Cryptocurrencies become a hedge against instability in Latin America

You’re reading The Brazilian Report’s weekly tech roundup, a digest of the most important news on technology and innovation in Brazil. This week’s topics: the boom of cryptocurrencies, new regulations for crowdfunding investments in Brazil, and N26’s planned arrival in the country.

Latin America looks to cryptocurrencies to ward against instability

The news that the price of bitcoin topped the USD 40,000 mark has rekindled investors’ interest in cryptocurrencies around the world. And in Latin America, investors’ drive is not only motivated by potentially lofty profits. A recent report by public relations agency Sherlock Communications shows that Latin American investors see crypto as a hedge against inflation and currency devaluation.

Reasons to invest. Sherlock conducted a survey with 2,200 people in Argentina, Brazil, Colombia, and Mexico. Three-quarters said the coronavirus crisis piqued their interest in cryptocurrency.

• In all countries surveyed, the main reason for this is to provide protection for assets against instability. That is particularly the case in Argentina, where annual inflation rose to 30 percent by November and the Argentine Peso crashed 42 percent in 2020.
• Over half of Brazilians see cryptocurrencies as a way to diversify their portfolio, while one-third of Colombians regard them as a better tool for sending money overseas.

Dipping one’s feet. While over 85 percent of surveyed investors say they are familiar with bitcoin and other cryptocurrencies, they still invest very little in it. Most had no more than USD 100 worth of cryptocurrencies.

• In Brazil, 37 percent say they did not make transactions with cryptocurrencies in 2020. Still, data from the Federal Revenue Service obtained by The Brazilian Report shows that cryptocurrency transactions in Brazil amounted to USD 101.5 billion between August 2019 and July 2020. The country reportedly makes up for only 1 percent of the global market.
• Most Latin Americans believe their countries’ crypto scene is lagging in terms of technology, with Colombia being the most optimistic about future progress.
• The survey also suggests that having more reliable, easy-to-use platforms to invest in such assets could make...