Latin America is home to 626 million people, spanning over 20 countries and 13 dependencies, all with a need for banking. Banking that isn’t cumbersome, overly complicated to use—cue Bitcoin. In 2021, when El Salvador President Nayib Bukele announced to the world that his country would be the very first nation in the world to accept Bitcoin as legal tender—Latin America went wild. Because for the first time, there was a small Latin American country that chose to be a pioneer in technology, proving that great things can come from small places.
Then came the launch of Bitso in the heart of Mexico City, as the German-Mexican entrepreneur, Daniel Vogel, came up with his strategy for creating an exchange that felt accessible to the Latin American community. As of the time of writing, Daniel’s little Latin America project is now Latin America’s largest crypto exchange with a whopping 4 million users.
And so the question here is this: How is crypto changing the Latin American financial landscape and is it for the better?
Who Is Winning In Latin America?
Brazil: The most powerful country next to Mexico, this Portuguese-speaking nation is one of crypto’s largest investors with a $27.6 billion market as of May 2022. The first cryptocurrency unicorn, Mercado Bitcoin, hails from the heart of Brazil, raising more than $2 billion in valuation by 2021.
Investors can expect to see Brazil’s crypto market continue to grow, as more retail investors learn about blockchain technology. This emerging economy is only going to get more technical and that is great news for the crypto markets.
Cuba: A small island nation of about 11 million citizens may sound small, but out of those eleven million, roughly 100, 000 citizens hold crypto wallets and use cryptocurrencies. This is because, unlike other countries in South America, Cuba is one of the few that has been barred from the international community’s financial systems.
President Donald Trump most recently blocked the use of all Western Union payments from Cuba. This led to the island’s residents having to find an alternative to move money across the borders. This is when cryptocurrencies emerged and from the projections, it looks like Cuba’s crypto community isn’t slowing down soon.
Panama: No other country has done as much as Panama to fully legalize and regulate the use of cryptocurrencies within its borders. A bill recently passed this year in Panama’s congress would legalize and regulate eight different cryptocurrencies: Algorand, Bitcoin, Elrond, Ethereum, IOTA, Litecoin, XDC Network, and XRP Stellar.
Can We Trust Crypto In Latin America?
At first glance, all the capital rushing into dozens of developing nations seems like a good idea—but what happens when big money comes into small countries? Well, history is an excellent teacher in that regard with the British and Spanish colonies, but not all things that seem bad at first are in actuality.
There remains a doubt and worry around illicit financial activity occurring in Latin America, especially with the release of the Panama Papers. These documents revealed the names of dozens of high-ranking officials from around the world who held offshore accounts, often to avoid paying taxes in their native homelands. These types of financial activities are completely legal.
Or so they appear, with shell companies being used to fund these types of off-shore accounts. And so that is the great worry with crypto leaving a large stamp on the Latin American community.
Will the use of crypto lead to crime organizations trafficking money? Probably, but that’s why more regulation and frameworks from Latin American communities are needed. Now more than ever, the dawn of crypto in Latin America leads to prosperity and not to an increased level of criminal activity.
Only time will tell how these factors will play out on the continent, but one thing is for sure: change is a-comin’ to Latin America.
