Since El Salvador's President Nayib Bukele put red laser eyes on his Twitter avatar, local politicians and much of the population have been lobbying for the legalization of cryptocurrencies in other countries in the region.
You may have seen loud headlines about legalizing crypto in Latin America in 2023. For example, the biggest country in the region,
Why is Crypto so popular in Latin America?
Traditionally, Latin American countries have low financial inclusion and relatively little access to a bank account - many are unbanked. In general, cryptocurrencies give the local population additional financial and investment opportunities.
Interestingly, despite the popularity of cryptocurrencies and the adoption of laws on their legalization by MPs in
What is the main trend?
Despite these vetoes, most countries in Latin America have changed their approach to crypto regulation in the last two years.
Interestingly, the de facto regulatory approach is common in many countries in the region. For example, Mexico and Chile already have legislation that allows crypto exchanges to operate in the country. This industry is regulated as part of the fintech industry, though the role of crypto exchanges and other aspects of the regulation still need to be fully spelled out in the law. Also, without laws, working crypto exchanges exist in Colombia and Uruguay.
Recent regulation updates: Argentina and Peru
And that’s even though, aside from Bolivia, Argentina’s approach to cryptocurrency regulation remains one of the most conservative in the region. This is because Argentina has two exchange rates and about 100%
In the Summer of 2023, the Senate of Argentina
Previously, regulators here tried to limit purchases of cryptocurrencies through banks and cards, but still need to address the fact that local exchanges operate in the country and have a great demand for users. Even a 0.6% “check tax” imposed in 2022 for payments to crypto exchanges didn’t change this trend.
Also, the lack of regulations and barriers could be overcome as it does for crypto card providers in Argentina. Local exchange Ripio has launched a card this year in partnership with VISA. And Binance co-launched its cryptocurrency with Mastercard back in August 2022.
More recently, moves to change crypto regulation have begun in another country in the region with a high inflation rate, where there was no regulation before. The President of Peru has published this summer a
The document regulates only online crypto exchange platforms, fintechs, and custodians. It doesn’t define other types of VASPs.
The future of crypto in Latin America
In short, everything is ready for the mass adoption of cryptocurrencies to a Latin American population of over 600 million. According to Mastercard’s
So, we see that the number of active cryptocurrency users in the region's countries is at least in the tens of millions. So, it’s not a miracle that local regulators, even in countries like Argentina, need to somehow react to it and provide regulations. Leading global cryptocurrency and fintech companies are developing products in the area.
In general, for now, we can say that cryptocurrencies are popular in Latin America as a way to store money in stablecoins and as a hedge against inflation alternatively. However, over time, there will be a demand for more advanced blockchain services here.
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