Latin America makes up for a 9.1% of the global 2022 crypto transaction value, while remittances and high inflation are the highest drivers of adoption
October report from Chainalysis identified three main factors driving crypto adoption in Latin America. Those are remittance payments, fiat fears, and profit-chasing.
LatAm has become the seventh-largest crypto market in the world since the value of cryptocurrencies received by individuals skyrocketed 40% between July 2021 and June 2022. The total amount reached $562 billion.
Chainalysis noted that crypto-based service adoption was “uneven, but swift.” Partly, the surge is attributed to the regional remittance market that reached $150 billion in 2022. A single Mexican exchange processed over $1 billion in remittances between Mexico and the US from January till June 2022. It marked an increase of 400% year-on-year and accounted for 4% of the country’s remittance market.
At the same time, decades-high inflation rates have contributed to the adoption of crypto, in particular, USD-backed stablecoins. Due to the soaring inflation, Venezuelan bolívar depreciate by over 100,000% since December 2014. As national currencies plummet, consumers look for stability provided by the fiat-pegged crypto. Thus, citizens from Venezuela, Argentina, and Brazil were most likely to use stablecoins for small retail transactions (under $1,000).
While more troubled LatAm economies sought a safety net from the deteriorating financial crisis, citizens of the larger and more developed Latin American countries increasingly adopted cryptocurrencies as a means of profit.
For instance, Chileans were the most involved in DeFi, with over 45% of all crypto transaction volume taking place on DeFi platforms. Brazil was the number one country in the region for crypto value received, whereas over 30% of those transactions involved DeFi.