Argentina and Venezuela are increasing interest in stablecoins as they face declining local currencies and economic instability. Brazil is seeing institutional growth for cryptocurrencies, with regulatory advances increasing the popularity of stablecoins.
In Latin America, the use of stablecoins has increased significantly due to economic instability in various countries. The region currently accounts for 9.1% of global crypto activity and received nearly $415 billion in digital currency transactions from July 2023 to June 2024.
Source: Chainalysis
Countries such as Argentina, Brazil, and Venezuela are at the forefront of this trend, with citizens and institutions alike turning to stablecoins as a solution to protecting their assets.
Argentina and Venezuela turn to stablecoins for protection
Argentina’s inflation rate reached 143% by the second half of 2023, causing demand for stablecoins to surge. Faced with the declining value of the peso, many citizens turned to stablecoins pegged to the US dollar as a safer way to save money.
Source: Chainalysis
Separately, we reported on Crypto News Flash that in Venezuela, where the local bolivar has similarly lost value, stablecoins are becoming the go-to solution for ordinary citizens looking to protect their finances.
Source: Chainalysis
This trend points to a growing reliance on cryptocurrencies as a hedge against collapsing local currencies.
Brazil’s institutional transition to stablecoins
Brazil is experiencing a resurgence in institutional crypto activity, particularly stablecoin activity. This shift occurred after a slump in early 2023, but gained momentum as the year progressed. Through the first quarter of 2024, Brazilian institutional-sized deals increased by 48.4%.
The country’s evolving regulatory framework and the launch of a cryptocurrency exchange-traded fund (ETF) have attracted the attention of major financial institutions, with renewed interest in digital assets as an alternative investment.
Regulatory changes will encourage the use of stablecoins
We have already reported in Crypto News Flash that stablecoins have become an integral part of Latin American financial and trading markets, offering a practical alternative for cross-border transactions and as stores of value. I did. Stablecoin adoption is expected to grow as Brazil continues to develop its regulatory environment.
Companies like Circle are expanding their operations in Brazil, recognizing the country’s growing demand for stablecoins pegged to the US dollar. This reflects broader changes in the region, as economic challenges drive both institutional and retail investors to seek more stable financial solutions.
Cryptocurrency activity is expanding in the Caribbean after FTX’s bankruptcy.
David Templeman, a specialist financial investigator with the Cayman Islands Financial Investigations Authority, shares his insights on the evolving crypto landscape in the Caribbean, and specifically in the Cayman Islands.
He reports that the number of overseas customers launching blockchain-related businesses has increased significantly compared to the previous year. These businesses span a wide range of applications, from artificial intelligence to blockchain-based data storage.
Templeman concluded:
“In the aftermath of various bankruptcies (FTX, TerraUSD/Luna, Celsius Network, Three Arrows Capital), there is pressure on the industry to learn from mistakes and put in place better oversight and guardrails. We have a strong community of blockchain and Web3 companies that are physically present and legally resident here.”
Templeman also noted that the industry has learned from past mistakes like those seen with FTX, leading to increased oversight and security measures. He highlighted the strong presence of blockchain and Web3 companies in the archipelago, suggesting that the Caribbean region is strengthening its role as a key hub for blockchain adoption and growth.
The future of cryptocurrencies in Latin America
Stablecoins offer a path to economic stability in regions facing inflation and currency devaluation. As countries like Argentina and Venezuela continue to face economic uncertainty, stablecoins are becoming an important tool for both individuals and businesses.
Meanwhile, Brazil has seen the institutionalization of cryptocurrencies through regulatory clarity and the introduction of ETFs, demonstrating growing confidence in cryptoassets as part of the mainstream financial system.
