Stablecoins gain traction as inflation shields in Latin America with growth in Europe

Stablecoin adoption worldwide continues apace despite the bear market and banking crisis, as some projects (notably the USDC stablecoin) lost their dollar peg, Latin American and European crypto specialists said during a recent Spanish-language CoinDesk Twitter Spaces event.

“We see that stablecoin usage continues to increase continuously since 2019. In fact, today stablecoins represent more than 50% of Belo’s trading volume,” said Manuel Beaudroit, CEO and co-founder of Belo, an Argentina-based crypto exchange operating in 136 countries.

“Our second largest market is El Salvador, where bitcoin is legal tender and many users use our platform to deposit bitcoin in exchange for USDT,” he added. (USDT is the symbol for tether, the largest stablecoin by volume.)

Stablecoins’ market share continued to grow during the bear market, even with the drop in prices of bitcoin, ether and other altcoins, said Agustín Liserra, CEO and co-founder of Num Finance, an Argentina-based company that issues stablecoins linked to developing countries. currencies.

“While it is true that crypto activity has decreased since the bear market, the participation and capitalization of the stablecoin market has grown a lot,” Liserra said.

Adoption varies from region to region. In more developed economies, growth was mainly driven by experienced traders and investors, while in Latin America it came more from ordinary citizens trying to protect their money against inflation.

In Europe, stablecoin adoption has increased since the crypto winter of 2017, when most investors and traders wanted to protect themselves from volatility in the cryptosystem, says Cristina Carrascosa, CEO and co-founder of ATH21, a Spain-based law firm specializing in crypto and blockchain companies.

“The adoption in Europe did not come from fear or from the desire to protect savings, but more from speculation and use [decentralized finance] protocols to take advantage of the returns, Carrascosa said.

In Argentina, the central bank imposed strict restrictions on residents from buying US dollars, hoping to maintain its own federal reserves. It increases the attraction of buying a dollar-denominated stablecoin via the internet. “With a stablecoin, you can access a dollar account without having a dollar account,” Beaudroit said.

“A lot of people wanted to find a way to ‘dollarize’ their savings and found in DAI, USDC and USDT a very friendly way to do that,” Liserra said, referring to stablecoins.

According to Chainalysis’ 2022 “Geography of Currency” report, Latin America’s main crypto adoption drivers are storing value and sending remittances, for which stablecoins are widely used.

Meanwhile, Central, Northern and Western Europe are the largest crypto economies worldwide thanks to DeFi, non-fungible tokens and increasing regulatory clarity, with lower daily usage for stablecoins. “The new regulation affects all actors such as service providers, token and stablecoin issuers who need to apply for licenses to operate and a published white paper,” Carrascosa said of the EU’s recently approved MiCA regulation. “Regulatory requirements are increasing for stablecoin issuers becoming ‘relevant’ to regulators,” she added.

“[European] users are starting to forget about fiat currency as their business flows are earned and spent directly in stablecoins, Carrascosa said.

This is also a trend in Latin America, where more people are now earning their wages directly in “cryptodollars” or stablecoins, depositing them in wallets and using them for daily living, according to Beaudroit.