Latin America’s Enthusiasm For Digital Assets Gives Rise To Homegrown Crypto Ecosystems
Latin America has emerged as a powerhouse in the crypto industry, with the adoption of digital assets driven by its unique socio-economic challenges and an adventurous entrepreneurial spirit.
The region became attracted to crypto in the mid-2010s as hyperinflation shook the economics of nations such as Argentina and Venezuela. These events caused more people to question their governments’ ability to safeguard the stability of their national currencies, and henceforth their savings. For many, especially those who lost their savings and whose salaries became effectively worthless, the idea of a safe digital currency to be used for everyday payments, a hedge against inflation and for remittances has big appeal.
A number of Latin American nations have made substantial strides towards crypto adoption. One of the major countries to do so is Argentina, which has a history of financial instability and hyper inflation. In 2023, interest rates surpassed 95%, while inflation was officially recognized at 108%. But many tech-savvy Argentinians refused to sit back and allow their savings to erode, instead embracing cryptocurrencies to safeguard their wealth. With the recent election of Javier Milei as President, the government itself has become pro-Bitcoin and crypto.
Other countries, including Brazil, Colombia and Venezuela have also achieved high crypto adoption rates, primarily due to their penchant for investment opportunities and economic woes, but a special mention must go to El Salvador, which famously became the first country in the world to recognize Bitcoin as legal tender under its pro-crypto President Nayib Bukele. El Salvador has since amassed a Bitcoin-based national fund that’s now valued at $204.5 million, according to the Nayib Tracker website.
The overwhelming popularity of digital assets in Latin America has encouraged numerous investors to embrace the crypto scene and it has emerged as a hotbed of innovation, with various homegrown crypto ecosystems springing up to cater specifically to LATAM users.
Latin America’s Biggest Crypto Platforms
The honor of the best overall crypto ecosystem in Latin America currently belongs to Patex, which earned the “Best Latam Blockchain Ecosystem of the Year” award at the 2023 Future Innovation Summit in Dubai. Patex won the prize due to its influence in changing Latin America’s blockchain world. Having started out as a crypto exchange, Patex transformed itself with the launch of Patex Network, an Ethereum Layer-2 dedicated to Latin American crypto projects, in early 2023.
Patex Network sets itself apart from rival platforms as it offers an all-in-one solution for CBDC adoption, with the ability to issue and track Central Bank Digital Currencies that can be traded on the C-Patex Exchange platform. It also offers Patex Campus, an educational platform offering various courses to teach people about building and using blockchains and digital assets, and other innovations include the Patex Wallet and blockchain explorer tool. Its ecosystem is already growing fast, and is likely to become even more prominent as its native token $PATEX was recently listed on top-tier centralized exchanges KuCoin, Gate.io and MEXC, as well as decentralized exchange platforms Uniswap and PancakeSwap.
Patex also boasts a powerful C-level team, made up of specialists in areas such as crypto, fintech, cybersecurity and so on. It’s led by its CEO Ricardo Da Ros, who was formerly head of Binance in Brazil.
Patex is rivaled by a number of other major crypto platforms and ecosystems, including Bitso, which became one of Latin America’s first ever unicorns, hitting a $2.2 billion valuation in May 2021 when it received backing from Tiger Global and Coatue. Bitso boasts over 2 million users across Central and South America, and its services extend into payments and remittances. Another major Latin American exchange platform is Mercado Bitcoin, the first crypto exchange to launch in Brazil, which counts more than 2.8 million users. Ripio, which operates primarily in Argentina and Brazil, and Buda, which is based in Chile, are also significant exchange players in the region.
Crypto Savings & Spending
For crypto to be successful as a hedge against inflation and an alternative to fiat, users need a way to both save and spend their digital assets. This need has led to a growing ecosystem of crypto service providers, with many focused on offering stablecoin-based payment systems with simplified fiat on- and off-ramps.
Ramp Network is one of the world’s top Web3 onboarding solutions with a significant presence in Brazil due to its support for the popular national payment network Pix and its adoption of document-free verification, allowing anyone to buy and sell crypto within minutes of signing up.
Another popular app is Lemon Cash, which was born in Argentina and launched the first crypto credit card in Latin America in partnership with Visa. Lemon Cash cards can be used in any physical or online store in Latin America that accepts regular Visa credit cards, and requires users to hold stablecoins in a digital wallet that’s linked to the card. It provides users with 2% cashback in BTC as a bonus, and more recently has began expanding into DeFi, with borrowing and trading features and a nascent NFT games ecosystem.
Airtm is a Mexico-based E-wallet that allows users to spend and save U.S. dollars or stablecoins and conduct cheap P2P transfers. Its stated goal is to protect Latin Americans from high inflation rates, and it offers a mobile FX marketplace that allows users to quickly convert their wages into stablecoins to protect their value. It also supports digital remittances, and has expanded to more than 125 countries. Airtm was famously used in 2020 by Venezuelan opposition leader Juan Guaidó to distribute $19 million of funds to healthcare workers, after the money was seized from the Maduro government in the U.S.
On the savings and investment side, Belo’s mobile app has emerged as an Argentinean favorite, allowing citizens there to buy and deposit stablecoins and earn yields of up to 8.25% APY. Another Argentina-based app, called Defiant, has created a P2P payments network that makes it simple for anyone to buy, sell, store, receive and spend cryptocurrencies without any KYC process.
Crypto Investments
Another big appeal of crypto for Latin Americans is it provides investment opportunities to millions of people who had no such options before. Some of the major players here include RSK Labs, which has built a smart contract application for decentralized applications secured by Bitcoin, giving users a way to earn yield on their BTC holdings.
Ridian is a popular Mexican mobile app that connects users to exchanges and provides access to investments focused on large cap tokens and high-yield vaults, with users charged a montly asset management fee and performance-based fees. Ridian is a custodial app, but those who prefer to own their own holdings can go with Xcapit, which is a self-custodial crypto application that enables smart contract-based investments. Its main offering is an AI-powered wealth management investment strategy that’s focused on crypto assets.
More To Come
Latin America’s enthusiasm for crypto has given birth to a number of high-growth digital asset ecosystems, and many of them have extended their influence beyond the Spanish and Portuguese-speaking worlds. With crypto expected to keep up its bullish progress throughout 2024, it’s likely that we’ll soon see many more Latino crypto projects and ecosystems emerge to challenge the likes of Patex, Bitso and its most popular payments, savings and investment apps.
For both institutional and retail investors, Latin America’s growing crypto ecosystem provides golden opportunities for them to cash in on one of the industry’s fastest-growing markets. The decentralized finance trends in Latin America cannot be ignored and there will be plenty of interesting developments in the space as more people realize the benefits and protections provided by digital assets.
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