What Latin America has in mind for crypto businesses

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What Latin America has in mind for crypto businesses

Crypto companies have been a huge focus of the US, Europe, and Asia for many years. As these markets mature, and crypto regulations begin to take shape, crypto companies would be wise to pay attention to what's brewing elsewhere.

Asia is a prime target for crypto, owing to its immense population and ready for financial technology. But companies who seek to contribute to crypto adoption in the continent soon realized the 'heavyweights' of the region, namely India and China, come with their own set of barriers.

Both India and China seem to have a conservative stance on crypto, leaving an uneven playground for any international business looking to set up shop there.

Moreover, two-thirds of the LATAM population seek better flexibility to use crypto and traditional payments interchangeably in their daily lives, leaving huge room for growth for crypto businesses targeting the region.

With this degree of acceptance, Latin America may soon become the center of emerging and exciting real use cases that necessitate a significant mass of users and scale to work.

Let's take a closer look at what LATAM has in store for the crypto industry and why it's ripe for expansion.

Latin America is quietly but confidently moving full-steam ahead of crypto adoption. The region is determined to make its mark, and it's determined to take on a leading role in bringing crypto mainstream.

LATAM, with a market share of around 10% of global cryptocurrency activity, managed to place its major economies, such as Brazil, Argentina, Colombia and Ecuador, in the top 20 of Chainalysis' Global Crypto Adoption Index for 2022.

The projects sought to drive adoption and develop stronger tools for faster and cheaper remittances, for serving the unbanked or underbanked and for making digital payments available to everyone.

LATAM shines brightly at this moment. The region has an unexplored opportunity for crypto adoption, with its developing economies that require protection from inflation, better cross-border payments, and asset tokenization.

The country had only 2 million crypto users in 2021, making it the perfect example for the region to take advantage of the new wave of crypto users. Crypto adoption in Brazil has been driven by a surge in inflation and the depreciation of the Brazilian Real.

In 2022, four countries from LATAM, such as Brazil, Argentina, Colombia and Ecuador, were among the top 20 countries with the most global crypto adoption.

The rapidly expanding adoption of digital currencies caught the eyes of global players as well, with significant crypto exchanges, such as Binance and Coinbase, now concentrating their attention on the Brazilian market.

The Brazilian government is leading the way in the region and giving the crypto industry a welcome degree of clarification to operate in the country.

The government nominated Brazil's central bank and its securities regulator in June to lead the local crypto industry.

In addition to that, the Brazilian central bank is also expected to launch a central bank digital currency dubbed DREX in 2024, alongside a list of local and global heavyweights, including Visa and Banco Ita.

While talking about crypto-leaning regulations in LATAM, let's not forget to mention El Salvador's 2021 Bitcoin Law, which required all businesses to accept the asset as legal tender.

The decision by the Salvadoran government to approve crypto helped drive adoption and a good deal of attention to crypto. In an effort to safeguard their wealth from high inflation, LATAM people flocked to cryptocurrencies to safeguard their wealth, which is driven by necessity.

In Argentina, stablecoins pegged to stronger currencies like the U.S. Dollar or the Euro, have been providing a safety net against hyperinflation for a while, as well as allowing high-value purchases like houses.

A significant portion of Venezuelans are also looking to crypto for safer exchanges and to protect their savings from a failing monetary policy. Bitcoin and other cryptocurrencies are becoming more widely utilized in the country as payment methods, making it easier for individuals to shop and buy goods and services.

Besides that, Venezuela is also home to a significant concentration of Web3 gamers. Play-to-earn gaming, where users get real-life crypto tokens that have real-life value for their effort, has drawn in thousands of local gamers, placing Venezuelans in the second spot on Axie Infinity's top countries by number of players in 2022.

LATAM population wants more use of crypto

The evidence is clear that a significant portion of the population in Latin America has already made crypto an integral part of their economic lives, and that this trend appears to be accelerating upwards.

With a population that looks eager to financial innovation, driven by actual use cases and a regulatory environment that seems to be taking a reasonably friendly stance toward crypto, Latin America is positioned to lead global adoption.

All things considered, any Web3 businesses looking to take a leadership role in the next cycle of crypto adoption should ramp up their presence in the region right now - before it's too late.

Szymon Sypniewicz, the CEO of Ramp Network, is a global financial technology company that creates solutions that connect the crypto economy with today's financial infrastructure.