The growing adoption of cryptocurrencies in Latin America reflects an increasing trend in various countries in the region, driven by economic factors and each nation’s specific needs.
Below is a diverse and dynamic overview of the cryptocurrency situation in Argentina, Mexico, and Venezuela. It reflects how cryptocurrencies are shaping new economic dynamics in Latin America. Each country faces challenges and opportunities on the path to greater adoption of crypto assets.
Argentina: innovation driven by the economic crisis
The constant devaluation of the Argentine peso and exorbitant inflation have led Argentines to increasingly adopt cryptocurrencies in Latin America as an investment alternative and protection of their purchasing power. According to the Global Crypto Adoption Index 2023, prepared by Chainalysis, Argentina is ranked 15th in the world ranking, only surpassed in Latin America by Brazil.
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, the leading Mexican exchange, has a 40.7% share of the Latin American market. Although no bank accepts payments with cryptocurrencies and only some businesses have implemented them, one of their main uses is sending remittances to Mexico from the United States,” highlights Kaiko, a market research firm.
In 2021, the Bank of Mexico (Banxico) announced the launch of its digital currency, which is now planned for 2025. “Banxico plans to launch its central bank digital currency, although the current governor, Victoria Rodríguez Ceja, said that it will not be until 2025 when it will operate in the country,” notes a report.
Venezuela: cryptocurrencies as an economic refuge
In Venezuela, cryptocurrencies in Latin America are primarily used as a store of value in the face of constant inflation and devaluation of the bolivar. As Aarón Olmos, economist and cryptocurrency specialist, explains, this strategy allows citizens to protect their money from the “attacks of the economic situation.” It’s a testament to the resilience of the Venezuelan people in the face of such challenges.
El Salvador: a controversial bet
El Salvador captured global attention in 2021 by adopting Bitcoin as legal tender, a measure promoted by President Nayib Bukele to promote financial inclusion and attract foreign investment. However, three years later, most people still do not use cryptocurrency daily. “88% of Salvadorans did not use the Bitcoin cryptocurrency in 2023,” according to a survey by the University Institute of Public Opinion (Iudop).
Unleash Your Growth Potential:
Attract Foreign Direct Investment (FDI)
Learn how our proven strategies bring international capital to your organization. Schedule a free consultation today to discuss your unique needs and discover how we can unlock your growth potential.
Almost three years later, after analyzing and seeing the behavior of the population, we can say that this Government experiment has failed,” notes economist Tatiana Marroquín. The financial inclusion that was expected has not materialized due to “lack of knowledge of the subject,” adds this expert.
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 the beginning of 2024, we are observing growth that makes the business viable,” says 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 collaboration with Mastercard.
Bolivia: regulatory challenges and opportunities
Bolivia recently lifted the ban on purchasing, selling, and investing in cryptocurrencies, opening new opportunities for its citizens. “Regulation is essential; that does not prevent, that does not create obstacles, but that helps,” notes financial analyst Jaime Dunn. Currently, 250,000 Bolivian citizens have crypto accounts.
The Central Bank of Bolivia (BCB) has initiated an Economic and Financial Education Plan to promote the informed use of crypto assets. The BCB’s explanatory note details that “the technology that supports cryptocurrencies in Latin America, called ‘ blockchain, ‘is a decentralized database located on more than one server.”
Colombia: moderate growth in a developing regulatory framework
Colombia ranks 32nd in the Global Crypto Adoption Index 2023. The Bank of the Republic and the Financial Superintendency of Colombia are working on pilot projects for technological and financial innovations. “Cryptoactives are not explicitly regulated or recognized as official currency,” clarifies the Bank of the Republic.
The Financial Superintendence launched the LaArenera platform to realize technological and financial innovations. “After completing the pilot, no incidents were observed that put the continuity of the exchange pilot at risk,” says the Superfinanciera. However, they warn that “crypto assets are not backed by a central bank or by the assets or reserves of said authority.”
The rise of cryptocurrencies in Latin America presents a complex yet promising landscape, with each country navigating its unique challenges and opportunities. The region demonstrates a diverse approach to digital finance, from Argentina’s innovative use of cryptocurrencies to hedge against economic instability to Mexico’s preparation for a central bank digital currency and Venezuela’s reliance on crypto assets as an economic refuge. El Salvador’s bold experiment with Bitcoin as legal tender and Brazil’s resilience in the face of the FTX crisis highlight the varying degrees of success and adoption across Latin America. Meanwhile, Bolivia and Colombia are cautiously integrating cryptocurrencies into their financial systems, balancing regulatory frameworks with the need for innovation. As these nations continue to explore and adapt to the world of cryptocurrencies, the potential for economic transformation and greater financial inclusion becomes increasingly evident, setting the stage for a dynamic future in the digital economy.
Don't Miss Out: Limited Spots Available for Free FDI Strategy Sessions
Foreign Direct Investment can fuel your organization's success. But competition is fierce. Secure your spot today for a free, no-obligation consultation with our FDI experts. Learn how to attract global investment and take your business to the next level.