As confidence in cryptocurrencies as a safe investment increases throughout Latin America, further regulation is expected.
Mexico City, August 2023. Trust in cryptocurrencies and blockchain technology is increasing in Latin America. More people are harnessing the potential of the web3 to achieve investment returns, inclusion and global financial mobility, the report shows. most recent report of Sherlock Communications. In Mexico, 44% of respondents expect safer and more reliable cryptocurrency platforms.
“Latin America sets a trend in the adoption of web3 technologies. Some of the most innovative blockchain projects and startups in recent years come from here. The region is an increasingly attractive hub for cryptocurrency trading for both investors and consumers,” explains Patrick O’Neill, Managing Partner of Sherlock Communications.
The report highlights key aspects of the cryptocurrency landscape in 21 countries, including surveys of 3,500 people on the current state of cryptocurrency and the blockchain ecosystem in Brazil, Mexico, Argentina, Colombia, Peru, and Chile.
“The crypto ecosystem is constantly changing; In 2023, there are two main things to consider: We are in a bear market facing regulatory pressure. Since the collapse of the Terra Luna stablecoin and the fraud on the FTX exchange, regulators around the world (especially in the US) are closely monitoring the crypto ecosystem and taking measures to protect investors and their national markets”, points out the leading researcher specializing in blockchain at Sherlock Communications, Luiz Hadad.
As the regulatory landscape begins to change in the region, authorities are working to develop central bank digital currencies (CBDCs). This is the case of Banco de México, although there is still no estimated date for its launch.
“Some countries have reasons to be more conservative in their regulations, like Argentina. On the other hand, there are countries that have approved friendly regulations that can foster innovation and attract long-term crypto projects,” explains Luiz Hadad.
On the other hand, the institutional players of the financial market entered the ecosystem in a significant way. Banks, fintechs, centralized exchanges, and hedge funds all improved their interfaces in 2022 and began to facilitate cryptocurrency adoption in different ways.
How is the cryptocurrency market growing in Mexico?
The cryptocurrency market in Mexico continues to grow, although barriers to adoption persist. More than 30% of those surveyed believe that blockchain technology will change their shopping, investing and saving habits.
In contrast, the top three reasons holding back adoption are a lack of knowledge on the subject, concerns about the security of money, and concerns about price volatility.
What is the first step to acquire cryptos? In order to invest in cryptocurrency over the next year, the majority of those surveyed indicated that they first need to learn more about the subject, receive expert advice, study it with reliable educational resources, and market regulations to be established.
Currently, the main reasons for investing in cryptocurrencies according to Mexicans are: saving money for the future (48%), getting extra income (34%) and diversifying their investments (33%).
In the Mexican market, the use of cryptocurrencies also stands out in the face of economic and social conditions. 30% consider them an alternative to face inflation and financial instability. Inflation closed last year at 7.82%, the highest in two decades.
On the other hand, 27% of those surveyed indicated the use of cryptocurrencies for international transfers at a lower cost. It is a historical trend marked by the migration of Mexicans to the US During 2022, the sending of remittances to Mexico reached a record of more than 58 billion dollars.
Potential investors are closely watching how regional governments move to introduce regulations. 44% of Mexicans want more secure and reliable cryptocurrency platforms. While 42% expect clear regulations for the market.
“We found that base adoption comes from the use of stablecoins and many mining projects looking for cheap, renewable energy sources in places like Paraguay and Argentina. Latin American countries can benefit from current conditions in the long term and have the opportunity to increase adoption rates once the market cycle shifts to a bullish outlook”, says Luiz Hadad.
