Outside Source
Stablecoins have come under scrutiny in the developed markets following UST’s crash earlier this year, but Latin America could become the new growth base for the stablecoin market.
Hubble Protocol’s co-founder Marius Ciubotariu believes Latin America could provide the new growth base for stablecoins. His comments come as stablecoins face increased scrutiny in the developed markets since the start of the year.
Marius Ciubotariu told Coinjournal that;
“Cryptocurrency in Latin America is alive and well. In fact, the region is poised to be the next biggest growth market for stablecoins – bigger than anything we have seen in the US to date. Latin America is currently facing unprecedented economic challenges, with record-breaking inflation posing an existential threat to many of its citizens. Many are reliant on remittances from abroad; however, these transfers attract high fees, particularly for the huge swathes of the region’s populace that remain unbanked. This situation is creating a perfect storm for decentralized stablecoins, which directly address many of these challenges and are being rapidly adopted in Latin America.”
Ciubotariu explained that the rising inflation in Latin America is one of the reasons why stablecoins would thrive in the region.
He pointed out that the Inflation Rate in Argentina increased to 78.5% in August from 71% in July of 2022, and it is expected to worsen come 2023. Venezuela is currently experiencing hyperinflation, and although it seems to be easing, it is significantly elevated compared to its Latin American neighbors.
With stablecoins, the rising inflation level in Latin America could be curbed, Ciubotariu added.
Another reason for the expected growth of stablecoins in Latin America is the lack of access to financial services.
Ciubotariu explained that Mexico is the third largest remittance recipient in the world, and according to IDB, in 2021, Latin America and the Caribbean received $127.6 billion in remittances.
However, The World Bank Data showed that over 60% of Latin American adults are unable to access checks, credit, or other forms of banking tools. Hence, most people in the region have to deal with sky-high exchange rates and fees for OTC transfers.
Stablecoins solve this issue as the cost of transactions are very low. Ciubotariu said the above-mentioned factors mean that Latin America is now leading the adoption of cryptocurrency globally, with crypto providing a light at the end of the tunnel for citizens across the region.
Unlike in developed economies, stablecoins are viewed as a safe, inflation-proof solution to local currencies in Latin America. He concluded that;
“While Western consumers remain skeptical of cryptocurrency, necessity means that consumers in Latin America are increasingly finding everyday applications for this relatively new asset class. As such, stablecoins look set to boom in Latin America in a way we haven’t seen before – neither in stablecoins nor cryptocurrency generally. It’s an exciting development we at Hubble Protocol are excited about and are increasingly exploring on the ground here in the region.”
Some experts in the developed economies, including Perianne Boring, founder and CEO of the Chamber of Digital Commerce, believe that stablecoins don’t pose financial stability risk.
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