RIO DE JANEIRO, BRAZIL – For many years now, Venezuela has been among the countries with the highest adoption of cryptocurrencies in the world.
Despite the difficult economic situation it has been experiencing for almost a decade (or precisely because of it), the population of that Latin American country has become an investor in crypto.
A report published in June by the United Nations Conference on Trade and Development (UNCTAD), the UN body dedicated to world trade and investment, shows that Venezuela continues to be among the first in crypto adoption.
Three other South American countries are in the world’s top 20. These are, in addition to Venezuela, Colombia, Brazil, and Peru.
Here you can see the UNCTAD graph that shows the countries that have the most cryptocurrency owners worldwide, as a percentage of the national population:
It is worth noting that the three countries that occupy the ranking are in severe crisis: Ukraine, whose economy has been affected in a significant way due to the Russian military operation; Russia, also affected by international sanctions; and Venezuela, whose severe economic crisis has been going on for almost a decade, added to a political crisis and institutional breakdown, with massive inflation, loss of adoption of the local currency (the bolivar) and dollarization of the economy.
The report, issued last month, states that the cryptocurrency ecosystem has grown by 2,300% between September 2019 and June 2021 and that the Covid-19 pandemic was one of the main catalysts for this growth.
10% OF VENEZUELANS WITH CRYPTO
According to the report, 10.3% of citizens in Venezuela (i.e., 1 in 10) own cryptocurrencies. It also indicates that 6.1% of Colombians own crypto, 4.9% of Brazilians, and 3.7% of Peruvians.
The report also shows that developing countries have been more receptive to cryptocurrencies (mainly associated with societies in crisis). Of the top 20 countries with the highest adoption, 15 are qualified as developing countries under UN standards.
UN RECOMMENDATIONS
The paper notes that the Covid-19 pandemic was essential in adopting cryptocurrencies. It states:
“The use of cryptocurrencies was an attractive channel, in terms of price and speed, through which to send remittances. During the pandemic, the already high costs of traditional remittance services increased further during blockchain periods due to related disruptions.”
The second reason driving this growth is that citizens in these countries view cryptocurrencies as useful to hedge their savings.
The report says, “cryptocurrencies, as part of financial investments and speculation, are mainly held by middle-income individuals. Cryptocurrencies have been perceived as a way to protect household savings. Regardless of the motive for using cryptocurrencies, cryptocurrency exchanges play a crucial role in enabling their wider implementation.”
However, the agency criticizes adoption, expressing, “These private digital currencies have become particularly prevalent in developing countries, implying considerable risks and costs concerning national monetary sovereignty, policy space, and macroeconomic stability.”
On this, the agency gives countries some suggestions:
“Three policy recommendations that developing countries may consider in this regard are to ensure financial regulation; restrict cryptocurrency-related advertisements; and provide a secure, reliable, and affordable public payment system adapted to the digital age, such as a central bank digital currency or a fast retail payment system.”
With information from DiarioBitcoin