”
According to Carter, initiatives like these are becoming more important, as she pointed out that women who live in or trace their ancestry to Latin America continue to be underrepresented in the tech industry. To put this in perspective, data from the online tech community Built In found that only 2% of computing-related jobs in the United States are held by women of Latin American descent. The same applies in Latin America itself, where women are significantly underrepresented in science, technology, engineering and math fields, according to research from IDB.
Monica Talan, founder of CryptoConexión, told Cointelegraph that organizations must take an education-first approach that incorporates different languages to bridge the Web3 diversity gap, stating, “CryptoConexión has an initiative called ‘WAGMI LatAm,’ where our mission is to ensure access to Web3 content in English, Spanish and Portuguese.”
Additionally, Laura Navarro Muñoz, governor of H.E.R. DAO LATAM, told Cointelegraph that the organization is helping women in Latin America transition to Web3 by providing travel scholarships to events and hackathons.
Groups like H.E.R. DAO LATAM and CryptoConexión have already started making an impact. Bricia Gabriela Guzmán Chávez, community manager at Web3Equity — a Web3 platform promoting gender equality — told Cointelegraph that she got her first job in the sector after obtaining a scholarship from H.E.R. DAO LATAM to attend a cryptocurrency event:
“I heard a speaker say, ‘If we want to have more inclusion, we have to do it.’ That day, I joined the H.E.R. DAO Global Telegram where someone shared a position for ‘Discord moderator.’ I applied, and my life changed. Yet, at that moment, I didn’t have the hard skills that I have right now, so I’m grateful that they gave me their vote of confidence.”
According to Guzmán Chávez, H.E.R. DAO LATAM also created a scholarship program following ETH Mexico called “Hacker Mom Scholar.” Through this, she was able to attend Devcon VI with her three children. “Currently, I’m working full-time remotely on Web3 projects, and each chance that these projects provide me to attend Web3 events is an opportunity to improve the quality of my life,” Guzmán Chávez mentioned.
Talan further remarked that it’s important for Latin American women to get involved in Web3 due to the demand the sector is witnessing in the region, especially in places like Mexico.
“Mexico is seeing more people use crypto for remittances,” she said. According to World Bank statistics, Mexico was the second-largest recipient of remittances in the world last year. Given this, a number of Web3 companies are setting up shop in Mexico to enable crypto remittances. “We need information available about how crypto remittances can be used. I believe this can be better achieved if we have more women building these products,” Talan said.
Challenges for Latin American women seeking jobs in Web3
While it’s notable that organizations are focused on bringing women from Latin America to the Web3 sector, challenges such as hiring freezes and access to technology may hamper adoption. For instance, data from Crypto Jobs List noted that the number of job listings and talent interested in the space has declined about 30%–40% in comparison to the last bull market in February 2022.
On the flip side, Web3 is enabling more remote job opportunities, which may help drive a diverse workforce. “Web3 is helping people get high-paying jobs regardless of their location. All they need are the skills, which is why we are focused on education first,” Navarro Muñoz pointed out.
Recent: Institutional crypto adoption requires robust analytics for money laundering
Diana Carolyn Olvera Gómez, a Web3 researcher, told Cointelegraph that H.E.R. DAO LATAM gave her the opportunity to participate in her first hackathon. The organization also presented her with educational content in Spanish. In turn, Olvera Gómez shared that she remotely serves as a contributor to Web3Montréal, a Canadian nonprofit focused on Web3, and to Coinmiles, a Bitcoin (BTC) rewards platform.
However, Olvera Gómez mentioned that access to technology, such as Web3 initiatives, can be complicated for many women living in regions like Latin America. Yet she believes that a ripple effect will drive women’s involvement as more get involved.
“Web3 communities dedicated to women provide an opportunity to bridge the gender gap in the workplace.” Carter added that demand from women wanting to participate within Web3 is there, yet supplying the correct educational content is the next challenge:
“We are in a bear market, but this is the time for building. Energy and enthusiasm around the space haven’t waned. We just need to figure out how to supply education to those interested in learning more.”
Remittances drive ‘uneven, but swift’ crypto adoption in Latin America
The Latin American region now makes up for a 9.1% share of the global crypto value received in 2022 with remittances and high inflation the highest drivers of adoption.
Remittance payments, fiat fears, and profit-chasing have been the three most significant drivers of crypto adoption in Latin America, according to a new report.
