Argentina has surpassed Brazil in crypto inflows to Latin America, highlighting the growth of the crypto market. Stablecoins play an important role in protecting Argentina’s citizens amid high inflation and currency devaluation. Centralized exchanges, led by institutional and professional investors, dominate crypto activity in Latin America.
Argentina has surpassed Brazil in terms of estimated cryptocurrency inflows, making it the top country in Latin America. According to Chainalysis, the region received nearly $415 billion in digital currency from July 2023 to June 2024, just over East Asia. Cryptocurrency inflows to Argentina during this period were valued at an estimated $91.1 billion, with Brazil covering approximately $90.3 billion.
This surge is part of a broader trend, with Latin America now the second fastest growing crypto region in the world, with 42.5% year-on-year growth in this activity. Argentina, Venezuela, and Brazil are largely contributing to the boom due to increased use of digital currencies for everything from remittances to inflation hedging.
Source: Chainalysis
Stablecoins: a lifeline for Argentines
Argentina’s high inflation rate, which will reach around 143% by mid-2023, has led many residents to take refuge in digital currencies, primarily stablecoins pegged to the US dollar. As the Argentine Peso continues to devalue, the demand for these stablecoins is increasing and people are using them as a hedge to maintain small savings. According to a report by Chainalysis, as the Argentine peso depreciated, stablecoin transactions soared.
Source: Chainalysis
Stablecoin transactions below $10,000 represent retail transactions in Argentina more than any other digital currency. This means that Argentines are using stablecoins to hedge their assets against the inflationary pressures they face. Stablecoins account for almost 62% of the cumulative cryptocurrency trading volume in Argentina, demonstrating the importance of these currencies in the economy.
Source: Chainalysis
Organized cryptocurrency activity expands in Brazil
While Argentina leads in overall crypto inflows, Brazil is seeing a resurgence in institutional crypto activity. Major financial institutions in Brazil are increasing their interest in digital assets, with institutional digital currency transaction value increasing by 48.4% from Q4 2023 to Q1 2024. This growth is due to portfolio diversification and regulatory developments. Bitcoin and Ethereum ETF.
Source: Chainalysis
Interest in stablecoins, especially for cross-border payments, continues to signal a changing situation in Brazil. Transactions in stablecoins account for approximately 70% of flows from domestic exchanges to international platforms. Circle, one of the largest stablecoin operators, has strengthened its presence in Brazil, pointing to good regulatory policies as a key driver of growth.
Source: Chainalysis
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