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Fintech firms in Latin America are rapidly embracing digital finance solutions, fueled by an increase in crypto adoption among citizens.
In a recent report, USDC issuer Circle revealed that citizens of LatAm countries received $562 billion in digital currency value between 2021 and 2022. Circle stressed that stablecoins have played a major role, working their way into the purchasing power of LatAm consumers.
The global settlement volume of stablecoins reached $7 trillion last year, half the $14 trillion settled by Visa and Mastercard. As a result, there is a pivot towards stablecoins in Latin America, where they are used for everyday purchases.
“Latin America’s well-established market demand, policy support and widespread dollar usage make the region a natural fit for broader stablecoin adoption.”
Source: Circle
Further, per a Mastercard survey published last year, over half of Latin American consumers have already engaged in crypto transactions.
What Drives the Adoption in LatAm?
The widespread crypto adoption is driven by a large underbanked population in LatAm, with limited access to traditional financial services. Also, lower income inequality is responsible for higher LatAm fintech adoption.
“LatAm is taking on a leading role when it comes to digital currency and financial technology more broadly,” Circle wrote. “This is partly due to necessity, since many populations within the region lack access to analog financial services.”
The report added that Latin America’s strong developer base is also a major factor for its rapid embrace of digital currencies.
Circle draws striking parallels between digital assets evolution and the internet that took shape in the 1990s.
“Digital currency and blockchains are quickly moving beyond the dial-up phase, with the user experience improving while the blockchains themselves are getting faster, cleaner and more resilient.”
The US-based blockchain firm predicts that “trillions of dollars in value will eventually migrate to blockchain-based financial services” in the coming years.
“More traditional financial instruments will migrate on chain, exposing them to significant populations that have traditionally lacked access,” it added.
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