The seventh-largest crypto market in the world saw the value of cryptocurrencies received by individuals rocket 40% between July 2021 to June 2022, reaching $562 billion, according to an Oct. 20 report from Chainalysis.
Part of the surge was attributed to remittances, with the region's overall remittance market estimated to have reached $150 billion in 2022. Chainalysis noted that crypto-based service adoption was “uneven, but swift.”
The firm pointed to one Mexican exchange operating in the “world’s largest crypto remittance corridor” which processed over $1 billion in remittances between Mexico and the United States in the year to June 2022 alone.
It marked an increase of 400% year-on-year and accounted for 4% of the country’s remittance market.
However, the region’s soaring inflation rates have also played a huge part in crypto adoption, according to the analytics firm, particularly in the adoption of U.S. dollar-pegged stablecoins.
“Stablecoins – cryptocurrencies that are designed to stay pegged to the price of fiat currencies like USD – are a favorite in the most inflation-ravaged countries in the region,” explained the firm.
The region has been battling with staggeringly high inflation rates, with an estimate from the International Monetary Fund revealing that inflation across the largest five Latin American countries reached a 25-year high in August to 12.1%.
This has led to regular consumers, attempting to protect themselves from their plummeting national currencies, to take and hold stablecoins in order to make their everyday purchases.
The report cited a June Mastercard survey that found over a third of consumers already use stablecoins to make everyday purchases, while Chainalysis noted that citizens from Venezuela, Argentina, and Brazil were most likely to use stablecoins for small retail transactions (under $1,000).
Venezuela in particular has seen its national fiat currency the bolívar depreciate by over 100,000% since December 2014, the firm added.
Interestingly, the report found that citizens in the larger and more developed Latin American economies were also likely to adopt cryptocurrencies as a means of profit.
Related: Latin America is ready for crypto — Just integrate it with their payment systems
Chileans were the most involved in DeFi, with over 45% of all crypto transaction volume taking place on DeFi platforms followed by Brazil at just over 30%, Brazil was the number one country in the region for crypto value received closing in on $150 billion.
“Latin America’s more DeFi-centric crypto markets are not unlike Western Europe’s or North America’s, where market participants are embracing cutting edge, returns-focused crypto platforms moreso than savings-centric centralized services,” Chainalysis explained.
Over 12,000 Brazil companies declare crypto holdings in record high
August figures released by Brazil's tax authority revealed over 12,000 companies have cryptocurrency holdings, the largest amount ever recorded.
The number of companies holding cryptocurrency in Brazil has reached new record highs as of August, amid an increased trust in cryptocurrencies and high inflation rates.
According to local media reports, the country’s taxation authority, Receita Federal do Brasil (RFB), also known as the Federal Revenue of Brazil, recorded 12,053 unique organizations declaring crypto on their balance sheets in August 2022.
The number is a 6.1% increase from the 11,360 companies in July and is the month with the highest recorded number of companies with crypto holdings to date.
The RFB noted that Bitcoin (BTC) is the most popular cryptocurrency held by institutions, followed by stablecoin Tether (USDT).
However, the number of individual Brazilian investors holding crypto fell from the prior month, down to 1.3 million in August.
The value of the total declarations also experienced a slight decline, likely due to the condition of the crypto markets, with August seeing a total of $2.1 billion (11 billion Brazilian Reais), down from $3.4 billion in July.
The U.S. dollar pegged stablecoin USDT had the most value transacted, with over $1.42 billion moved across nearly 80,000 transactions in August, averaging roughly $17,500 per transaction.
BTC was second with almost $270 million transacted, but took first place for number of transactions, clocking in over 2.1 million in the same month at a much lower average transaction amount of $130.
Related: Latin America is ready for crypto — Just integrate it with their payment systems
It was noted the stablecoin USD Coin (USDC) dropped from third to fifth place from July to August in regard to value transacted, losing out to Ether (ETH) and Brazilian Digital Token (BRZ), a Brazilian Real pegged ERC-20 token.
Brazilians trust in cryptocurrency remains high according to a September Bitstamp “Crypto Pulse” report, with 77% stating they trusted digital assets.
Multiple financial companies in the country have started offering cryptocurrency services, such as brokerage giant XP Inc and payment application PicPay both integrating crypto exchange services in August. Crypto exchange Binance has also increased its efforts in the country, doubling its team since March and opening two new offices on Oct. 4.
