According to Chainalysis, a crypto auditing and blockchain tracking firm, the common economic problems facing both Latam, and especially Argentina and Venezuela, have led to the dollar-pegged The use of stablecoins is increasing. In Venezuela, 34% of “small” transactions and 31% of those in Argentina involve stablecoins, as citizens seek to protect themselves from devaluation and inflation.
Chainalysis Report Finds Stablecoins Are Useful for Latam Countries
Although criticized by many, stablecoins have become an important part of cryptocurrency market activity in some countries. The latestreportfrom Chainalysis, a cryptocurrency research and blockchain monitoring firm, found that a significant portion of transactions in Argentina and Venezuela involve stablecoins.
The report, which spotlights the use of cryptocurrencies in these countries, determined that in Venezuela, 34% of small transactions under $1,000 involve stablecoins. Similarly, in Argentina, 31% of these transactions move stablecoins.
The difference in the number of users in Latam compared to the rest of the world has to do with the economic peculiarities of countries like Argentina and Venezuela, which are facing record levels of inflation and fiat currency devaluation.
Sebastian Serrano, CEO of Ripio, an Argentina-based cryptocurrency exchange, believes that stablecoins are popular because they offer a digital hedge against the dollar. He explained.
Psychologically, people in Argentina use crypto for security. That’s why you see a lot of use of stablecoins – because it’s a good digital alternative to save physical dollars.
Circumstances and constraints
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Venezuelans have already lifted exchange restrictions, but Argentines are still restricted from purchasing dollars. In addition, different exchange rates exist in Argentina for different uses of dollars. Recently, the government introduced two new exchange rates for specific uses, called qatari and cold play. This makes the proposal for stablecoins more interesting, as citizens can bypass these regulations by using these digital dollars.
But Argentina and Venezuela are not the only countries relying on stablecoins to move value. Brazil, one of the continent’s largest economies, also records high usage of stablecoins. According to figures released by the Brazilian Tax Administration as of August, two stablecoins, USDT, and USDCare in use; USDTand USDC were among the top five cryptocurrencies used to move larger amounts. Specifically, Tether’s, USDTwas used to move $1.4 billion in 79,836 operations, averaging almost $18,000 per operation.
Stable Coin Trend Moving Institutions
This dependence on stablecoin and the circumstances surrounding it have moved financial institutions to offer services that use stablecoin as a way to save and earn yield. One such service is a program launched in May by Bitso, a Mexican cryptocurrency exchange. as part of the program, called Bitso+, the exchange offers yields of up to 15% in stablecoin. Bitso’s initiative has been well received by its customers, and since its launch, over 1 million customers have been enrolled in the program.
Offering products to fight inflation and enabling use cases for cryptocurrencies in other areas is important to the exchange’s strategy, as stated by Santiago Alvarado, Bitso’s Vice President of Products. He explained.
It fills us with pride to see the role Bitso is playing in Latin America as we develop new crypto-based products adapted to the needs of our customers, including payments, returns and support for inflation.
Bitso and Ripio also announced the development of a crypto-based credit card in August, allowing their customers to save in cryptocurrencies and stablecoins and use their savings in stores where crypto is not yet accepted, expanding the use of these tools.
In Brazil, Smartpay will also include Tether’sUSDTto more than 24,000 ATMs as a way to allow more customers to safely exchange stablecoins for fiat currency.
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