Crypto Adoption in Latin America: A Tool Against Economic Woes and Authoritarianism

Latin America is carving a unique narrative in the global cryptocurrency landscape, with Venezuela and Argentina standing out due to their distinct socio-economic and political contexts. According to a report by Chainalysis, Latin America ranks seventh in the global crypto economy hierarchy, just ahead of Sub-Saharan Africa. The region’s preference for centralized exchanges (CEXs) over decentralized exchanges (DEXs) is notable, contrasting with global trends. However, the core attraction lies in how cryptocurrency is morphing into a tool against economic adversities in Argentina and a shield against authoritarianism in Venezuela.

Argentina: Crypto as Economic Safeguard

Argentina’s long-standing economic turmoil, accentuated by a 51.6% devaluation of the Argentine peso up till July 2023, has spurred crypto adoption as a defensive mechanism. In this period, the nation led Latin America in raw transaction volume, with an estimated $85.4 billion in value received, showcasing a strong grassroots adoption. Alfonso Martel Seward, Head of Compliance & AML at Argentina-based cryptocurrency exchange Lemon Cash, elucidates that crypto, particularly stablecoins, has become a vital alternative for savings amidst stringent foreign currency acquisition restrictions. This trend is visually evident in the spike of crypto purchasing as the peso devalued, especially around mid-April when Argentina’s inflation rate hit 100% for the first time in three decades.

Lemon Cash has capitalized on this situation, offering a debit card feature enabling users to transact with crypto at local retailers, thus alleviating day-to-day commerce challenges induced by currency instability. The rise of Lemon Cash, amid an active crypto market where about 5 million out of 45.8 million people use crypto, epitomizes the asset class’s capacity to buffer against economic hardships.

Venezuela: Crypto as a Pillar of Resistance

Venezuela’s narrative diverges from Argentina primarily due to its authoritarian governance under Nicolás Maduro. The nation’s economic woes, marked by hyperinflation rates surpassing 1 million percent, have driven many towards crypto, especially stablecoins, to preserve their savings. The crypto adoption trend in Venezuela also extends to enabling remittances, which have burgeoned due to a significant populace exodus since 2014.

A notable dimension is how crypto is fostering resistance against authoritarianism. Venezuelan opposition leader Leopoldo López shared an instance where crypto facilitated direct aid to healthcare workers during the Covid-19 crisis in 2020, bypassing the repressive governmental controls. This initiative, which benefited 65,000 medical professionals directly and impacted hundreds of thousands indirectly, underscores crypto’s potential as a humanitarian aid conduit amidst political repression.

Furthermore, López emphasized that cryptocurrency’s value in supporting democracy movements could be fully realized when the off-ramping process is independent of autocratic regimes, indicating a path towards leveraging crypto for broader societal change.

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Bitfinex Unveils Zero-Fee P2P Trading in Argentina, Colombia, Venezuela

On October 11, 2023, Bitfinex, a leading digital asset trading platform, disclosed the initiation of a zero-fee trading facility for market takers on its Peer-to-Peer (P2P) platform in Argentina, Colombia, and Venezuela. This development follows the recent availability of the P2P trading service to clients within these geographies, further catalyzing the adoption of cryptocurrency trading in the region.

Bitfinex’s announcement underpins its commitment to fortifying the cryptocurrency trading ecosystem within these emerging markets. By abolishing the trading fees for market takers, individuals who execute buy or sell orders at prevailing market rates, the platform is propelling the advantage of real-time crypto-to-crypto settlements sans any financial encumbrances. This initiative is anticipated to spur trading activities by significantly reducing the cost of transactions, which traditionally acts as a barrier for many potential and existing cryptocurrency traders. The immediate financial relief is likely to enhance liquidity and foster a more robust trading environment on the Bitfinex P2P platform.

To avail of the zero-fee trading, users are required to log into their Bitfinex accounts and select the P2P option featured in the top navigation menu. 

