April 19, 2024
Latin America and the Caribbean: A Crypto Oasis in the Global Bear Market?
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Latin America and the Caribbean: A Crypto Oasis in the Global Bear Market?

The global north may have been the region most hit by the bear market.

A collaborative analysis from the University of Cambridge and the Inter-American Development Bank claims that the LAC area had strong growth between 2020 and 2022.

The “Cryptoasset Ecosystem in Latin America and the Caribbean” study was produced as a result of an 80-enterprise survey conducted between June and August of last year.

The Cambridge Fintech Ecosystem Atlas, a live depiction of the cryptocurrency market, was used to crunch the data for the report. It determined that there were 175 businesses in the area in 2022, of which 100 had their headquarters or were formed in LAC, demonstrating that the crypto sector has grown by more than twofold since 2016.

Although interest in cryptocurrencies remained high throughout, the survey found that the factors motivating investors have evolved.

Before 2020, speculation dominated, with respondents indicating that it was mostly motivated by the desire to profit from rising asset values. Nowadays, cross-border payments come in third, with remittances coming in second and protecting against inflation and devaluation coming in first.

The analysis indicates that the countries with the most crypto businesses are Brazil, Argentina, and Mexico, with the first dominating in the three key market areas. Exchanges make up 74% of this group, followed by digital payment providers (41%) and crypto custody services (27%).

The research’s primary focus was on regulation, which the majority of respondents saw as the biggest barrier to the growth and development of the region’s crypto business.

This latter argument was reinforced by Andrés Junge, co-founder of the crypto compliance business Notabene. He said that the area is “more lax” than its equivalents in the northern hemisphere, which prevents “the masses from accessing crypto.”

Together with the uPort self-sovereign identification platform for Ethereum, Junge established the first Bitcoin exchange in Chile. Although he believes the local crypto market is “not very big,” he is optimistic about the ecosystem. According to Junge, there is a lot of skill and enthusiasm in the communities.

Romina Sejas, the founder of ETHLatam, and ETHKipu, and a key figure in SEED Latam (an organization that fosters critical thinking towards the Web3 environment) hold the same opinion.

While the number of new users may have decreased, she said she still saw the local industry “growing and getting stronger.” Sejas continued by saying that Web3 builders are under pressure to “professionalize the industry” and leave their specialized market.

Sejas, who has worked in the sector for six years, said the ecosystem’s abundance of talent, both locally and globally, has taken her by surprise. She discussed how the difficulties of an expanding area like Latin America might act as a “stress test” before going worldwide.

Regarding how things have altered since the report’s study was conducted the previous year, Junge emphasized that the crypto winter is still very much in effect. He said, “I don’t see many new companies wanting to enter crypto,” but from another perspective he expressed confidence.

“What I do see is ever more interest from traditional financial institutions trying to find their way into crypto,” Junge concluded.

Image: Freepik

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