Remittance payments, fear of fiat money, and the pursuit of profit have been the three biggest drivers of cryptocurrency adoption in Latin America, according to a new report.
The seventh largest cryptocurrency market in the world saw how the value of cryptocurrencies received by individuals soared 40% between July 2021 and June 2022, reaching $562 billionaccording to an Oct. 20 report from Chainalysis.
Part of the increase was attributed to remittances, as the region’s overall remittance market is estimated to reach $150 billion by 2022. Chainalysis noted that the adoption of cryptocurrency-based services was “uneven, but fast.”
The firm noted a Mexican exchange operating in the “world’s largest cryptocurrency remittance corridor,” which processed more than $1 billion in remittances between Mexico and the United States in the year to June 2022 alone.
It represented an increase of 400% year-on-year and represented 4% of the country’s remittance market.
Nevertheless, Rising inflation rates in the region have also played a significant role in the adoption of cryptocurrencies.according to the analytics firm, especially in the adoption of US dollar-pegged stablecoins.
“Stablecoins, cryptocurrencies designed to stay pegged to the price of fiat currencies such as the dollar, are the favorites in the countries most affected by inflation in the region”, explains the company.
The region has been struggling with staggeringly high inflation rates; An International Monetary Fund estimate reveals that inflation in Latin America’s five largest countries hit a 25-year high in August at 12.1%.
This has led regular consumers, trying to protect themselves from the fall of their national currencies, to buy and hold stablecoins to make their everyday purchases.
The report cited a survey conducted by Mastercard in June, according to which More than a third of consumers already use stablecoins to make their everyday purchases. Meanwhile, Chainalysis noted that citizens of Venezuela, Argentina, and Brazil were the most likely to use stablecoins for small retail transactions (less than $1,000).
Venezuela, in particular, has seen its national fiat currency, the bolívar, depreciate by more than 100,000% since December 2014, the company added.
Interestingly, the report found that citizens of the largest and most developed Latin American economies were also likely to adopt cryptocurrencies as a means of earning.
Chileans were the most involved in decentralized finance (DeFi): more than 45% of all cryptocurrency transaction volume takes place on DeFi platforms, followed by Brazil, with just over 30%. Brazil was the number one country in the region in terms of the value of cryptocurrencies received, closing with USD 150,000 million.
“The more DeFi-focused Latin American cryptocurrency markets are no different than those in Western Europe or North America, where market participants are embracing cutting-edge, yield-focused cryptocurrency platforms rather than centralized services. focused on savings Chainalysis explained.
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