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Latin Americans Turning to Dollar Stablecoins Amid Inflation Surge: Paxos
Latin Americans already see dollar-backed stablecoins as more secure than their own currencies, according to a new study.
By Xinyi Luo
Updated May 11, 2023, 5:03 p.m. Published Sep 13, 2022, 1:00 p.m.
A new study unveiled that the drive toward digital currencies in Latin America comes from consumers instead of institutions.
Latin America saw the fastest growth pace of cryptocurrency in 2021. In particular, about 41% of adults in Brazil own some cryptocurrency, according to a report from Gemini. Latin Americans led this wide adoption with the desire for a viable alternative to traditional banks, receiving over $60 billion cryptocurrency in 2021.
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The report published by blockchain infrastructure firm Paxos said cryptocurrency, particularly dollar-linked stablecoins, are appealing to Latin Americans more trusting of the greenback than their own hyperinflation-prone national currencies. It didn’t mention which stablecoins people are using.
Read more: Why Latin American Crypto Exchanges Are Doubling Down on Yield Products
As the region is enduring the highest inflation in the world, lingering around 12%, the dollar keeps its dominant position as a tool to counter the local inflation challenges. In this way Latin Americans already see dollar-backed stablecoins as more secure than their own currencies, the report said.
The report also cited data from Mastercard, unveiling that over 33% of Latin American consumers have used stablecoins for everyday purchases.
“The consumers in Latin America have suffered their currencies depreciation and capital controls for a long time, so they were quick to understand the advantages of crypto and embrace it,”Wences Casares, chief executive officer of Gibraltar-based Xapo Bank, said in the report.
Read more: Half of Latin Americans Have Used Cryptocurrencies, Mastercard Survey Shows
CORRECTION (Sept. 13, 2022, 03:26 UTC): Amends article to clarify Latin Americans received more than $60 billion in cryptocurrency in 2021.
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Lo que debes saber:
- Mexico's central bank maintains a cautious stance on digital assets, keeping them separate from its financial system.
- Banks and fintech firms in Mexico have been prohibited from offering cryptocurrencies to customers since 2021.
- The Bank of Mexico cites concerns over price volatility, cybersecurity risks, and money laundering as reasons for its cautious approach.
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