- A study by Geminis found that stablecoins linked to the US dollar have become an instrument to deal with the high inflation rates in the region.
- The adoption of cryptocurrencies in general in Latin America has also been driven by inflation.
- 46% of Latin American respondents see crypto as a great way to hedge against high prices.
A new Gemini study released by New York-based fintech firm Paxos finds that Latin Americans trust cryptocurrencies, especially dollar-pegged stablecoins, more than their own currencies.
In Latin America, not only has the adoption of cryptocurrencies grown rapidly, but they have also become a refuge against high inflation. Stablecoins are offering users some protection against the deterioration of national currencies.
The online survey conducted by Data Driven Consulting Group for Gemini between November 23, 2021, and February 4, 2022, compiled the opinions of nearly 30,000 adults in 20 countries around the world.
Growth of Confidence in Stablecoins
The study that added three Latin American countries (Brazil, Colombia, and Mexico) established that 2021 was the year of the cryptography takeoff globally. Just over half of crypto users in Brazil (51%), Hong Kong (51%), and India (54%), the countries with the highest levels of adoption, entered the world of crypto last year.
The confidence of Latin American crypto owners in stablecoins backed by the US dollar has surged according to the study. Even in countries with more stable economies such as Chile or Peru, the adoption of stablecoins continues to increase due to inflation and the devaluation of their currencies.
The report does not mention the peculiarities of the stablecoins that Latin American users are using the most. However, it is known that these cryptos are being used in small and large-scale trading activities and for sending remittances to receiving countries such as Mexico, Colombia, Argentina, El Salvador, Venezuela, and others.
Brazil Leads the Adoption
In general, the adoption of cryptocurrencies in Latin America during 2021 was exponential. The region led the growth of the crypto industry globally as a valid option against banking and traditional fiat currencies.
In Brazil, approximately 41% of adults own some kind of cryptocurrency token. Of these, almost half (45%) are women. While in Colombia, the market and interest in digital currencies also continue to increase every day.
Latin America currently has one of the highest inflation rates in the world at around 12%. This has made the dollar stronger against other currencies, as it serves as a protection and refuge against devaluation.
Hence, stablecoins pegged to the US dollar also benefit from this relationship. The Geminis report mentions data from Mastercard, according to which, a third of Latin American consumers use stablecoins to make daily purchases.
On the Flipside
- Inflation has been a driver for the adoption of cryptocurrencies in Latin America.
- Between January and August, the Brazilian real devalued 7.61% against the dollar, as did other Latin American currencies to a greater or lesser extent.
- The results of this study predate the collapse of the Terra/Luna ecosystem and the crypto winter.
Why You Should Care
- Only 12% of respondents in Latin American countries said they haven’t bought cryptocurrency yet because they don’t trust it. In contrast to 33% of respondents in Europe and the US.
- Likewise, just 13% of Latin Americans are concerned that digital currencies do not have government backing. As many as one in five Europeans and Americans are concerned about this.
On the other hand, close to half (46%) of the respondents in the region state that “cryptocurrencies are a great way to hedge against inflation.” In Africa, a similar number felt the same.
For the majority of people who responded to the survey in Brazil (66%), cryptocurrencies represent the future of money, in contrast to 23% in the United States.
Find more information on the use and adoption of stablecoins in the following articles: