Latin American economies like Argentina and Venezuela are turning to cryptocurrencies to counter inflation and instability. El Salvador's adoption of Bitcoin as legal tender has attracted businesses to the country, and with millions unbanked in the region, remittances in crypto have surged 900% in 2021.
Latin America is the seventh largest crypto market, seeing $562 billion in crypto flows from July 2021 to June 2022, a 40% year-over-year increase. Leading the way are Brazil, Argentina, Colombia, Ecuador, and Mexico.
Mastercard's New Payments Index 2022 cast a spotlight on the region's evolving payment landscape. Astonishingly, 51% of consumers across Latin America have already engaged in cryptocurrency transactions. Their confidence in this new financial realm hinges on the backing of reputable organizations, with 67% expressing increased trust if cryptocurrencies were issued or endorsed by trusted entities.
As cryptocurrencies continue to shape the economic landscape in Latin America, the region stands at the crossroads of financial modernization, leveraging digital currencies to navigate complex economic challenges while fostering financial inclusivity and innovation. In an exclusive interview with Proactive, RocketFuel Blockchain Inc (OTCQB:RKFL) vice president of marketing, Monica Taher, talks through the opportunities that the robust Latin American market brings for small businesses to grow.
Proactive: Brazil, Argentina, Colombia, and Ecuador ranked amongst the top 20 in 2022 of cryptocurrency adoption. Obviously it’s really taking shape in Latin America.
Monica Taher: Absolutely. If we look into the reasons why this is happening, I think it is really a no-brainer. Unfortunately, Latin America’s economies historically have proven to be problematic. You mentioned those four countries, but we have also seen a huge adoption rate in countries with economies that are even more problematic, such as Argentina and Venezuela. Inflation rates, volatility of the local currencies, both make people look for other outlets, in this case, cryptocurrencies, in order to survive those inflation rates. It’s really not a surprise to see these numbers.
Several of these countries are home to a lot of people who are unbanked, meaning they don't use the regular banking system. Can you talk about how important those people are in the adoption of cryptocurrency?
I’m Salvadorian. In El Salvador alone, 70% of the population doesn't have a bank account. In Mexico, it ranges between 60 to 63%. Those numbers are really high. When we talk about the region, we're talking about millions and millions of people that are unbanked, and that basically gives them the opportunity to use digital outlets, in this case, cryptocurrencies. If they don't have a bank account, they don't have access to credit, either. And as you may know, a lot of these people, especially a lot of the unbanked, have informal businesses. It makes it even harder because they don't have access to capital. If they have access to cryptocurrencies (through their phones), and they're able to make payments that way, I think is really a game changer for all those millions of people in the Latin American region, that right now are not able to access a traditional monetary system.
How is the team at RocketFuel taking steps to capture the opportunity that exists in Latin America?
RocketFuel has incorporated a company in El Salvador, which has adopted Bitcoin as legal tender. We are also talking to many companies that are in the business of remittances. Just in the last year, we saw a 900% increase of remittances in crypto in the Latin American region, which means that industry alone is just going to explode. Those companies that are still depending on the traditional way of sending money have to reinvent themselves or add cryptocurrencies to their portfolio, or they will disappear. This is another disruptive technology that will absolutely change the way people send money.
MasterCard recently put out a survey about the Latin American crypto market, and the numbers they've returned are incredible as far as crypto is concerned. How big is this opportunity?
The survey conducted by MasterCard says that 51% of the population in Latin America has already utilized some sort of crypto payment method. That is a really high percentage – we're talking about half of the population in Latin America. It is no surprise that Latin America ranks number seven in the world in terms of crypto adoption, and that is why I really believe that for any crypto company, any company that is in the business of providing services and products with Bitcoin or any cryptocurrency, they have to pay attention to what is happening on the ground in Latin America.
This interview was edited for style and clarity