After El Salvador made Bitcoin legal tender, what else can we expect from South America?
Cryptocurrencies provide an alternative financial ecosystem that can change the lives of millions of people. While the Western world has a well-developed financial system — making the need for cryptocurrencies less apparent — many South American countries are known for rampant inflation rates, and people often struggle to make ends meet. These are the regions where crypto can make the most significant impact in the years ahead.
It will take significant effort to educate the masses on crypto and highlight the benefits it may provide. While there is a lot of work ahead, things appear to be improving gradually.
The Current State of Crypto in South American Countries
Contrary to popular belief, not all South American countries see merit in Bitcoin and other crypto assets.
That isn't too surprising, even though the current financial system in most of these countries leaves much to be desired. Regions like Bolivia and Ecuador have officially banned
Bitcoin and other crypto assets since 2014. Although officials made some amendments over the years, there is still unease and uncertainty in these regions surrounding cryptocurrencies.
Other parts of South America appear to have an open mind toward crypto. While this is a positive development, educational efforts will be needed to make a meaningful impact. No other regions in South America officially prohibit the use of cryptocurrencies, although very few seek to endorse it actively. However, that situation changed dramatically in 2021 when El Salvador embraced Bitcoin as a legally accepted currency.
Government officials from Argentina, Brazil, Panama and Paraguay congratulated El Salvador's regime on taking this bold step. The governments’ public congratulation may have been a reflection of what their populations want, as over 35% of people in Latin America and the Caribbean have indicated they plan to use cryptocurrencies more actively. Opposing the people's preferences and demands usually don't work out well, although it remains unclear if any of these countries will openly support Bitcoin and similar assets.
As some South American governments begin to embrace cryptocurrencies, one logical question is left: how can Bitcoin and similar assets operate within a regulatory framework? As regulation of digital assets is still a troublesome point, making progress on that front will prove beneficial, as other governments around the world can use any crypto legislation as an example to follow in their own countries.
Educational Crypto Efforts in South America Today
The first step to bring crypto to the South American masses is by focusing on the educational aspect
— do the people know what Bitcoin is
? Do they really understand the technology?
Most people are still uncertain as to why crypto matters or what they can use it for. Education on the benefits, risks and responsibilities is a crucial move in the right direction. Several educational efforts are underway across South America today, each of which embodies a slightly different approach to bring more people into the cryptocurrency and blockchain ecosystem.
One example is the National Autonomous University of Mexico, or UNAM. Their introduction of a financial engineering specialization course includes models on crypto and blockchain topics. Of course, it is not just crypto-oriented, as the course focuses on evaluating the profitability of public and private companies, financial strategies, innovative financial instruments and presses, measuring financial risk, and more. However, crypto and blockchain fit into these topics, making them a worthwhile addition to the course.
In Colombia, things are a bit different. The government has dedicated
financial support for an application, board game and book all about cryptocurrency education. These platforms will educate children and young adults on investing in the stock market and cryptocurrencies,
by simulating retail trading through a gamified and competitive approach. Users have to interpret market momentum to buy and sell at the correct time. Since economic literacy may not be an active topic in all Colombian schools, these tools can help to change that narrative.
Educational efforts are a first step toward making people aware of existing service providers for users to explore.
Existing Crypto Service Providers in South America
Most crypto service providers in South America focus on Bitcoin, as it is the world's leading cryptocurrency. Colombia's Valiu, for example, providers remittances and Bitcoin-backed savings accounts. In addition, users can send fiat across country borders if they need to or use the platform to store funds denominated in dollars through bitcoin derivatives. The platform supports debit, credit and cash payments to make it as accessible as possible.
Brazil's Moeda tackles a different avenue. The project uses global trading platforms, including Binance, to extend small loans and operational liquidity to clients in Brazil. Although a domestic effort, it showcases the potential of crypto liquidity for financial purposes.
Venezuela is home to companies such as Cryptobuyer. With initial support for Bitcoin and later Ethereum and DAI, the company specializes in Bitcoin ATM placement and the distribution of crypto point-of-sale devices.
Making crypto assets more accessible and facilitating their use through payments at local businesses create a broader usability level for assets like Bitcoin and Ethereum.
Beyond these efforts, there are various exchanges, trading platforms and wallet providers across South America. Although the most considerable progress has been made in El Salvador, it appears crypto continues to gain traction in the rest of South America. With the help of educational efforts and service providers, the overall adoption of crypto assets can keep improving.
What Will Happen Next For Crypto in South American Countries?
As El Salvador has created an intriguing precedent for crypto in South America, other countries may follow a similar path. Making Bitcoin legal tender is a big deal, regardless of how small El Salvador might be compared to Western norms. As the first country to legalize Bitcoin as legal tender, El Salvador gains a competitive edge that other governments may want to replicate. As officials in Argentina, Paraguay, Brazil and Panama already supported El Salvador's decision before the new policy went into effect, there may be a lot to look forward to.
Paraguay is a likely candidate to embrace Bitcoin or provide a clear regulatory framework. Panamanian officials have indicated they are working on a similar plan to El Salvador’s in order to become more "crypto-friendly."
As many South American countries have a large unbanked
or underbanked population that will seek exposure to financial services and products through other means, crypto could be an attractive second option. Embracing this new paradigm of money in South America may be more favorable than banning it.
This article contains links to third-party websites or other content for information purposes only (“Third-Party Sites”). The Third-Party Sites are not under the control of CoinMarketCap, and CoinMarketCap is not responsible for the content of any Third-Party Site, including without limitation any link contained in a Third-Party Site, or any changes or updates to a Third-Party Site. CoinMarketCap is providing these links to you only as a convenience, and the inclusion of any link does not imply endorsement, approval or recommendation by CoinMarketCap of the site or any association with its operators. This article is intended to be used and must be used for informational purposes only. It is important to do your own research and analysis before making any material decisions related to any of the products or services described. This article is not intended as, and shall not be construed as, financial advice. The views and opinions expressed in this article are the author’s [company’s] own and do not necessarily reflect those of CoinMarketCap. CoinMarketCap is not responsible for the success or authenticity of any project, we aim to act as a neutral informational resource for end-users.