Chainalysis Says Stablecoins Used To Fight Inflation And Devaluation In Latam

Crypto research and blockchain analysis firm, Chainalysis recently said that there was a growing usage of dollar-pegged stablecoins in Latam, particularly in Venezuela and Argentina.

It said that this rise in stablecoin usage was primarily because of the common economic problems that the two nations are dealing with.

Citizens of both Venezuela and Argentina want to protect themselves from inflation and devaluation, with the former seeing 34% of small transactions conducted in stablecoins and 31% for the latter.

Stablecoin usage

Even though stablecoins have been criticized by many, they have become a major part of the crypto market activities in a number of countries.

The latest report released by crypto auditing and blockchain tracking firm Chainalysis showed that the same is true for stablecoins in Latin American countries like Argentina and Venezuela.

The report sheds light on the usage of crypto in Latam and it disclosed that out of all small transactions in Venezuela, 34% had been made in the form of stablecoins. These are transactions that involve movements of less than $1,000.

As far as Argentina is concerned, 31% of the small transactions in the country are in the form of stablecoins.

Economic situation

When Latam countries are compared with others, there is a visible difference in their usage pattern and this is because of their economic peculiarities.

Countries, such as Venezuela and Argentina, are dealing with record levels of devaluation of their respective fiat currencies and inflation as well.

The chief executive of a crypto exchange based in Argentina, Ripio, Sebastian Serrano, said that stablecoins have become popular because they can be used as a digital hedge against the dollar.

He stated that Argentinians were turning towards crypto for safety reasons. This had contributed to the rise in the use of stablecoins because they are considered a good alternative to keeping physical dollars.

Restrictions and circumstances

While exchange controls are no longer applicable in Venezuela, Argentinians are still not permitted to buy dollars.

Furthermore, the exchange rates are different in Argentina for different purposes of the dollar. Two new exchanges named Coldplay and Qatar were recently introduced by the government.

They were named so because of their specific applications. This has only added to the appeal of stablecoins, as citizens can switch to these digital dollars in order to sidestep the restrictions.

However, it should be noted that it is not just Venezuela and Argentinians who are depending on stablecoins for moving value.

One of the continent’s biggest economies, Brazil has also recorded a high level of stablecoin usage. The data from the Brazilian Tax Authority for the month of August reflected the same.

It showed that stablecoins USDC and USDT were in the list of the top five crypto that recorded high volumes.

USDT has been used in around 79,836 operations and moved a value of $1.4 billion, with every transaction worth $18,000.

Due to the popularity of stablecoins, a number of institutions are now offering services that involve the use of stablecoins for earning yields and saving.

Mexican crypto exchange named Bitso launched a similar program recently.