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An update on the further development of blockchain technology in Latin America

June 15, 2020

Much of Latin America has been shaken by financial chaos in recent years. Despite the risk and volatility of cryptocurrency, digital assets and blockchain technology have become a viable alternative to unstable national currencies.

Latin Americans are increasingly using cryptocurrencies to hoard, store, or buy goods and services.

In many Latin American countries, the market entry barrier for cryptocurrency is often lower than with traditional forms of financial management. About half of the Latin American population has no access to basic banking services. A large population without bank account with WiFi access makes immersion in the cryptocurrency much easier than opening a current account.

Blockchain and cryptos are becoming a viable alternative

An update on the further development of blockchain technology in Latin AmericaAn update on the further development of blockchain technology in Latin America

Latin America is a revolutionary region for the cryptocurrency and blockchain industry and is facing further growth. The digital currency still has a long way to go before it becomes mainstream.

However, there is real evidence that Latin America sees crypto as a serious and viable alternative to the traditional currency. The region can become a global leader in efficient real-world cryptocurrency applications.

In this context, the citizens of Latin America have promoted adoption. As mentioned above, around 70% of the population is still lacking banking services and they have little faith in current institutions that have been hindering opportunities and growth for decades.

For this reason, cryptocurrencies and blockchain technology offer the opportunity to distance themselves from weak government institutions that have led to banking crises, ongoing corruption and political instability.

From a decentralized finance perspective, Latin America is so exciting that people who prefer Bitcoin and other digital alternatives aren’t crypto experts and don’t know the underlying technology.

This is an important step towards broad acceptance. Much of the public in Latin America has turned to digital currency alternatives like Bitcoin for changes. For many, it is a legitimate alternative to the respective fiat currency as a medium of exchange for domestic and cross-border payments.

Cryptocurrencies are most commonly used every day to send transfers abroad. Millions of users are convinced that using this type of exchange method is cheaper than traditional Swift codes.

Argentina

For example, if you look at Argentina, it’s easy to understand why a stateless, tamper-free coin is attractive.

The southern country has progressed in this area, although it does not yet have legal recognition. There are commercial ATMs in Buenos Aires, many bitcoins are moving, and the cryptocurrency adept community is growing rapidly, forcing the government to work to create a law. The Financial Information Unit (UIF) and the National Securities Commission (CNV) are monitoring the problem from the Central Bank (BCRA).

According to the Argentine National Constitution, the central bank is the only authority able to issue legal currencies. Crypts are generally not a strictly legal currency because they are not issued by the government monetary authority and are not a legal tender.

Brazil

This was one of the legal cryptocurrency economies worldwide, however The pandemic hit the Brazilian economy hard, causing the country’s population to consider how cryptocurrencies could be used as a long-term savings option. and as a means of cross-border settlement.

Mexico

Other regions of Latin America also have significant problems in Mexico. The Mexican law regulating financial technology companies (Fintech Law) in March 2018 deals with operations involving “virtual assets”.

In this sense, it forces financial companies on its territory that work with cryptocurrencies to inform their customers that virtual assets are not legal tender and are therefore not supported by the federal government or the central bank of Mexico.

With the Fintech Law enacted in 2018, the country set out a regulation for technological institutions, which provides for the creation of an interinstitutional committee to deal with issues related to financial technology.

Chile

Chile’s Internal Revenue Service (SII) announced a number of changes to the tax definition applicable to the cryptocurrency industry to further regulate the operation of companies that provide digital wallet services and money exchange services.

With this new measure, the SII states in its declaration that any operation carried out through a company that manages these types of services must state the economic fact under which the invoice is issued and state in detail whether it is a purchase. Shipping or other services related to the use of digital currencies. In addition, the operators must submit affidavits.

Venezuela

Due to the country’s crisis, the Venezuelan government has decided to use cryptocurrencies as a way out. The relationship with them is valuable today, but he had his stumbling blocks in implementing his “Petro” token.

With the advent of its sovereign digital currency, which is backed by crude oil reserves (petro), the Latin American country made the world aware that it was leading the way in the implementation of the first cryptocurrency, which was issued by a government in December 2017.

The government recognized the petro as cryptoactive for the exchange of goods and services, investment, and national and international marketing, and its actual operation began in October of the same year.

Currently, Venezuela is not only the first country to legally introduce a national cryptocurrency, but also one of the few in the world that is considering achieving it.

Uruguay, Honduras, Guatemala and Peru

Neither of these countries has current cryptocurrency regulations that go beyond the official declarations of their country’s central banks and indicate that decentralized digital currencies like Bitcoin are not legal tender in the country. Therefore, they have no official confirmation.

Bitcoin and cryptocurrencies offer a monetary alternative

Ultimately, people use Bitcoin and other cryptocurrencies as a monetary alternative because it fundamentally solves the problems and provides protection against the instability of the Fiat currency.

But let’s keep in mind that cryptocurrencies in general are still in a very rough legal environment in Latin America, where only a handful of countries in the region have taken the initiative to create the appropriate legal framework for developing the ecosystem in one orderly manner.

In Europe and other industrialized countries around the world, trust in digital currencies as a means of payment is not so broad. Due to the continuous and permanent use of these cryptocurrencies, Latin America has evolved in various aspects compared to the rest of the world.

As crypto assets grow and establish themselves as competition to traditional currencies, the countries are joining the matter. In their agendas it already seems to be an inevitable point.