Latin America can be considered as a late mover in terms of adopting cryptocurrencies. But El Salvador did put Latam on the map in summer 2021 with the legalization of bitcoin as tender.
Between 2017 and 2020, the region accounted for less than 6% of total bitcoin volumes worldwide. However, this situation has started to change in 2021, as more Latam consumers realize the benefits of digital assets. We’ll see what happens as a result of El Salvador’s move. Despite this, there have been limited regulatory developments in other regions in Latin America.
This blog looks at the current state of crypto regulations in Latin America.
Brief History
Until 2021, Mexico was the only major country in the Latin American region to develop clear regulations governing cryptocurrencies. The country introduced a Fintech Law in 2018. This law also includes the trading of cryptocurrencies. The government believes that these laws were necessary to prevent illegal activities such as money laundering. Despite these regulatory advancements, the trade volumes for digital assets in Mexico remain fairly low.
Current Status
As of 2021, Mexico continues to be the only major country in this region, aside from El Salvador, that has clearly defined regulations governing cryptos. Others such as Brazil and Argentina have indicated a positive attitude towards crypto adoption, but clear regulations are yet to be defined. And Panama is another country considering going all in on bitcoin in the near future. Bolivia has decided to ban all types of cryptos and exchanges, hurting industry prospects.
Future Outlook
The future of cryptocurrencies in Latin America looks promising. The year 2021 has witnessed an improvement in trading volumes, and this trend is likely to continue in the near future, particularly driven by El Salvador, most likely. Countries such as Colombia and Panama are likely to lead this charge, as consumers in this nation continue to take an interest in digital assets.
Progress will be uneven, but interesting
Thus, to conclude, the Latin America region still has a long way to define clear crypto regulations. Mexico continues to be the only country that has made significant progress in this regard and El Salvador is making its own steps with regard to legalization. Although crypto volumes in this region are improving, and will continue to improve, regulations for the region as a whole should be prioritized by the authorities to avoid jurisdictional arbitration or other risks.
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