Stablecoins like USDT have become a vital financial tool in Latin America, aiding citizens in navigating economic volatility, as reported by Chainalysis’ global adoption study.
Latin America, contributing 9.1% of global crypto value received, witnessed significant growth driven by increased institutional interest and consumer adoption of digital assets.
From July 2023 to June 2024, Latin America received nearly $415 billion in crypto, surpassing Eastern Asia in global crypto activity despite lower adoption rates.
Argentina led the region with $91.1 billion in crypto value received, followed closely by Brazil’s $90.3 billion. Brazil experienced a surge in institutional activity, with a 48.4% increase in high-value transactions from Q4 2023 to Q1 2024.
USD-pegged stablecoins, especially, have played a crucial role in providing a hedge against inflation in countries like Argentina and Brazil facing currency depreciation.
Financial Stability in Latin America
Stablecoins have become a lifeline for citizens in economically unstable countries like Argentina, where inflation soared to 143% in 2023, prompting the search for alternatives to safeguard savings from the devaluation of the Argentine peso (ARS).
Following newly-elected President Javier Milei’s economic measures, stablecoin usage surged, particularly amidst a 50% devaluation of the ARS.
Bitso data indicated a drastic increase in stablecoin trading volumes after key economic events. For instance, stablecoin trading volumes exceeded $10 million the month following the ARS dropping below $0.002 in December 2023.
Argentina dominated the region’s stablecoin transaction volume with a 61.8% share, surpassing Brazil’s 59.8% and the global average of 44.7%.
Institutional Activity in Brazil
Brazil witnessed a significant rebound in institutional crypto activity after a brief decline in early 2023.
According to Chainalysis, the country saw a 29.2% rise in institutional-sized transactions exceeding $1 million between the last two quarters of 2023, with an additional 48.4% increase from Q4 2023 to Q1 2024.
The approval of Bitcoin and Ethereum ETFs by the SEC in January spurred institutional interest in digital assets, contributing to this recovery.
The report also highlighted the involvement of major financial institutions, such as Circle, which launched its USDC stablecoin in Brazil in May, attracting global attention.
Brazil’s progressive regulatory environment, including initiatives like the Drex pilot program, a hybrid central bank digital currency (CBDC) platform, further supported the increased institutional interest.
As the crypto markets in Latin America evolve, stablecoins are expected to play a crucial role in providing financial stability, especially in countries facing inflation and currency devaluation.