Brazil’s inflation rate hit a 26-year high of 12.1% in April, but has since cooled slightly to 8.7% in the latest August figures as per data from the country’s statistics agency.
Latin America is ready for crypto — just integrate it with their payment systems
Brazil is already leading the globe in cryptocurrency adoption. Integrating crypto with payment providers in the region is a surefire way to see Latin America fully embrace the industry.
Thriving on exploiting users’ data, Web2 monopolies like Facebook and Google have ushered in an era of massive internet centralization in recent years. This concentration of power has enabled huge shares of communication and commerce closed platforms, giving users little control over how their data is collected.
An emerging concept, Web3, will provide a means to pivot from centralization to an open-source internet. A recent report from Andreessen Horowitz (a16z) found that this new digital economy could reach an astounding 1 billion users by 2031. If executed correctly, the decentralized internet will allow users to take control of their data and content.
While Web3 promises to radically change the internet and its ability to provide value to users worldwide, key hurdles must be overcome before it can be adopted en masse.
Related: Brazilian proposal would make crypto payments legal and protect private keys
One major obstacle to mass adoption is the lack of local payments integration that many Web3 projects have. For example, a global Web3 project based in Germany likely doesn’t understand or offer the preferred payment options of people living in Brazil. While it seems tedious, accepting local payment options familiar to customers in their respective regions is a strategic decision that can make an enormous impact in winning market share.
Let’s look at how Web3 projects can scale in Latin America and globally by expanding local payment options.
Understanding local payment preferences
Local payment methods are regionally preferred payment types. These methods include digital wallets, cash vouchers, local debit networks, bank transfers, open invoicing and other tactics used globally to transact in-store and online. Without local payment fluency, Web3 businesses aren’t able to access different markets across the globe.
However, serving an international clientele by accepting local payments is no easy feat as each region subscribes to significantly different preferred payment options and regulatory requirements. Web3 projects often don’t have the proper infrastructure to reach global audiences at scale.
One of the hottest Latin American markets for Web3 projects is Brazil, as its citizens are adopting digital transactions faster than in any other country. Brazil has seen a massive uptake of its national instant payment solution, PIX, implemented by the Brazilian Central Bank in 2020. For Web3 companies to reach this audience, they must forge a way to connect with local banks and stay in line with local regulations.
Related: Top Latin America delivery app to accept crypto
COVID-19 accelerated digital transformation in nearly every corner of the world. In Mexico, the adoption of SPEI, a real-time gross settlements payment system created by the Bank of Mexico, is rising. Companies can capitalize on systems like SPEI by finding a way to partner with central banks or employing a third party to link to banks for them.
Additionally, the pandemic and the rise of contactless payments highlighted the importance of flexible payment options. Online payment methods are gaining significant traction in Latin America. For example, Mexican convenience store OXXO recently launched a voucher-based banking app that allows users to pay for their utility bills and online purchases that now boasts more than 1.6 million users. Keeping up-to-date with new developments in the payments landscape is vital to serving customers and keeping pace with the competition.
Establishing trust and loyalty
In many countries in Latin America, individuals are eager to embrace crypto in the hope of a better financial future. A recent study found that Latin Americans are the most bullish on crypto compared to any other region worldwide. There is a huge opportunity for the Web3 movement to establish deep trust with Latin Americans as the centralized system has failed them.
Local payments are a gateway to customer acquisition and loyalty. To effectively enter new markets, it is vital to establish quick integration with all relevant currencies. This results in new end-user conversions and higher success rates, which builds loyalty and trust with local audiences.
Enhancing user experience
It is a widely held belief that much work is needed to streamline the user experience in Web3. Regarding Web3 payments, users are looking for fast, reliable transactions in the payment method of their choice. Web3 projects can improve user experience by meeting customers where they are and speaking their language.
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Ways to enhance payment user experience include simplifying the onboarding process and providing exceptional customer support. Notifying users every step of the way so that they are confident their payment is being processed will ensure there is no confusion or apprehension.
Web3 is still in its infancy and has some growing pains in its current state. But accomplishing the due diligence required to deepen infrastructure integrations worldwide will open up endless possibilities and, ultimately, transform the ways individuals socialize, transact and consume data.
Holger Arians is the CEO of Banxa, a payment and compliance infrastructure provider to the global crypto industry.
This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.