Chainalysis, which is a blockchain auditing and monitoring firm, reports that the popularity of stablecoins pegged to dollars in Latam has increased in Argentina, Venezuela and Venezuela because of the economic challenges they are both facing. 34% of the “small” transactions include stablecoins in Venezuela, and 31% of these in Argentina, as citizens seek to shield themselves from devaluation and inflation.
Chainalysis Report – Stablecoins are Useful For Latam Countries
Although they are often criticized, stablecoins have become a major part of some country’s cryptocurrency market. Chainalysis has released a new report that shows stablecoins are a major part of cryptocurrency transactions in Argentina as well as Venezuela.
This report places the spotlight on cryptocurrency usage in these countries and shows that 34% include stablecoins from Venezuela in small transactions under $1,000. Similar results were obtained for Argentina, where 31% of the transactions involved stablecoins.
Comparing Latam and other regions shows a significant difference in their usage patron. This is due to economic peculiarities such as Argentina and Venezuela’s record-breaking levels of inflation or devaluation of fiat currencies.
Sebastian Serrano is the CEO of Ripio (an Argentina-based cryptocurrency exchange). He believes stablecoins have a lot of appeal because they offer an alternative to dollars. He explained:
Psychologically, Argentinians are using crypto for safety.That’s why you see so much use of stablecoins — because it’s a good digital alternative to storing physical dollars.
Be aware of the restrictions and circumstances
Although Venezuelans have already removed their currency control, Argentinians still face restrictions when it comes to buying dollars. There are also different rates of exchange in Argentina for dollar-related purposes. Due to the specific application of these exchange rates, Qatar and Coldplay were recently introduced by government. The stablecoin proposal is now more intriguing, as citizens can use these digital dollars to get around these regulations.
Stablecoins are used to transfer value in Argentina and Venezuela, but not just those two countries. Brazil is one of the largest economies on the continent and has seen a significant increase in stablecoin usage. Two stablecoins USDT (and USDC) were the most used cryptocurrencies to move higher volumes according to data from the Brazilian Tax Authority. Specifically, Tether’s USDT was used to move $1.4 billion in 79,836 operations, with an average amount of almost $18,000 per transaction.
Stablecoin Trends – Moving Institutions
Institutions are now offering services using stablecoins to save and earn yield due to their dependence on stablecoins and the surrounding circumstances. Bitso is a Mexican cryptocurrency trading platform that introduced one of these programs back in May. Bitso+ is a program that offers stablecoins yields up to 15%. Bitso’s initiative has been well received by its customers, registering more than a million customers in the program since its launch.
Santiago Alvarado (Vice President Product at Bitso), stated that the key to the strategy is offering products to combat inflation and enabling cryptocurrency usage cases in other areas. He explained:
We are proud to be able to show Latin America the value of Bitso’s crypto-based products. These products can be used to pay, return, or support inflation.
Bitso and Ripio announced in August the creation of crypto-based credit card options. This will allow customers to invest in stablecoins and cryptocurrencies, and then spend the savings at stores that do not accept crypto, thus expanding their use of the tools.
In Brazil, Smartpay will also include Tether’s USDT in more than 24,000 ATMs as a way of enabling more customers to exchange their stablecoins by fiat currency safely.
Chainalysis has released a new report that outlines the impact stablecoins have in Latam. Comment below.
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