Latin America’s Cryptocurrency Boom Reflects Economic Pressures and Opportunities
The growing adoption of cryptocurrencies across Latin America is a testament to the resilience of the region’s economies. Driven by economic factors and specific national needs, this dynamic landscape presents challenges and opportunities as countries navigate the path to greater crypto adoption.
The rising adoption of cryptocurrencies in Latin America mirrors a burgeoning trend in various countries across the region, spurred by economic factors and each nation’s unique needs. This overview presents a diverse and dynamic picture of the cryptocurrency situation in Argentina, Mexico, Venezuela, El Salvador, Brazil, Bolivia, and Colombia. It reflects how cryptocurrencies are shaping new economic dynamics in Latin America, with each country facing challenges and opportunities on the path to greater adoption of crypto assets.
Argentina: Innovation Driven by Economic Crisis
The constant devaluation of the Argentine peso and exorbitant inflation, which have led Argentinians to increasingly adopt cryptocurrencies as an alternative investment and a means of protecting their purchasing power, are the specific economic crisis driving this adoption. According to the 2023 Global Crypto Adoption Index by Chainalysis, Argentina ranks 15th worldwide, only surpassed in Latin America by Brazil.
“Argentina has an impressive level of cryptocurrency adoption out of necessity, as it has experienced significant economic problems over the last 20 to 30 years,” Pablo Casadio, co-founder and CFO of Bit2Me, told EFE. This scenario has made the country an attractive destination for major international players and has fostered local innovations such as Agrotoken, backed by grains, and Atómico 3, anchored to lithium.
Argentinians’ innovative spirit is evident in the Impressive crypto ecosystem they have built. According to Mariano Biocca, executive director of the Argentine Fintech Chamber, ‘There are about ten million virtual asset operation accounts in Argentina,’ making the country a regional leader in transaction volume.
Mexico: Preparations for a Digital Currency
In Mexico, cryptocurrency adoption continues to rise, with Bitcoin dominating the domestic market with a 99.5% share. Bitso, Mexico’s leading exchange, holds 40.7% of the Latin American market. “Although no banks accept cryptocurrency payments and only a few businesses have implemented it, one of its main uses is for remittances sent from the United States to Mexico,” noted Kaiko, a market research firm.
In 2021, the Bank of Mexico (Banxico) announced the launch of its own digital currency, which is now expected to be launched in 2025. “Banxico plans to launch its central bank digital currency; however, the current governor, Victoria Rodríguez Ceja, said it won’t operate in the country until 2025,” a report stated.
Venezuela: Cryptocurrencies as Economic Refuge
In Venezuela, cryptocurrencies are primarily used as a store of value against the constant inflation and devaluation of the bolivar. According to economist and cryptocurrency specialist Aarón Olmos, Venezuelans do not use them transactionally but as a savings reserve. This strategy allows citizens to protect their money from the ‘onslaught of the economic situation,’ he added.
The sector faces significant limitations due to restructuring the Superintendency of Crypto Assets and Related Activities (Sunacrip) following a corruption scandal. “All companies licensed to operate remain intervened and suspended,” Olmos noted. According to the 2023 Global Crypto Adoption Index, Venezuela ranks 40th globally.
El Salvador: A Controversial Bet
El Salvador captured global attention in 2021 by adopting Bitcoin as legal tender, a move promoted by President Nayib Bukele to boost financial inclusion and attract foreign investment. However, three years later, most of the population still does not use cryptocurrency daily. “88% of Salvadorans did not use Bitcoin in 2023,” according to a survey by the University Institute of Public Opinion (Iudop).
“After nearly three years of analyzing and observing the population’s behavior, we can say that this government experiment has failed,” economist Tatiana Marroquín told EFE. The expected financial inclusion has not materialized due to a “lack of understanding of the topic,” she added.
Brazil: Overcoming the FTX Crisis
Mercado Bitcoin, one of the leading cryptocurrency platforms in Latin America, has managed to overcome the crisis caused by the bankruptcy of the giant FTX. “Since early 2024, we have seen growth that makes the business viable,” said Reinaldo Rabelo, CEO of Mercado Bitcoin in Brazil. The platform has 3.8 million users in the South American giant and plans to launch new financial products, including fixed-income plans and a bank card in partnership with Mastercard.
“We are eliminating the complex part of Bitcoin; usage must be good enough for people to forget the technology,” Rabelo emphasized. Recent regulations in Brazil have increased investor confidence. However, Rabelo warns that “an excessive dose can kill the patient” if the exact requirements are imposed on a cryptocurrency platform as on a traditional bank.
Bolivia: Regulatory Challenges and Opportunities
Bolivia recently lifted the ban on buying, selling, and investing in cryptocurrencies, opening new opportunities for its citizens. “Regulation is essential; it should not hinder but rather help,” financial analyst Jaime Dunn told EFE. Currently, 250,000 Bolivians have crypto accounts.
The Central Bank of Bolivia (BCB) has launched an Economic and Financial Education Plan to promote the informed use of crypto assets. “The technology behind cryptocurrencies, called blockchain, is a decentralized database that resides on more than one server,” an explanatory note from the BCB detailed.
Colombia: Moderate Growth in a Developing Regulatory Framework
Colombia ranks 32nd in the 2023 Global Crypto Adoption Index. The Bank of the Republic and the Financial Superintendency of Colombia are working on pilot projects for technological and financial innovations. “Crypto assets are not explicitly regulated or recognized as official currency,” the Bank of the Republic clarified.
The Financial Superintendency launched the LaArenera platform for technological and financial innovations. “After completing the pilot, no incidents were observed that would jeopardize the continuity of the exchange pilot,” the Superfinanciera noted. However, they warn that “crypto assets are not backed by a central bank or by the assets or reserves of that authority.”
Also read: Venezuela’s Shift to Cryptocurrency Amid Sanctions Draws Concerns
This diverse and dynamic landscape shows how cryptocurrencies influence economic behavior and opportunities across Latin America. Each country faces unique challenges and opportunities, but the overall trend points towards increased adoption and integration of cryptocurrencies into everyday financial practices. As economic conditions continue to evolve, the role of cryptocurrencies in Latin America will likely grow, presenting risks and rewards for the region’s economies and populations.
