Latin America ranks seventh among all regions in terms of the global cryptocurrency economy ranked by Chainalogy. It is only ahead of sub-Saharan Africa but closely follows regions such as the Middle East and North Africa, East Asia and Eastern Europe.
Compared to other regions, Latin America’s cryptocurrency economy has remained relatively flat over the past two years. However, the latest study shows that Brazil, Argentina and Mexico are three countries in the region that have shown “strong grassroots adoption” and rank 20th in the top 20 countries in Chainasis’ Global Cryptocurrency Adoption Index.
With the majority of countries in the region allocating a larger portion of their transaction volume to centralized exchanges than the global average, Mexico stands out as the only exception.
Mexico – one exception
According to the latest report by Chainalogy shared with CryptoPotatoMexico’s exchange distribution closely matches global averages, with nearly half of trading volume processed through decentralized exchanges (DEXes).
The report noted that this is likely the contributing factor behind Mexico’s greater focus on altcoin purchases, as DEXes typically offer a much larger array of assets than their centralized counterparts.
Mexico is also notable for its adoption of cryptocurrency-based remittances, an area of financial transactions that crypto enthusiasts have long hailed as one where the technology can provide increased speed and cost-effectiveness.
The country also ranks as the second-largest recipient of remittances in the world, with an estimated annual inflow of about $61 billion, mostly from the United States.
Daniel Vogel, CEO of Mexican exchange Bitso, reported that his company handled more than $3.3 billion in cryptocurrency transfers sent from the United States to Mexico in 2022, representing 5.4% of the total market.
The use of cryptocurrencies in Argentina and Venezuela
Argentina has long suffered from economic instability, characterized by frequent currency devaluations, making it difficult for residents to save and manage their finances. The Argentine peso lost about 51.6% of its value in the year before July 2023.
However, the country has shown great interest in cryptocurrencies, with an estimated transaction volume of $85.4 billion and strong adoption at the grassroots level. This trend is primarily due to the escape from the depreciation of the peso, rising inflation, and restrictions on access to foreign currencies.
Stablecoins, such as USDT and USDC, are popular for holding and remitting local profits, providing a hedge against currency depreciation, according to Chainasis findings.
Venezuela faces its own economic problems, and stands apart because of its authoritarian government led by Nicolas Maduro. Venezuelans suffer from human rights violations, political repression, and rampant government corruption, especially within the state-owned oil company.
In recent years, there has been a large exodus from the country, with about 25% of the population leaving. Driven by this mass migration, remittances have become a vital part of Venezuela’s economy.
Similar to Argentina, many Venezuelans have also turned to stablecoins as a means of receiving funds from abroad, providing a more reliable and efficient alternative in the face of economic and political challenges, and ultimately serving as a lifeline in this complex humanitarian emergency.
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