Explainer: Crypto in Latin America

By Chase Harrison and Jon Orbach

Amid cryptocurrency's plunge, we cover its proliferation and regulation in countries like Argentina, Brazil, and El Salvador.

It's been a rough time for crypto, and some countries in Latin America will be feeling the reverberations, given the region's exploding use of the financial product: the region saw use of cryptocurrencies rise by 1,370 percent from 2019 to 2021. Last year, El Salvador became the first in the world to approve a cryptocurrency—in its case, Bitcoin—as official legal tender. But the country has lost almost $40 million with crypto since the September 2021 adoption.

How do cryptocurrencies work? The transactions of these digital assets are verified and recorded by a digital ledger, known as a blockchain. This means their records are publicly available and decentralized from any national central bank, leaving their value subject to the swings of supply and demand. This same technique of using a digital ledger to note a transaction is applied to a range of financial products. This creates digital tokens for physical assets, as in the case of non-fungible tokens (NFTs). While art pieces are the most well-known form of NFTs, the tokenization of assets can also be applied to mining and real estate.

Rapid developments in crypto and digital assets have sparked startups in the region. In 2021, the value of crypto firms in Latin America grew tenfold from $68 million to $650 million. Still, caution abounds over the proliferation of digital assets due to the kind of volatility we’ve seen in recent days, as well as the potential for criminal use. Countries across the region are considering legislation to both promote and safeguard usage of these products.

Still, caution abounds over the proliferation of digital assets due to their volatility and potential for criminal use. Countries across the region are considering legislation to both promote and safeguard usage of these products.

AS/COA Online zooms in on the Latin American countries at the forefront of crypto and its regulation.


The appeal of cryptocurrency in Argentina has largely been due to the instability of the peso, which is experiencing year-over-year inflation of over 55 percent. Argentines once looked to keep their assets in dollars or euros, but crypto flow in Argentina reached $103 billion in 2021. The number of companies paying their employees partly in crypto increased 340 percent over the last year, making Argentina the country with the highest percentage of crypto-paid employees in the world

The country has yet to introduce major cryptocurrency regulations. Amid central bank concerns of vulnerabilities such as cyberattacks linked to rising use, a March 2022 debt deal with the International Monetary Fund (IMF) included a pledge to “discourage the use of cryptocurrencies with a view to preventing money laundering, informality, and disintermediation.”

Using and producing crypto is especially popular in the country’s South. Since electricity is comparatively cheap in Argentina, its arable Patagonia region is a logical host for the energy-heavy task of producing new crypto, a process known as mining. But it’s getting more expensive to mine as crypto’s popularity grows and local governments raise energy taxes. BitPatagonia, one of Argentina’s largest registered crypto mining companies, recently saw its energy bills increase 400 percent.


Latin America’s largest economy is also its largest crypto market, valued at $27.6 billion a year as of April 2022. That volume makes Brazil a hub for crypto-related venture capital. Latin America’s first cryptocurrency unicorn, Mercado Bitcoin, is based in Brazil and its valuation rose above $2 billion last year. According to the 2022 Global State of Crypto Report Brazil has the highest percentage of its population owning crypto in Latin America.

Brazil’s Congress is in the process of developing a regulatory framework. On April 26, the Brazilian Senate passed a bill that governs virtual assets, including Bitcoin and tokens. The bill includes provisions that both define virtual assets and create rules for day-to-day usage. Providers must follow guidelines to safeguard clients’ funds and personal data. It also installs penalties for fraud, which totaled $503 million in 2021. The Senate bill must be merged with the version of the bill in the Chamber of Deputies to become a law. Brazil’s executive branch will be tasked with establishing which government agencies will supervise and propose further regulation on crypto beyond this in initial law.


It’s estimated that more than 100,000 of Cuba’s 11 million citizens use some form of cryptocurrency. That may not sound like a high number, but for a country that only recently introduced mobile internet, it’s a rapid development.

The uptick in crypto usage on the island is related to the U.S. embargo of Cuban economic activity, which blocks citizens’ access to much of the Western world’s financial systems. Virtual currencies are especially popular in Cuba for remittance payments. In November 2020, then-U.S. President Donald Trump banned the use of Western Union, the main company that was facilitating remittances to Cuba. This accelerated the use of sites like BitRemesas to send money to the island.

In April, Cuba’s central bank approved licensing of certain cryptocurrency service providers, after having allowed crypto for personal use in 2021.

Given that cryptocurrency’s anonymity and independence from national or multinational oversight allows circumvention of U.S. restrictions, Venezuelans and Nicaraguans have likewise enlisted cryptocurrency to get around sanctions.

El Salvador

On September 7, 2021, El Salvador became the first country in the world to adopt Bitcoin as official legal tender. President Nayib Bukele, a major crypto advocate, framed his country as a pioneer and launched a state-sponsored crypto wallet, volcano-powered crypto mines, and a utopic Bitcoin city. Bukele hoped citizens and businesses would adopt Bitcoin for everyday transactions and remittance payments. Meanwhile, the IMF and ratings agencies warned against the adoption of Bitcoin due to the instability of its value and its vulnerability to financial crimes.

The reality of El Salvador’s Bitcoin rollout has been anything but ideal. May’s Bitcoin crash added to losses totaling $40 million, surpassing the $38 million El Salvador has to pay to bondholders in June. Crypto adoption by businesses and citizens runs low, and technical barriers to its usage abound. Meanwhile, Bukele has dipped into state coffers to attempt to stabilize the price of Bitcoin, buying over $105 million of the currency. Fitch downgraded El Salvador’s credit rating in October in part due to the Bitcoin move, and concerns exist of a potential default.


No country has been considering more extensive legislation to expand crypto usage than Panama. A bill recently passed in Congress regulates eight cryptocurrencies: Algorand, Bitcoin, Elrond, Ethereum, IOTA, Litecoin, XDC Network, and XRP Stellar. If the bill passes, Panamanians would be able to use any of these currencies in private businesses and for civil matters, such as paying taxes. The bill also contains provisions related to tokenization, which is when a digital counterpart is produced for a physical asset.

The bill passed in the legislature with 38 votes in favor and two abstentions. Still, there are worries that crypto could be used for money laundering. Illegal financial activity is a problem Panama has struggled with in the past, as revealed by the Panama and Pandora Papers. Panamanian lawmakers have assured that crypto will be regulated and overseen by a watchdog and that transactions will be subject to the country’s existing laws on financial transparency, though tax experts have expressed concern that the proposed protections are not rigorous enough to prevent fraud.