The US dollar has traditionally dominated the global stablecoin market. In Latin America, such dollar-backed digital assets offer an accessible means of hedging against inflation. But increasingly, stablecoins tied to local currencies are also popping up across the region, promising to transform how people move money across borders.
Around the world, the stablecoin boom of recent years has served to reinforce dollar supremacy. In emerging economies, volatile domestic currencies and limited access to savings and investment opportunities have fueled demand for digital dollars.
Stablecoin Usage in Latin America
For example, Tether has expanded aggressively in Argentina, where inflation now stands at over 100%.
In fact, the situation in Argentina is so dire that the presidential candidate Javier Milei has proposed replacing the Argentine peso with the US dollar.
In Venezuela, where the economy has also been dogged by persistent inflation in recent years, consumers across the country have embraced stablecoins as an alternative to the weak domestic currency. According to a report by Chainalysis, in 2022, 34% of all small retail transaction volume in the country consisted of stablecoin trades.
As much as LatAm consumers may turn to dollar-pegged stablecoins to hedge against inflation, in most countries, people still use domestic currencies for their everyday transactions.
The same goes for the continent’s businesses. Although USD often serves as the de facto international trade currency, local currencies continue to drive business on the ground.
Author: James Morales
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