During recent months, Latin America has seen many developments regarding cryptocurrencies.

In this article we’ll be looking at recent crypto events that have taken place within the continent.

We have also examined how different countries there have reacted to the development of blockchain technology.

Let’s see how the situation is regarding cryptocurrency in Latin America.

cryptocurrency latin america

The Evolution of Cryptocurrency in Latin America

Blockchain and crypto has been adopted at different rates across the world. For instance, Asia and North America were early adopters of cryptocurrency, and they have the highest rate of owners.

Digital currency owners there continue to power the growth as the technology develops.

However, Latin America has been a bit slower in pace with regard to using cryptocurrency. It’s good to look at the reasons behind this, but first let’s look at some data. 

Let’s start with some statistics of Latin America which were gathered by the World Bank in 2014. The findings show that:

  • 50% of Latin America is ‘unbanked’ meaning that people don’t have access to a bank or traditional bank account. This also includes access to a credit card.
  • 60% or more do have access to a smartphone or computer.

These findings are quite interesting, especially the fact that more people have access to a smartphone than a bank account.

This means that Latin America is a continent that has great potential for cryptocurrency adoption. Mainly because digital currencies don’t require people to have a traditional bank account, they just need internet and smartphone access.

Cryptocurrencies are a revolutionary change in the way people can access funds and send money. Especially in places where people may not have had the chance before.

Besides personal use, Governments in Latin America are also looking at introducing cryptocurrency and blockchain technology into official sectors.

Different Approaches by Latin America Countries

When it comes to cryptocurrencies, each country in Latin America is taking a different approach in terms of acceptance. 

Chile, Argentina and Uruguay have all started to recognise the potential of cryptocurrency in Latin America. They view its status as legal tender, so they have shown a more lenient approach towards cryptocurrencies in general.

For example, a big development was undertaken by Argentina when many Bitcoin ATMs were installed across the country. This was with the permission of the Central Bank of the Argentine Republic. This move has allowed people access to Bitcoin funds like any other ordinary ATM.

Another Argentinian bank called Banco Masventas also made a big change. In 2018, it transformed the way it handled international payments by introducing Bitcoin technology for its customers.

The first change was that the bank stopped using SWIFT and replaced it with Bitex. Bitex is a Latin American based cryptocurrency payment service, which is used to settle international payments. This was done to reduce the costs for customers who normally make payment transfer via SWIFT.

SWIFT charges higher fees because they act as a go-between with other international banks. With Bitex though, international money transfers are cheaper as no other international banks are needed.

Instead Bitex will send Bitcoins directly to the recipient. The customer only has to pay a small Bitex fee & transaction charge which is sent to the Bitcoin miners. It’s the Bitcoin Miners who verify all the transactions which happen via the blockchain.

There were concerns that customers might be put off from using the new system due to a lack of understanding of how the technology works. Especially if they don’t know much about cryptocurrency.

However, according to one of the main shareholders of the bank Jose Dakak, the bank will handle everything.

He declared that: “The customers will ask the bank to do an international payment, and the bank uses Bitex as a provider. For the customer, it’s transparent, they don’t touch, they don’t see the Bitcoin. We are a provider for them, and they are not touching Bitcoin.”

This separation of the process will hopefully encourage more users to use the new process without having to worry about knowing how it works.

Cryptocurrency in Venezuela

Another surprising development regarding cryptocurrency has been made in Venezuela. Although the socialist regime government has not been open to external cryptocurrency use, ordinary citizens are changing that.

With the turbulent political situation in Venezuela, ordinary people have turned to digital currency in order buy food and medicine. 

In Venezuela cryptocurrency technology could bring hope to many of its impoverished citizens.

The national currency has suffered greatly from hyperinflation because of the national crisis. This has caused the national Venezuelan Bolívar currency to become worthless.

However the use of Bitcoin and other cryptocurrency platforms has shown how Venezuelan citizens are dealing with the crisis, by accessing an alternative digital currency. This allows them to buy important items with a valued currency that is free from Government interference.

One main cryptocurrency platform called AirTM launched a campaign this year called Airdrop Venezuela. Their aim is to help send crypto-connected digital funds of US Dollars to 100,000 ID identified Venezuelan citizens. This will help them to buy everyday essentials such as food. 

The chance to send virtual money across international borders without Government restrictions can really help people in need in times of national crisis. Especially when the Government is not trying to help their citizens.

As well as providing aid, the access to digital money can introduce struggling communities to alternative incomes. For example, it provides job opportunities such as freelance work and online commerce.

To read more about the campaign please visit AirdropVenezuela.org

Where is Cryptocurrency Banned in Latin America?

The use of cryptocurrency in some Latin America countries remains controversial and illegal. For instance Ecuador and Bolivia have completely banned Bitcoin and other cryptocurrencies.

In July 2014, Ecuador banned all forms of cryptocurrencies. However during the same period it founded its own digital currency, the Dinero Electronico. This Government currency is backed by the Central Bank of Ecuador and was created to transform the countries monetary system.

Although a ban on other cryptocurrencies remains in place, the Government has not cracked down or punished crypto use. Many Ecuadoreans have continued to use crypto illegally.

Unfortunately the ban will continue to affect Ecuador when it comes to blockchain adoption. This is likely to prevent any future developments in the technology.

In Bolivia, the majority of the population remains without access to traditional banking facilities. This is a reason why the country could really benefit from the advantages of digital crypto funds that could be accessed via smartphones.

Yet Bolivia was one of the first Latin American countries to ban cryptocurrencies back in 2014.

The ban has lead to crackdowns and arrests for users. In 2017, Bolivian police arrested members of a Bitcoin mining operation in a crypto crackdown. Plus the head of the Bolivian Financial Supervision Authority (ASFI), stands firm behind the ban policy. The ASFI claims that any form of virtual currency should remain “prohibited.”

One country where cryptocurrency remains a grey area is Colombia. Colombia does not recognise digital currencies as a form of legal tender. The Government only recognises the Colombian Peso as being the one monetary unit.

So because digital currencies have no real value, they are not also viewed as a security. As a result businesses in Colombia aren’t allowed to manage or invest in projects related to them.

This does not mean that they are banned and illegal though. Rather Colombian citizens needs to understand the risks of crypto if they do get involved with them. Especially because they’re not protected by any state regulation.

Conclusion

Cryptocurrency is clearly growing and becoming more popular for businesses as well as citizens in Latin America. It’s clear that crypto technology is bringing relief and economic independence to a lot of people. Especially for people who cannot access a traditional bank account or credit card.

It’ll be interesting to see which cryptocurrencies remain the most popular for investment and growth. In Latin America the most popular ones remain Bitcoin and Ethereum.

However the following options also remain popular and could see further investment:

  • DASH/Dash
  • NEO/Neo
  • ADA/Cardano
  • BNB/Binance coin

With so many cryptocurrency types on the market, there are many choices for people to invest in. It also looks promising that in the next few years cryptocurrency use will really increase.

The time has come for people and businesses come together to create a financial system that works for all citizens across Latin America.

No matter which cryptocurrency type in Latin America people invest in, it’s clear that the citizens are ready to explore their own economic futures.

It’ll be interesting to follow what happens