Latin America and Cryptography
2022.12.22 13:35
Latin America and Cryptography
Budrigannews.com – Expansion, cross-line installments, resources tokenization and nonfungible tokens (NFTs) were among the significant drivers for crypto reception across Latin America in 2022, sources in the area told Cointelegraph, with energizing instances of progress across numerous nations.
Between July 2021 and June 2022, Latin America accounted for 9.1% of the total crypto value received worldwide, reaching $562 billion, or 40% growth. In the most recent Chainalysis Global Adoption Index, four countries in Latin America were ranked among the top adopters of cryptocurrencies.
Over the past year, significant developments have contributed to these outcomes. Central bank digital currencies (CBDCs), business operations standards, and regulations have been the focus of authorities’ efforts. In the meantime, a lot of Latin American businesses are looking into ways to use digital assets and blockchain technology to help countries in the region solve various problems.
A spokesperson for the cryptocurrency exchange Bitso, which operates in Brazil and Argentina, among other Central American nations, noted, “The region is ripe with opportunities for cryptocurrency adoption,” adding that:
“For both Argentina and Colombia, the impacts of inflation have driven many to use cryptocurrency. […] For Colombia, remittances are another significant driver of adoption, even surpassing coal as a driver of dollar revenue in 2022 according to a Banco de Bogotá report.”
The MBRL, Brazil’s first stablecoin, has been issued by Mercado Bitcoin thanks to institutional adoption and changes in regulations. Through a partnership with Stellar, the MBRL is backed one-to-one by the Brazilian fiat currency. The digital currency will be tested in 2023 by the country’s central bank before being made available to over 200 million people in full in 2024. Also, after years of debate in Congress, a bill that was recently passed will regulate providers of virtual assets.
“For a number of reasons, Brazil has been a significant player in the crypto economy story in Latin America: institutional adoption, advancements in regulation, and public acceptance “This is a very positive move, which enhances the crypto-active industry while providing greater security for investors,” noted Mercado Bitcoin director Fabrcio Tota. In that sense, public sector involvement is inevitable.
Additionally, Colombia intends to introduce its digital currency with the intention of enhancing transparency and preventing tax evasion, which is estimated to amount to nearly 8% of the country’s GDP. In Chile, the central bank has put off plans to issue the digital Chilean peso until more benefits and risks are looked at.
Cities like Buenos Aires and Mendonza began accepting cryptocurrencies for tax payments in an effort to combat inflation. In addition, Santa Fe Province intends to carry out crypto mining operations in order to raise funds for rail infrastructure enhancements. FocusEconomics panelists predict that Argentina’s inflation rate will reach 73.5 percent by the end of 2022, so these initiatives may be timely.
According to Stellar Development Foundation senior manager Ryan Dennis, “Argentina is becoming a hub for bringing tech development and resources to Latin America from the rest of the world.” With a growing number of startups in the country and consequently a growing number of developers and founders working together in blockchain and cryptocurrency, this naturally flows into blockchain development.”
The tokenization of investment products has also helped the crypto market in Latam, giving many people access to products that were previously only available to large investors. Dennis noted that “assets such as corporate bonds and real estate debts” have seen an increase in tokenization over the past few years.
The region’s high interest rates are another factor contributing to the rise of tokenization of financial assets. Investors look for assets with predictable returns and less volatility because the majority of Latin American nations have interest rates that are double digits. For financial institutions working on tokenization and decentralized finance (DeFi) solutions, this is the ideal scenario.
Latin America is also seeing a rise in the tokenization of art and music. One unrest that has occurred in LatAm is giving specialists a window into the universe of Web3,” Dennis made sense of. ” Numerous artists have achieved international fame by establishing themselves outside of their home communities and nation. That is massive.”
More New Law on Cryptocurrencies in Brazil
The challenges facing the crypto industry in the region are comparable to those worldwide: a lack of trust, inadequate regulation, and inadequate education regarding blockchain technology According to a spokesperson for Bitso, “the companies and projects that will lead the crypto industry in Latin America next year will be the companies that thoughtfully address the need for increased transparency and trust.”
