In a digital currency era, Latin America (LatAm) is making its mark. From Brazil’s forthcoming AI regulation bill to Argentina’s crypto adoption amid economic turmoil, a lot is happening in this growing, digitally vibrant region. Data from Blockchain investigator Chainalysis shows that the region has a big market for cryptocurrencies.
This article walks you through the LatAm crypto market, revealing some of the challenges and opportunities that lie ahead. We’ll dig into the impact of regulatory delays in Brazil, the rise of crypto adoption in Argentina, and the exciting opportunities in other LatAm countries as well.
Brazil’s AI Regulation Bill
Brazil, a key player in the Latin American crypto market, has been working on a bill initiated by Senate President Rodrigo Pacheco to regulate Artificial Intelligence (AI). Brazil’s Proposed AI Regulation was brought before the Federal Senate on May 3, 2023. However, the bill’s enactment has been delayed, with no clear timeline for its next legislative developments. This delay has stirred up the crypto market, as the bill’s provisions could impact the development and use of AI systems, including those in the crypto industry.
The bill requires developers and companies to evaluate and classify their AI solutions according to risk levels. It also establishes rights for people affected by these tools and defines parameters of responsibility and punishment for the agents involved. The postponement of this bill leaves the crypto market uncertain, as it could remarkably affect the development of AI-driven crypto technologies in Brazil.
Crypto Opportunities in LatAm Amid Economic Challenges
Despite these regulatory uncertainties, the LatAm region presents a fertile ground for crypto adoption, as data on the monthly trade volume of the region from the crypto market data tracker Kaiko Research shows. Argentina, for instance, has been making a name for itself in the crypto space. The country’s political shifts and economic challenges have spurred interest in cryptocurrencies. Argentina is grappling with a 276% inflation spike. This means the value of the Argentine peso is falling, and people’s savings are losing value fast. Many Argentinians are turning to cryptocurrencies, specifically stablecoins, to protect their wealth. In Argentina, these digital currencies are becoming popular as they offer a way to escape the high inflation rates.
The cryptocurrency market in Argentina is booming thanks to the approval of Bitcoin as Argentina’s official currency in 2023 by the new leadership—the crypto-friendly President Javier Milei-led government. Partly because of this, one report suggests the market is estimated to hit a huge sum of US$728.2 million this year. This shows that despite economic challenges, Argentinians are embracing the crypto revolution. Today, Argentina is home to “play-to-earn” crypto games and several crypto startups like Ripio, Koibanx, Decrypto, Lemon, and SatoshiTango. These companies are at the forefront of integrating digital currencies into Argentina’s financial landscape.
But the crypto boom isn’t confined to Argentina. Brazil, Colombia, Ecuador, and Mexico are among the top 30 countries in the 2022 crypto index. These countries leverage crypto for various purposes, including storing value, sending remittances, and seeking alpha.
In countries like Venezuela and Argentina, where inflation rates are soaring, cryptocurrencies, particularly stablecoins, offer a means to preserve value. In Venezuela, for instance, 34% of all small retail transaction volume consisted of stablecoin trades.
The founder of Venezuelan political party Voluntad Popular and Venezuelan opposition leader Leopoldo López, October said last year that “Venezuela has had one of the worst ever hyperinflation rates at over one million percent” but that “cryptocurrency, particularly stablecoins, has helped many Venezuelans overcome this.” Further speaking on how crypto has become an essentially useful tool for those resisting autocratic governments like the Nicolás Maduro-led authoritarian government, Lopez said, “Crypto has provided an alternative to democracy activists, NGOs, and freedom fighters to overcome censorship and the closing of the civic space,” while stressing that cryptocurrency wasn’t in itself a magic bullet.
Remittances also play a crucial role in the LatAm crypto scene. According to a World Bank press release last year, Mexico, the world’s second-biggest receiver of remittances, processed approximately $61 billion in crypto remittances sent from the U.S. in 2022. This trend is expected to grow, arguably transforming the remittance landscape in LatAm. But that’s not all. Mexicans are not just buying Bitcoin. They’re also investing in altcoins.
Brazil is the largest economy in South America and is also a leader in crypto adoption. It ranks ninth in the Chainalysis’ 2023 Global Crypto Adoption Index, showing that Brazilians are keen on exploring the benefits of digital currencies. The number of cryptoasset firms in Latin America and the Caribbean has doubled between 2016 and 2022. In fact, according to data from Kaiko Research, crypto trading volume denominated in Brazilian real (BRL) reached $6 billion, a recorded 30% spike year-over-year (YoY). This growth indicates that the region is becoming a hub for crypto innovation.
Meanwhile, El Salvador made history in 2021 by becoming the first country to adopt Bitcoin as legal tender. This bold move shows LatAm countries are not just adopting crypto but also shaping its future. 2024 is shaping up to be a landmark year for crypto in LatAm. With more people using digital currencies for everything from remittances to wealth preservation, the region is on a busy ride to become a global leader in crypto adoption.
The current LatAm crypto market is somewhat like an unhealthy mixed bag of regulatory delays and flourishing opportunities. Amid the postponement of Brazil’s AI regulation bill, which has created a cloud of uncertainty, the region is undeterred. It continues to embrace crypto, driven by economic challenges and the thirst and quest for financial innovation. It breathes crypto. It is hoped that the LatAm countries would — with favorable state policies on crypto’s side — continue not only to traverse but maneuver the crypto space. The region could unquestionably become a hotbed for crypto adoption, offering a wealth of opportunities for investors and innovators alike.
Author: Ayanfe Fakunle
The editorial team at #DisruptionBanking has taken all precautions to ensure that no persons or organisations have been adversely affected or offered any sort of financial advice in this article. This article is most definitely not financial advice.
