The 40% growth in cryptocurrency adoption by Latin American countries over the past year was largely driven by remittances.

Citizens of these countries received $562 billion in crypto payments between July 2021 and June 2022, according to Chainalysis data. According to its latest report, remittances were a determining factor in this growth. versus fugitive inflationmany also used stablecoins to preserve value as local currencies plummeted.

Remittance Payments Boost International Crypto Flows

Remittance payments have been a common feature in Latin American economies for some time. Workers earning higher wages abroad often send a significant portion home to support their family there. The formal market for remittances amounted to approximately $150 billion this year.

While the proliferation of crypto-based remittances has not occurred uniformly across the region, it has been rapid where it has been. For example, in El Salvador, where the government introduced Bitcoin as legal tender last year. In order to facilitate the use of cryptocurrency, the government encouraged the use of its official Chivo purse. Between January and May of this year, the system processed $52 million in Bitcoin remittances.

Meanwhile, Mexico has seen billions in crypto remittance payments over the past year. Starting in June of this year, Bitso, the largest cryptocurrency exchange in Mexico, facilitated $1 billion in payments from the United States. This represents about 4% of the $51.6 billion remittance market in the country, and an increase of 400% year over year.

Inflation hedge against Latin American currencies

similar to economies in the middle east Battling inflation, Latin Americans have been using cryptocurrencies to store value. The currencies of Argentina and Venezuela in particular have been in crisis for the past year. In the former, year-on-year inflation reaches 79%, while in the latter it reaches 114%. This means that the value of these coins has roughly halved since last year.

Consequently, citizens of these countries flock to stablecoins to retain some of the value behind their money. US dollar pegged stablecoins including USDT, USDC and USDD they have proven especially popular in Argentina, due to the current strength of its base currency. As a digital currency, stablecoins are also easy for anyone to use. Recent data from Mastercard showed that a third of consumers in Latin America make purchases with stablecoins on a daily basis.

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