Diana Marcela Tinjaca
Editorial America, Feb 27 (.).- The adoption of digital money continues to grow in America, where cryptocurrencies, in addition to being instruments of speculation, have positioned themselves as a trench against inflation and an alternative to send remittances, a phenomenon that has led governments to seek its regulation and bet on virtual currencies.
“While in other parts of the world, the boom occurred, at least initially, as a protest against the financial system, in Latin America it has responded more than anything to the need to protect against inflation and the economic crisis,” Santiago Pontiroli, an analyst at the Russian cybersecurity giant Kaspersky, explains to Efe.
The Global Cryptocurrency Adoption Index 2021 of the firm Chainalysis shows that North America, led by the US, is the second largest cryptocurrency market in the world, after Central, Northern and Western Europe, with movements of more than 750,000 million dollars. between July 2020 and June 2021, 18.4% of global activity.
Meanwhile, Latin America ranks as the sixth economy, with some 352,000 million dollars in cryptocurrencies in the same period, that is, a modest 9% of all global transactions, although with notable growth.
The rebound is evident in countries such as Chile, which, according to the Buda.com platform, registered a growth of 400% in 2021, and Mexico, where a survey by the Finder firm shows that 15.2% of the population has some type of of digital asset.
At the same time, emerging companies linked to cryptocurrencies and “blockchain” technologies such as Bitso (Mexico), Mercado (Brazil) and Ripio (Argentina) have managed to position themselves strongly.
TRENCH BEFORE DEVALUATION AND ALTERNATIVE FOR REMITTANCES
Despite still being among the smallest markets, digital money has shown increasing penetration among the Latin American population, with three countries in the region highlighted in the top 20 by analysts of the global cryptocurrency adoption index: Venezuela (7) , Argentina (10) and Brazil (14).
The reasons for the growth are common: the speed of transactions, the lack of controllers or intermediaries, the mistrust produced by state economic policies and the fear of devaluation.
However, the context of each country maintains differences.
Thus, while a large part of the Brazilian market is made up of large transactions on “exchange” platforms (exchange houses), with large-scale investors and merchants, in Venezuela, Argentina or Colombia – eleventh country in the world in cryptocurrency adoption – smaller movements and more P2P activity are recorded, with direct contact between buyers and sellers.
In the case of Argentina, despite the fact that crypto assets are not regulated, P2P activity, in which there is evidence of a greater risk of fraud as there is no intermediary, tended to increase as the peso lost value and inflation picked up, according to Chainalysis.
The situation is similar in Venezuela, where the loss of value and confidence in the bolívar pushed a large part of the population to plunge into a partial and unofficial dollarization, and to adopt cryptocurrencies (which do not depend on banks for transactions) as a alternative savings and means of payment.
“In a supervening situation of hyperinflation, lack of confidence in the monetary sign and shortage of banknotes, crypto assets found a place to take root,” economist and crypto specialist Aarón Olmos told Efe.
The sector also captivated the Government and, at the end of 2017, coinciding with the start of hyperinflation and given the obstacles that Venezuela encountered in the international financial market, the petro was announced, an alleged “cryptocurrency” that was sanctioned by the United States. and that he did not win the trust of the Venezuelans.
Meanwhile, in Cuba, cryptocurrencies are being used to circumvent US economic sanctions, whether it is the blocking of remittances or the difficulties in importing goods, or as an investment in a climate of weakness of the Cuban peso, according to various experts and media.
Cuba has allowed its use since last September, thanks to a resolution that regulates its use, with limitations, and establishes licenses for operations and payments.
Other countries have seen that sector revitalize thanks to remittances, whose increase saved several of the Latin American economies in the midst of the pandemic.
According to the platform CoinPay.cr, remittances in cryptocurrencies destined for Venezuela, Argentina, Colombia, Brazil, Chile, Peru and Mexico skyrocketed in 2021 up to 900%, although the majority arrive from the US to Central America, where digital money is also gaining popularity.
