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The crisis in Latin America opens up new opportunities for cryptocurrency exchange houses

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Key facts:
  • Resistance to restrictive laws and the urgency of a social change favor the rise of Bitcoin.

  • Regulations, on the other hand, seem to be a controversial point for exchange houses.

"Where there is a crisis, there is an opportunity," said Manuel Beaudroit, marketing manager of the Argentine exchange house Bitex, referring to the current situation of the cryptocurrency market in Latin America. For Beaudroit, the current socio-political landscape of the continent can enhance the adoption of Bitcoin, especially in countries such as Argentina and Venezuela. This position is shared by four other representatives of the most emblematic Latin American exchange houses, who participated in the seventh edition of LaBITconf, in the panel How exchange houses surf the Latin American crisis.

Beaudroit he pointed that the exchange rate imposed by the Argentine government this year accelerated the sale of bitcoins in that nation. «As you can not buy dollars freely, they buy bitcoin again to save value. It is even used for international payments, ”he said. Argentines would be looking for, according to Beaudroit, new alternatives for payment and value protection in order to keep their businesses afloat, as well as their daily economy.

Beaudroit presupposes that the civil disobedience of Argentines, as an act of survival, has benefited the cryptocurrency market. Citizens are willing to violate the dollar purchase restriction laws in order to keep their savings safe, so they turn to new technologies such as Bitcoin. This phenomenon is not exclusive to Argentina, a similar case occurs in Venezuela due to the devaluation of the bolivar.

Guillermo Torrealba, CEO of the Chilean exchange house Buda, believes that although the crisis in Chile is not economic, it has also benefited Bitcoin. Torrealba points out that the loss of confidence in Chilean institutions has opened an opportunity for those who wish to escape from the pre-established system. Thus, although citizens do not need an urgent monetary alternative to survive, there has been an increase in the volume of bitcoin marketing in Chile.

Torrealba calls it a "collective awakening" that not only affects Chile, but all of Latin America. For example, Edelman Trust Barometer he pointed At the beginning of this decade, people worldwide trusted less and less in institutions. This change of mentality could be benefiting Bitcoin, as this technology is born from a questioning of the authorities and centralized power. Buddha's CEO concluded that he feels optimistic about the future and believes that the continental crisis will open more opportunities for exchange houses in the region.

Regulation: ally or enemy?

Although the socio-economic situation in Mexico and Brazil is tense, it can be said that today there is no vivid crisis in these territories. Because of this, Pablo González, co-founder of the Mexican exchange house Bitxo, and Rocelo Lopes, CEO of the Brazilian Stratum platform, are focused today on how national regulations affect them.

Some consider regulations a bad idea, others believe they are undoubtedly necessary. Nevertheless, Most panelists, related to the exchange house ecosystem, concluded that the regulation has become an Achilles heel. González pointed out that the FinTech Law in Mexico is too restrictive, so it is difficult to enter the Mexican exchange market.

Andrés Fleischer, of the Argentine exchange house Ripio, also stressed that regulations instead of strengthening the market, disadvantage him. "Small businesses do not survive these measures," he said; adding that not only the big competitors can benefit, while the competition and variety disappears. In that sense, Pablo González confirmed that the Gibraltar regulations helped Bitxo improve its relations with banks in Europe.

However, in many cases the regulations only add major complications for users and exchange houses. Rocelo Lopes says that because the Brazilian government does not understand how cryptocurrencies work, they end up devising laws that limit their operation. For example, the Brazilian Securities Commission recently suspended the sale of a token created by Stratum.

Guillermo Torrealba, on the other hand, considers that, although laws can bring problems, good regulation is necessary. The proliferation of scams in Latin America, but especially in countries with zero regulations such as Peru and Colombia, expose users to the loss of money. "We hate regulation because we live in countries where lousy is regulated," he said. Because of that, Torrealba concludes that regulation has to be promoted where the consumer has protection without affecting small businesses.

A twinned ecosystem

Given the limiting regulations and the lack of interest of banks in cryptocurrency companies, the players in this market ensure that the union is the priority. Unlike other ecosystems, Andrés Fleischer de Ripio believes that in the world of cryptocurrencies companies are united "for an ideal of common good".

Fleischer points out that friendship between Latin American entrepreneurs is a common practice, since it is a huge market where diversity is appreciated. Likewise, the COO believes that in the union there is the key to be able to overcome adverse situations and even to get good banking partners.

Another element that limits the growth of exchange houses in Latin America are banks. Some exchange house owners have considered creating their own bank in order to facilitate the deposit and withdrawal of fiat coins between exchange houses. In this way, their operations would depend on the decision of national or international banks.

However, some entrepreneurs seem to be more interested in continuing to create financial services, a parallel reality with cryptocurrencies that has just divorced the banking industry. The panel closed with the promise, that in the future will be the fruits of these ideas and projects that are being developed today.



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