The cryptocurrency and payments company Ripple, has issued an article citing opportunities for cryptocurrency companies as well as barriers to the process in the Latin American countries.
Even though the region is facing some obstacles due to its economic traits and dominance of centralized banks, Ripple believes the region is a hotspot for crypto companies, especially when it comes to bringing crypto services to the masses.
Ripple, the banking payments, remittances, and cryptocurrency company, in a recent article, has expressed its belief that Latam could, in the future, be a region where crypto companies could record the highest success rate.
According to the article, Ripple has examined the region’s current payment system and possible integration that crypto may find in the region; Ripple believes that crypto companies might find these chances when banks start integrating digital currencies services into their platforms.
The company stated that: “There is a lucrative opening for traditional banks, fintech, and governments to increase adoption of crypto-forward technology to address this underbanked and fragmented market.”
This, however, is pointing to the idea of cryptocurrency companies partnering with banks and fintech companies to take an active role amongst the main rails to transact and make payments in the countries of this region.
Obstacles to the Process
For every force, there is always an equal and opposite reaction; this integration process, however, does not come without barriers.
Traditional payment networks are managed by the banks of the region, and banking inclusion is very high in some of the region’s largest countries. Brazil and Chile, for instance, have 88% and 82% of their population banked, respectively. However, the opportunities lie in the ability to offer services with lower fees than their existing system, which could make people move from the traditional payment systems to digital transactions.
Different debates regarding regulations in the region saw cryptocurrency companies included. However, this possible inclusion of crypto companies will be very important for the future of crypto in the region. In the Ripple article, Ripple thinks that this process will be positive, stating that:
“Smart and progressive regulation will beget further successful regulation — leading to increased innovation and progress around crypto across Latin America.”
With this, it is evident that there is a regulatory awakening in the continent; with El Salvador and Brazil leading the race, Brazilian legislators are set to present a unified regulation for cryptocurrency assets before the Congress, which could be approved in a few months, El Salvador last year has declared Bitcoin a legal tender with approval of its Bitcoin Law. Furthermore, this scenario does not exclude a progressive detachment from the dollar and US markets, which currently have a significant influence in the region.
Ripple, however concluded that: “The possibility of insulation from other regions’ financial swings underscores a major reason why achieving interoperability across Latin America and avoiding the de-risking trend in the US is so critical for LATAM economies.”
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