Stablecoins used to fight devaluation and inflation in Latam – Bitcoin news from emerging markets

According to Chainalysis, a crypto audit and blockchain tracking firm, the use of dollar-pegged stablecoins is growing in Latam, especially in Argentina and Venezuela, due to the common economic problems faced by both countries. 34% of the “small” transactions include stablecoins in Venezuela, and 31% of these in Argentina, as citizens seek to protect themselves from devaluation and inflation.

Chain analysis report finds Stablecoins useful for Latam countries

While criticized by many, stablecoins are becoming a significant part of cryptocurrency market activity in some countries. The latest report from Chainalysis, a cryptocurrency research and blockchain monitoring firm, has revealed that a significant portion of transactions in Argentina and Venezuela include stablecoins.

The report, which spotlights the use of cryptocurrency in these countries, found that 34% of small transactions, which move below $1,000, include stablecoins in Venezuela. Likewise, 31% of these transactions move stablecoins in Argentina.

The difference in user support when comparing Latam to other regions has to do with the economic peculiarities of countries such as Argentina and Venezuela, which are facing record inflation levels and devaluation of their fiat currencies.

Sebastian Serrano, CEO of Ripio, an Argentina-based cryptocurrency exchange, believes that stablecoins are popular because they offer a digital hedge in dollars. He explained:

Psychologically, Argentines use crypto for security. That’s why you see so much use of stablecoins – because it’s a good digital alternative to storing physical dollars.

Circumstances and limitations

While Venezuelans have already lost currency controls, Argentines are still subject to restrictions from buying dollars. There are also different exchange rates for different dollar purposes in Argentina. Recently, the government introduced two new exchange rates, called Qatar and Coldplay, due to their specific applications. This makes the stablecoin proposition more interesting, allowing citizens to bypass these controls by using these digital dollars.

However, not only Argentina and Venezuela rely on stablecoins to move value. Brazil, one of the largest economies on the continent, also registers a high level of use of stablecoins. According to figures presented by the Brazilian tax authority corresponding to August, two stablecoins, USDT and USDC, were in the top five of the cryptocurrencies used to move more volumes. Specifically, Tether’s USDT was used to move $1.4 billion in 79,836 operations, with an average amount of nearly $18,000 per transaction.

Stablecoin Trends Moving Institutions

This stablecoin dependence and the circumstances surrounding it lead institutions to offer services that use stablecoins as a way to save and earn money. One of these programs was launched by Bitso, a Mexican cryptocurrency exchange, in May. As part of this program, called Bitso+, the exchange offers a return of up to 15% in stablecoins. Bitso’s initiative has been well received by customers, and has registered more than one million customers in the program since its launch.

Offering products to fight inflation and enable the use of cryptocurrency in other areas is key to the exchange’s strategy, as Santiago Alvarado, Vice President of Product at Bitso, stated. He explained:

It fills us with pride to see the role that Bitso plays in Latin America as we develop new crypto-based products adapted to the needs of our customers, such as payments, returns and support against inflation.

Bitso and Ripio also announced the development of crypto-based credit cards in August, allowing customers to save in cryptocurrencies and stablecoins and use their savings in stores where crypto is still not accepted, expanding the use of these tools.

In Brazil, Smartpay will also include Tethers USDT in more than 24,000 ATMs as a way to enable more customers to exchange their stablecoins for fiat currency safely.

What do you think about the importance of stablecoins in Latam according to the latest report issued by Chainalysis? Tell us in the comments section below.

Sergio Goschenko

Sergio is a cryptocurrency journalist based in Venezuela. He describes himself as late to the game, entering the cryptosphere when the price spike occurred during December 2017. He has a computer engineering background, lives in Venezuela and is influenced by the cryptocurrency boom on a social level, offering a different point of view on crypto success and how it helps the unbanked and underserved.

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