Since the emergence of Bitcoin in 2009, the cryptocurrency landscape has enjoyed significant growth. In the last few years, government organizations, regulators, investors, and other market participants from Latin America have shown their enthusiasm for crypto.
Similarly, we’ve seen governments introduce friendly policies to ensure that the crypto market within their jurisdiction bloom. In recent times, Latin America has now been identified as a potential hub for crypto and blockchain innovations.
The region has managed to attain this height due to numerous factors. Some of these factors include economic downturn, a growing population of young tech enthusiasts, increasing access to the internet, and drive for financial inclusion.
In this article, we will dissect some of the factors that have made the region a good hub for crypto.
Factors Contributing to the Push of Latin America as the Next Crypto Hub
One of the major reasons why Latin America is becoming a good destination for crypto business is the constant economic instability. Recently, popular countries in the region like Brazil, El Salvador, Argentina, and Venezuela are battling hyperinflation, economic crisis, corruption, and currency devaluation.
As a result of the damaging economic crisis, citizens have lost interest in the traditional financial system. For instance, nationals of Venezuela were forced to seek alternatives in crypto after its local currency BolÃva shredded a significant portion of its value.
Reports indicated that Venezuelans are not only using crypto as a hedge against inflation but as a means of payment and transactions. Likewise, Argentina has also recorded a noticeable surge in the use of crypto as its economy continues to struggle.
More so, Argentina is one of the countries with the highest number of crypto adopters as a result of how the Argentine peso has devalued. Consequently, citizens of the country resorted to Bitcoin and other notable cryptocurrencies to store the value of their wealth.
How Tech-Savvy Young Individuals Contributed to the Drive
Another cogent driver of the emergence of Latin America as one of the fastest-growing cryptocurrency hubs is its young population. Due to their ambitious nature, young people are more likely to welcome game-changing financial solutions including cryptocurrencies.
Also, the increased access to technology and the internet in this region played a key role in establishing the presence of crypto. As revealed, youth are more likely to embrace cryptocurrencies by participating in the virtual assets market either by trading, investing, or interacting with blockchain-based solutions.
Additionally, financial inclusion has become a crucial topic in the region owing to how significant part of its population is yet to be included in the existing traditional banking systems. According to the World Bank, up to 250 million adults in the locale are yet to have access to the fiat banking system.
Considering the vast unbanked population of the region, cryptocurrency is a bridge that can cover the gap, mitigating the huge dependence on traditional banks.
Meanwhile, the unbanked population in countries like Mexico and Brazil are now exploring blockchain-centric initiatives to cover the inability to access traditional financial systems. In these countries, various startups have introduced solutions that permit users to easily send, receive, and store crypto assets.
Thanks to these setups, users only need their smartphone and internet connection, allowing them to engage in the crypto market.
Roles of Proper Regulation in the Growing Crypto Landscape in Latin America
However, despite having the enabling environment to strive in the crypto space, the state of the existing regulatory frameworks and government approach to the industry also played a prominent role in the advancement of the region. Governments and regulators in the region are gradually embracing cryptocurrency and blockchain innovations after recognizing their prospects.
Notably, El Salvador, one of the popular countries in the region, adopted Bitcoin as legal tender. Similarly, Brazil has moved towards establishing clearer regulations for the virtual assets sector.
Brazil, as a leading crypto hub in Latin America, has permitted its virtual assets landscape to flourish while ensuring consumer protection. The country has earned a good reputation for allowing crypto-backed investment vehicles like crypto exchange-traded funds (ETFs) to thrive.
Brazil and El Salvador are good examples of how regulatory frameworks can help foster growth and attract investors.
Conclusion
Latin America is on a remarkable march toward emerging as a notable hub for cryptocurrency and blockchain innovations. By seamlessly combining economic instability, a youthful population, and drive for financial inclusion, and a supportive regulatory setup, the region has allowed its crypto landscape to flourish.
Despite the upsides, there are a host of challenges that may affect the fast-raising crypto and blockchain industry in the region.
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