This week has been a buzz with developments in the crypto sector in Latin America, with both Binance and Circle announcing key initiatives. While Binance is introducing a ‘Send Cash’ feature that enables crypto-to-bank transfers for residents of nine Latin American countries, Circle is partnering with Mercado Pago in Chile to offer its USD Coin.
As per Binance’s announcement, the ‘Send Cash’ feature is designed to help residents of countries like Mexico, Argentina, Colombia, among others, to transfer cryptocurrencies into their conventional bank accounts. According to Binance, the feature will operate via Binance Pay, the platform’s proprietary payment program. Binance touts its new service as a more cost-effective and efficient method for transferring money.
This is another step forward for Binance, which renews its commitment to the crypto industry in Latin America
Regional VP for Latin America at Binance, Min Lin, emphasized, “This is another step forward for Binance, which renews its commitment to the crypto industry in Latin America, to the expansion of the benefits it offers in terms of financial inclusion, and to developing new ways of using crypto in everyday life.” Lin added that both individuals and companies in the region are eager for innovations that can tackle specific issues they confront.
Instant. Low fees. https://t.co/sqBnIAqABQ
— CZ 🔶 Binance (@cz_binance) August 29, 2023
The countries where this feature will be introduced include Costa Rica, Argentina, Paraguay, Colombia, Honduras, Guatemala, Panama, Dominican Republic, and Mexico. The move aims to help the sizable portion of the population that doesn’t have traditional banking services; the World Bank’s Global Fintex 2021 indicated that 42% of Latin American adults are in this category.
Inflation is another massive challenge for many Latin American countries, further making the case for cryptocurrency adoption. For instance, Venezuela and Argentina have the highest and fourth-highest inflation rates worldwide, at 398% and 113%, respectively, according to Trading Economics. Other countries like Colombia, Haiti, and Cuba also experience double-digit inflation rates. Crypto is increasingly being used for remittances as well, especially in the context of ongoing inflation in these countries.
However, it’s not all rosy for Binance. The company had to halt its crypto debit card services in the region on August 24, indicating some hurdles yet to be overcome.
USDC is Coming to Chile
On the other side, Circle is bringing its USD Coin to Mercado Pago, the largest fintech company in Latin America, and specifically in Chile. Circle CEO Jeremy Allaire announced the initiative, referring to Mercado Libre as “the Amazon of LATAM with 200M users.” USD Coin is a stablecoin that is anchored to the U.S. dollar, and its addition to Mercado Pago is viewed as an expansion of cryptocurrency utility and a boost for the U.S. dollar in Chile.
1/ The largest fintech in LATAM, @mercadopago, part of Mercado Libre, the Amazon of LATAM with 200M users, is rolling out support for USDC in key markets, starting with Chile. Momentum for USDC and digital dollars building around the world! https://t.co/3mNQxXvNUC
— Jeremy Allaire (@jerallaire) August 29, 2023
Before this, Circle had been strategizing to prepare for the potential entry of traditional financial and Big Tech corporations into the crypto and stablecoin markets by accumulating resources.
Travel experts and consumer sites have noted that, unlike other Latin American countries, the U.S. dollar is not widely accepted in Chile. Circle’s partnership aims to change that landscape and potentially introduce more people to the benefits of using stablecoins and cryptocurrencies.
Both these significant moves underscore the growing importance and adoption of cryptocurrencies in Latin America, against the backdrop of financial exclusion and high inflation rates.