Over the course of a year, Latin America accounted for between 5% and 9% of monthly total cryptocurrency activity. The region ranked second in growth in both volume and number of transactions, according to Chainalysis. The company attributed this dynamic to several factors.
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— Chainalysis (@chainalysis) September 3, 2020
With $25 billion of cryptocurrency sent over the year and $24 billion received, Latin America by total transaction volume surpassed only Africa and the Middle East.
Experts say that several factors are driving growing interest in digital assets in the region.
The first is the large volume of remittances from abroad. According to World Bank data, remittances account for 1.7% of Latin America’s total GDP.
Chainalysis specialists noted that 90% of cryptocurrency received in the region originates from outside its borders. A Bitso spokesperson, serving mainly Mexico, Argentina and Brazil, confirmed that cryptocurrency transfers from the United States to Latin America are a common option for platform users.
Chainalysis noted that Mexico accounted for about 11% of retail transactions over the year, trailing only Brazil and Venezuela.
The second factor was the commercial links between importers and East Asian companies. The volume of Bitcoin transactions from Latin America to this region during the study period was the largest.
The count and volume of Bitcoin transactions sent from Latin America to other regions. Data: Chainalysis.
Co-founder of Paraguayan exchange Cripex Luis Pomata explained that for importers it is easier and faster to operate via cryptocurrency. Often making a bank transfer is not only costly and slow but also impossible — institutions are wary of anti-money laundering and deny many firms, he added.
The third factor of growing popularity of cryptocurrencies in the region was their use as a store of value by young people amid lack of access to banking services and currency instability in some countries.
As a result, Sebastián Villanueva, head of Chilean exchange SatoshiTango, highlighted the importance of stablecoins for Latins, such as DAI and USDC. Chainalysis data confirmed this, experts acknowledged.
Share of cryptocurrencies in the volume of transactions received by Latin America. Data: Chainalysis.
Earlier, the company’s analysts analyzed on-chain activity in East Asia and found out that stablecoins, mainly USDT, are actively used for capital outflows in China.
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