- In Latin America, the leading crypto is booming at unprecedented rates.
- Despite widespread use, the region is keen on developing regulations for crypto.
- Cryptocurrency is now a viable alternative to fiat currency in the region that has been plagued by a weakened economy, political instability, and high crime rates.
The use of digital currency is on the rise in Latin America, with many individuals and even governments resorting to blockchain technology to ease transactions and improve transparency.
The region’s governments are keen to regulate the currencies to prevent misuse of criminal elements. Brazil’s Federal Revenue Service (Receita Federal) requires residents to report transactions involving cryptocurrencies.
Current status of Bitcoin in Latin America
Bitcoin in Latin America is huge. Statistica, the world’s leading portal for statistics, noted that Latin America has the highest number of cryptocurrency users globally.
Countries like Brazil, Colombia, Argentina, Mexico, and Chile were all part of the top 10 countries with the highest number of Bitcoin users. The reason for their burgeoning use is not far-fetched, as a slew of financial tragedies has plagued the region.
For example, Venezuela suffered insane levels of inflation that have rendered its currency worthless. Argentina saw inflation levels reach 53.89% in 2019 and Brazil the highest inflation rates in 13 years.
Aside from being a hedge against inflation, Bitcoin’s popularity in the region is due to the transfer of funds’ speed and security. Migrants in America have been sending money to their families back home in Latin America using cryptocurrencies.
Several tech startups have stepped in to fill the void, such as Valiu that creates a platform allowing funds to be transferred to Venezuela within a short time. Similarly, La PlataForma enables users to move crypto-currencies to people within the region with relative ease.
On the Flipside
- Bolivia and Ecuador have placed heavy restrictions on the use of Bitcoins and other crypto-currencies.
- Bitcoin tumbles after Janet Yellen call it “inefficient.”
- Previously (on January 19th), in her Senate confirmation hearing, Janet Yellen noted that cryptocurrencies are used to facilitate crime, including terrorist activity.
Bitcoin regulation In Latin America
To prevent Blockchain technology from being misused by criminal enterprises, government regulators have attempted to exercise a form of control over Bitcoin. For example, Brazil’s Federal Reserve Service (Receita Federal) now requires citizens to report all transactions involving cryptocurrencies. The Central Bank of Brazil accepts Bitcoins and other cryptocurrencies as an asset class.
For tax, cryptocurrencies are generally viewed as an asset class, and capital gain taxes are paid on them. In Argentina and Brazil, they may be categorized as income tax, depending on the volume.
Mexico’s Bill, “Law, To Regulate Financial Technology Companies,” requires companies to comply with anti-money laundering laws concerning Bitcoins and other crypto-currencies by registering and repeating them.
Apart from regulation, governments across the region are increasingly using blockchain tech and cryptos to improve accountability.
Colombia’s Attorney General’s Office now uses blockchain to improve transparency in awarding new contracts. Similarly, Ecopetrol – Colombia’s state-owned oil company announced that it is making blockchain investments to improve the supply of oil and gas networks.