The Rise of Cryptocurrencies in South America

South America is steadily leading the world in terms of cryptocurrency adoption. Among the top 20 nations with the fastest rate of digital asset proliferation are Brazil, Argentina, and Mexico. Young people are the primary driver behind this movement. Today we will look at what changes towards cryptocurrencies have taken place in South American countries recently and what the societal implications are behind them.

Major Developments in the South American Crypto Market

In this section, we'll take a look at what's happening with the cryptocurrency market in countries like Chile, Brazil, Venezuela, Argentina, Mexico and Colombia.

Chile

The Congress of Chile enacted legislation in 2023 to regulate the fintech industry, which includes cryptocurrency. The measure intends to make cryptocurrency-related transactions safer and more stable by establishing legal certainty for companies and individual investors. Chile intends to boost investment in the cryptocurrency space and quicken the expansion of the digital economy as a whole by enacting this legislation.

In 2023, the Chilean market saw a significant development in cryptocurrency adoption as Mercado Libre Group began offering crypto transactions. This e-commerce giant, through its Mercado Pago wallet app, now allows Chileans to trade Bitcoin (BTC) and Ethereum (ETH) with a minimum transaction amount of just 50 Chilean pesos. This move is facilitated in partnership with Ripio, a prominent Latin American cryptocurrency company.

Marcos Galperin, the co-founder and CEO of Mercado Libre, emphasized the enduring significance of cryptocurrencies, not primarily as a means of payment but as a store of value. The company views cryptocurrencies as a viable alternative to traditional finance, a perspective that is increasingly relevant in Latin America. The region is characterized by its youthful demographic, cost-effective mobile and internet services, and the burgeoning IT sector, making it a fertile ground for the adoption of Bitcoin and other digital assets for payment and savings purposes.

Brazil 

Brazil stands out with the most diverse portfolio of cryptoassets, including Bitcoin, stablecoins, altcoins, and memecoins. In our article, you can read more information about Brazil crypto adoption and the various ways the country is leading in this field.

Brazil ranks 4th in the world in terms of cryptocurrency adoption and is a leader in South America. The largest bank in Brazil, Banco do Brasil, has decided to start offering Bitcoin and cryptocurrency trading services, which is one of the most noteworthy recent developments in the Brazil crypto space. As digital money becomes more widely accepted and regulated, the project is anticipated to have a substantial effect on the financial industry. With the advent of Brazil crypto regulation, customer confidence will rise as anyone can now purchase or sell Bitcoin through a reputable financial institution, accelerating the cryptocurrency market's uptake in Brazil. As a result, cryptocurrencies may all eventually integrate into the mainstream financial system.

Venezuela

Back in 2017, Venezuela made headlines by launching El Petro, a national cryptocurrency underpinned by the country's oil and mineral reserves. This initiative distinguishes itself from standalone projects as it operates as a token on the Ethereum blockchain. To support its functionality, the Venezuelan government developed PetroApp, an online wallet accessible via the official government portal. This platform allows users to transact with El Petro, along with other digital currencies such as Litecoin (LTC) and Dash (DASH).

Venezuela has looked to its state-owned cryptocurrency Petro as a possible answer as it deals with one of the biggest economic crises in its recent history. The remarkable journey of Venezuela demonstrates the enormous potential of cryptocurrencies to provide relief from dire economic circumstances.

Argentina

Argentina stands out from other countries in the region for its particularly active use of stablecoins such as USDC and USDT. At the same time, Argentina ranks 15th in the world in terms of overall cryptocurrency adoption and 2nd in South America. It's worth noting that in 2023, the country experienced one of the highest inflation rates in the world - Argentina's annual consumer price growth rate reached 211.4%. High inflation is pushing people to look for more stable options to preserve their savings, and cryptocurrencies are becoming an attractive alternative within the Argentina crypto market.

Perhaps the most pro-Bitcoin leader in South America is Argentine President Javier Milei. Milei, who holds strong libertarian beliefs, is in favor of the use of Bitcoin. He views the popular cryptocurrency as a viable weapon against inflation and a substitute for the peso's increase. The acceptance of Bitcoin in Argentina is anticipated to be significantly impacted by his policies, which include lowering monetary interference and fostering financial independence. The nation can become one of the top countries in the area as a result.

Here you will find more information about crypto in Argentina.

Mexico

In Mexico, the number of cryptocurrency users increased by 18% year-on-year over the second half of 2023. The country stands out with the highest share of Bitcoin in cryptocurrency trading, accounting for about 40% of the total trading volume. If you're wondering how to buy Bitcoin in Mexico, it's notable that the country also leads in the usage of Bitcoin for transactions and investments.

Additionally, Mexico is unique in South America, where the XRP/Mexican peso pair is the third most popular due to the active use of cryptocurrencies for international transfers and remittances between the US and Mexico. The share of XRP in the average portfolio of Mexican users reaches 8%, which is twice as much as in other analyzed countries of South America. Find more about the status of crypto in Mexico in our article, especially if you're interested in Bitcoin in Mexico and other popular digital currencies.

Colombia

Colombia is currently collaborating with a number of Bitcoin exchanges to make cryptocurrency transactions easier and more regulated. A regulatory sandbox was established in 2021 by the Financial Superintendence of Colombia (SFC) to enable cryptocurrency exchanges to function in a regulated setting. The purpose of this partnership is to establish a transparent and safe cryptocurrency landscape in Colombia, thereby enhancing citizens' confidence and sense of security in engaging in cryptocurrency trade. These kinds of alliances are essential to fostering trust and creating a sound financial system in the nation.

In 2024, one of Colombia's largest banks, Bancolombia, launched a new cryptocurrency exchange, Wenia.

The goal of Wenia is to provide Colombians with a safe and convenient platform to trade cryptocurrencies and to make cryptocurrencies more accessible to Colombians.

Socio-Economic Impact of Crypto Adoption

There are significant social and economic ramifications to South America's embrace of cryptocurrency. For people of nations whose currencies are unstable, cryptocurrencies act as a reliable store of value and act as a hedge against inflation and economic instability. Furthermore, remittances are made easier by the simplicity of cross-border cryptocurrency transactions, which gives families access to a vital source of funding. By providing previously unbanked populations with access to financial services, cryptocurrencies also advance financial inclusion. 

In nations such as Venezuela and Argentina, where conventional banking systems are sometimes unstable or inaccessible, cryptocurrencies present a feasible substitute for carrying out day-to-day transactions and safeguarding assets. The switch to digital currencies can also boost economic expansion by drawing in foreign capital and fostering fintech innovation.

Conclusion

Many influential people and leaders in South America (for example, Congressman of Brazil Aureo Ribeiro) have supported the growth of Bitcoin and other cryptocurrencies. These people are setting up forums in an effort to inform the public, advance laws that support cryptocurrencies, and stimulate the use of virtual currencies. Their combined efforts have a significant impact on the current pro-Bitcoin agenda throughout the continent.

The financial environment of South America has the potential to be drastically altered by cryptocurrencies like Bitcoin. Due to progressive legislation and economic necessity, the region is seeing an increasing adoption of cryptocurrencies, which will position it to become a major player in the global cryptocurrency industry. Future prospects appear bright, with digital currencies potentially playing a major role in providing millions of people with financial security and accessibility. This is indicated by current advances and the support of prominent leaders for Bitcoin. The experience of South America can be a useful guide for other areas investigating the possibilities of cryptocurrencies.

SimpleSwap reminds you that this article is provided for informational purposes only and does not provide investment advice. All purchases and cryptocurrency investments are your own responsibility.