EL SALVADOR AND CAUTION FACING THE DISPLACEMENT OF THE DOLLAR
Last year El Salvador became the first country in the world to adopt the as legal tender along with the US dollar, a measure by President Nayib Bukele to attract investors and reduce the payment of commissions on family remittances, the country’s economic pillar. .
In that bet, El Salvador bought at least 1,801 bitcoins at different times between September 2021 and last January, a reserve that has decreased in value due to the volatility and falls in the price of this cryptocurrency, which was trading this Saturday at $39,207, a decline of 43% from its all-time high of $69,000 in November.
The volatility was also reflected with the beginning of the Russian incursion into Ukraine last Wednesday, after which bitcoin plummeted to $34,300.
An instability that has already been warned by the International Monetary Fund (IMF), which insists on the risks posed by its adoption as legal tender or as a reference currency to replace the dollar.
A PLEX REGULATION
The IMF also considers that the anonymity of cryptocurrency platforms creates “perverse” opportunities for “money laundering” and the financing of illegal activities.
For this reason, it suggests reinforcing the frameworks and credibility of local monetary policy and designing portfolios that allow the authorities to set limits on the operations and volume of digital money.
Bolivia has been blunt in this regard by prohibiting by law any operation with crypto assets; however, some experts suggest a “deep discussion” considering that it is an inevitable trend.
For Pontiroli, this discussion is precisely one of the issues of greatest concern and complexity.
According to the Kaspersky analyst, there is a basic regulation regarding “money laundering” and the origin of investments in cryptocurrencies, but not on issues such as taxes on these transactions or the responsibility of the platforms on the funds.
“It is done in this way to promote “fintech”, because by not having to comply with certain rules, greater innovation can occur. But there is a gap, because users are left unprotected against a ‘hacking’, the closure of a platform or the disappearance of funds,” he warns.
Thus, for example, in Peru there are reports of pyramid schemes and fraud committed by individuals who take advantage of ignorance and the attractiveness of the digital environment.
Faced with these risks, Brazil and Uruguay are processing legal initiatives to regulate these operations.
And in Panama a regulation is also being evaluated despite the fact that cryptocurrencies do not have “much roots”, given that it is a dollarized country with a stable economy, according to the dean of the Faculty of Economics of the state University of Panama ( UP), Rolando Gordon.
THE CRYPTODOLLAR AND THE DIGITAL REAL
The bank considers that with adequate regulation and with the development of virtual currencies issued by central banks, digital money could become widespread and become a real alternative to cash.
“But just like in the rest of the world, in our region there are still phases of preparation and research to determine a virtual currency system in harmony with the current currency in circulation,” the secretary general of the Latin American Federation of Banks (Felaban) told Efe. ), Giorgio Trettenero Castro.
The head of Felaban, which brings together more than 600 banks and financial institutions, points out that the best-known case globally is that of the Bahamas, a country that announced in 2021 the creation of the “sand dollar”, considered the first digital currency in the world issued by a central bank.
Along the same lines, the Brazilian issuer plans to launch the digital real by 2024, with the idea of democratizing its use and curbing money laundering.
For its part, and in order not to lose influence, the US Federal Reserve (Fed) has been studying for months to create a “cryptodollar”, which would compete with bitcoin and the and would fit into the logic of preserving the dollar as a reserve currency. world.
MINING, AN OPPORTUNITY FOR LATIN AMERICA
In the opinion of analyst Santiago Pontiroli, another great opportunity for Latin America lies in mining (a process required for the issuance of new cryptocurrencies) after the total ban on this practice in China.
The analytical firm Arcane Research considers that the relocation of the miners will continue this year and many will arrive in Latin America, where El Salvador has already targeted geothermal energy, due to questions about the high energy costs of this process, due to the fact that servers are used. gigantic that work continuously.
In this regard, Argentina has asked energy distributors to report on consumption linked to this activity and, in January, electricity rates for the sector were quadrupled in the province of Tierra del Fuego, where crypto mining farms attracted by the Cold weather.
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