Established in 2012, Bitfinex has been at the forefront of digital token trading, extending a suite of advanced trading resources to both global traders and liquidity providers. The platform’s diverse offerings encompass peer-to-peer financing, an Over The Counter (OTC) market, and margin trading for a broad spectrum of digital tokens. With a strategic emphasis on delivering superior support, innovative tools, and a seamless trading experience, Bitfinex continues to garner a global clientele.

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Venezuela Shuts Down Crypto Mining Operations

Venezuela, a country known for its volatile political climate, has recently made headlines for shutting down several crypto mining facilities throughout the country. According to reports from local media outlets and tweets from Venezuela’s National Association of Cryptocurrencies, mining operations were ceased in the states of Lara, Carabobo, and Bolívar in the past few days. Although it is unclear how many crypto firms were affected by the shutdown, several crypto exchanges were also ordered to cease their operations.

The closure of crypto mining facilities is believed to be part of an ongoing investigation into corruption involving Venezuela’s state-owned oil company, Petróleos de Venezuela S.A. (PDVSA), and the country’s national crypto department. The Venezuelan government has been grappling with the financial crisis and hyperinflation, leading many to turn to cryptocurrencies as a more stable investment option. However, the mining of cryptocurrencies requires a significant amount of energy, which is often subsidized by the government. As a result, the shutdown of crypto mining facilities could be seen as a way to conserve energy and resources amidst Venezuela’s financial struggles.

Additionally, the corruption investigation involving PDVSA and the national crypto department has been ongoing for several years. PDVSA has been accused of embezzlement and money laundering, with the country’s former oil minister, Rafael Ramirez, at the center of the investigation. The national crypto department, which was created in 2018 to oversee the country’s cryptocurrency operations, has also been under scrutiny for alleged corruption and mismanagement of funds.

The shutdown of crypto mining operations in Venezuela has raised concerns among crypto investors and traders, who are now questioning the government’s stance on cryptocurrencies. While some experts believe that the shutdown is simply a way to conserve energy and resources, others believe that it is part of a larger crackdown on cryptocurrencies in the country. The Venezuelan government has been known to take drastic measures to control the country’s economy, including imposing strict capital controls and devaluing the country’s currency.

In conclusion, the shutdown of crypto mining operations in Venezuela is just one of many challenges facing the country’s cryptocurrency industry. The ongoing corruption investigation involving PDVSA and the national crypto department, coupled with the country’s economic struggles, has created an uncertain future for cryptocurrencies in Venezuela. It remains to be seen how the government will navigate these challenges and what impact they will have on the country’s crypto industry.


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Venezuelans reportedly hit by new Bitcoin tax of up to 20%

The Venezuelan government has approved a new tax bill aiming to collect up to 20% in taxes from cryptocurrency transactions, according to local reports.

Venezuela’s National Assembly held the second discussion session on Thursday for a new draft bill targeting taxes on “large financial transactions” in cryptocurrencies like Bitcoin (BTC).

The Venezuelan government reportedly approved the draft bill last Thursday, requiring local firms and individuals to pay up to 20% for operations carried out in cryptocurrencies as well as foreign currencies like the U.S. dollar.

Filed on Jan. 20, the draft law aims to collect from 2% to 20% over transactions in any currencies other than those issued by the Republic Bolivarian Republic of Venezuela, or the Venezuelan bolivar and the country’s oil-backed cryptocurrency, El Petro.

The initiative aims to incentivize the use of the national currency, which reportedly lost over 70% in value last year alone and shed nearly all its value over the past decade.

“It is necessary to guarantee treatment at least equal to, or more favorable, to payments and transactions made in the national currency or in cryptocurrencies or crypto assets issued by the Bolivarian Republic of Venezuela versus payments made in foreign currency,” the bill reads.

Related: India to introduce 30% crypto tax, digital rupee CBDC by 2022–23

As previously reported by Cointelegraph, Bitcoin adoption has been skyrocketing in Venezuela in recent years, with many thousands of local businesses starting moving into cryptocurrency to survive amid hyperinflation. In October 2021, a major international airport in Venezuela was preparing to start accepting cryptocurrencies like BTC as payment for tickets and other services.