Are You Based In LatAm And Would Like To Learn About Cryptocurrency Adoption In The Region? – Fin Tech

Cryptocurrency adoption in Latin America has been notable for
various reasons, ranging from growing interest in digital
innovation and financial inclusion in some countries to economic
instability and high inflation in others.

Countries with a high volume of international remittances, such
as El Salvador, have used cryptocurrencies as a cost-effective way
to allow remittances to be sent with reduced transaction fees and
the time it takes to complete them, while other countries, such as
Argentina, have identified cryptocurrencies as a means to preserve
wealth against currency depreciation. To learn about how to issue
digital assets in the U.S., or to U.S. persons, you can read Brown
Rudnick’s article on that topic by clicking here.

The regulatory environment for cryptocurrencies varies
significantly across Latin American countries. Below you will find
the guidelines being followed by some countries in the region:

• Argentina does not have specific laws regulating
  cryptocurrencies; however, it recognizes and treats them as goods
  under its tax code, and as a result are subject to income tax.
  Despite the lack of a formal regulatory framework, the country has
  an open stance toward crypto. The government currently considers
  creating a mandatory registry for those operating with digital
  assets in the country.




• Brazil has taken steps to recognize and regulate digital assets
  as a financial asset class. In July 2023 the Central Bank was
  entrusted with overseeing and regulating all digital asset
  providers. Additional laws involving the tokenization of assets and
  launching an official digital currency are being considered in
  Brazil.




• Although Chile doesn’t have laws regulating digital assets,
  the country’s tax authority requires individuals and businesses
  to report their crypto earnings for taxation purposes, and the use
  of cryptocurrencies is generally allowed.




• Colombia does not have laws regulating cryptocurrencies;
  however, its financial authorities have issued warnings about the
  risks associated with crypto trading, and the country seeks to
  create a supportive regulatory framework for cryptocurrencies.




• In September 2021 El Salvador became the first country in the
  world to adopt Bitcoin as legal tender. As a result, Bitcoin is
  used alongside the U.S. dollar (the country’s official
  currency) for all transactions, and businesses are required to
  accept Bitcoin in their day-to-day operations.




• Mexico was one of the first countries in Latin America to
  regulate fintech and cryptocurrencies, with its Fintech Law being
  approved in 2018. This law provides a legal framework for digital
  financial services, including digital assets, and requires crypto
  exchanges to obtain a license from the Mexican financial
  authorities.




• Other countries in the region are in various stages of
  evaluating and implementing cryptocurrency regulations with a view
  to protecting investors and preventing fraud while fostering
  innovation and financial inclusion.

In addition to cryptocurrencies, Distributed Ledger Technology
(DLT) is being adopted across Latin America for its ability to
enhance transparency, improve efficiency and reduce costs. Some
countries in the region have used, or are considering using DLT,
for multiple purposes.

• Financial Sector Remittances and Payments:
  Latin American countries with a high volume of cross-border
  remittances are using DLT to reduce transaction costs and the time
  it takes to complete them. For example, Ripple, a DLT payment
  protocol, has partnered with financial institutions in Brazil,
  Chile, Colombia, Mexico, Peru, Argentina and Uruguay to facilitate
  faster and cheaper international transactions.




• Banking Innovation: Banks across the region
  are using DLT to improve the efficiency and security of internal
  processes, including compliance, Know Your Customer (KYC)
  procedures as well as preventing money laundering and illicit
  financing. Santander and BBVA are examples of banks that have
  launched blockchain-based services in the region.




• Registry and Identity Management: Some Latin
  American countries, such as Colombia, are considering the use of
  DLT to maintain secure and transparent public registries, including
  land registries and identity systems.




• Energy Sector: Countries like Chile use DLT to
  record and transact energy usage data more efficiently. This has
  implications for both large-scale renewable energy projects as well
  as small-scale distributed energy resources.

DLT’s potential for transparent and secure voting systems,
smart contracts as a tool to reduce corruption and increase
efficiency in public procurement processes, and DLT as a means to
improve supply chain transparency and traceability, are being
considered by several countries in the region.

The adoption of cryptocurrencies and other forms of DLT in Latin
America presents a path to achieve financial inclusion, public
sector transparency, and efficient business processes. On the other
hand, regulatory uncertainty and the need for technological
infrastructure present challenges to widespread adoption. To learn
how to invest in, or transact with, cryptocurrencies, you can read
Brown Rudnick’s article on that topic by clicking here.

If you are interested in learning more about the outlook,
trends, challenges and opportunities for the blockchain and
crypto-asset industry please join Brown Rudnick’s Global
Blockchain Conference in New York on April 18, or contact us. Our
team of international lawyers, many of whom are admitted to
practice law in Latin American countries, can assist you as you
look to integrate blockchain as a strategic component in your
business endeavors.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.