Cryptocurrencies like Bitcoin have not reduced financial risks in emerging economies, but instead, have amplified them, according to a study conducted by central banks and published by The Bank for International Settlements (BIS).
China's historical dominance in the crypto industry persists despite periodic crackdowns, with many crypto companies still earning a significant portion of their revenue from the country and maintaining unofficial channels of liquidity; China's economic uncertainty, including concerns about future crackdowns and a collapsing real estate market, can impact global crypto markets.
Binance Pay has launched in Brazil, partnering with local businesses to accept cryptocurrencies such as SHIB, Bitcoin, and XRP, which has led to increased adoption of these major cryptocurrencies in the country's financial landscape.
Central banks are exploring the issuance of digital currencies to promote financial inclusion and provide easier access to money for unbanked populations, with the potential to reduce dependence on cash, increase local currency adoption, and impact the role of international currencies such as the US dollar.
Brazil's central bank aims to address privacy concerns and increase understanding of blockchain technology before launching its central bank digital currency (CBDC), named DREX, in May 2024.
Bitcoin and crypto could experience significant growth in the next few months, with September expected to be a particularly eventful period, including the potential impact of U.S. bitcoin ETF filings and China declaring crypto as "legal property and protected by law."
El Salvador's experiment with making bitcoin an official currency is difficult to analyze due to its opaque nature and multiple objectives, including financial inclusion, revenue generation, and enhancing the president's reputation. The country has made bitcoin purchases, but the exact amount is unknown, and it has experienced a loss of value in its bitcoin investments. The government's digital wallet, Chivo, faced security issues, and the adoption of bitcoin for transactions and remittances has been limited. Comparatively, Argentina has surpassed El Salvador in terms of bitcoin adoption. The move to bitcoin has garnered attention for El Salvador but has also raised concerns about the lack of a coherent educational process for mass adoption.
Crypto adoption in Turkey has increased from 40% to 52%, driven by high inflation and a decreasing value of the Turkish lira, according to a survey conducted by KuCoin. Bitcoin is the most popular cryptocurrency, and younger women are increasingly investing, with 47% of investors between 18 and 30 being female.
A recent report reveals that people in Turkey are embracing crypto as a long-term investment strategy due to the depreciation of the Turkish Lira and the desire to grow wealth and protect against inflation.
The lack of a fully regulated financial market in the US contradicts global economic interdependence, and as a result, the crypto industry is moving offshore rapidly; however, the US government is likely to eventually establish a clear regulatory framework and invest in blockchain R&D, thus strengthening the industry.
Despite the uncertain regulatory environment and the current state of the crypto markets, asset managers remain interested in digital assets and expect the industry to grow in the next five years, with many estimating a compound annual growth rate of at least 11%.
The adoption of cryptocurrencies in Turkey has risen significantly, posing potential impacts on tokens like Shiba Inu, Dogecoin, and Everlodge as their popularity and interest grow among Turkish users.
Indian crypto platforms may attain the status of authorized dealers, similar to banks, under the regulatory framework being developed by the Indian central bank, RBI, based on joint recommendations from the IMF and FSB, potentially resulting in legal legislation within the next five to six months.
Crypto strategist predicts a significant expansion in the digital assets market similar to 2019, with the possibility of a short squeeze after a Bitcoin market correction.
Hong Kong remains the top jurisdiction for crypto adoption in 2023, while the US falls to third place, and Switzerland takes second place, according to a study.
The use of crypto wallets is predicted to grow by $686 million by 2026, driven by the expansion of wireless networks, online transactions, and evolving regulations, according to market research firm Technavio, with the COVID-19 pandemic and the rise of play-to-earn games contributing to the increase in wallet creation. However, new regulations aimed at regulating cryptocurrencies could potentially slow down adoption.
Despite claims of a bear market for cryptocurrencies, indicators such as website traffic suggest that crypto adoption and demand for crypto services have actually been growing in 2023.
A recent report from Chainalysis suggests that grassroots cryptocurrency adoption is seeing a stronger recovery in lower middle-income nations compared to the rest of the world, indicating a potentially promising future for crypto in these countries.
The main barrier to the adoption of crypto is not the user experience, but rather the lack of products that meet people's needs, indicating a product-market fit problem rather than a UX problem. Building crypto products that address core human needs such as belonging, community, and entertainment is crucial for achieving widespread adoption.
Institutional involvement in the crypto industry provides regulatory certainty and clarity, forcing regulators to address taxation, compliance, and reporting challenges, benefiting the entire industry and legitimizing digital assets.
The International Monetary Fund (IMF) has published a working paper proposing a crypto-risk assessment matrix (C-RAM) to identify potential risks and policy responses in the crypto sector, with examples including the risks associated with El Salvador's adoption of Bitcoin as legal tender.
Approximately 50% of crypto users invest in digital assets to improve their everyday living standards, according to a survey by Bitget, with respondents in South Korea, Canada, and Turkey having the highest priority on this goal.
Web3 technologies, including cryptocurrencies like Bitcoin and USDC, are driving financial inclusion in Africa and empowering individuals by bridging gaps in traditional financial systems, as exemplified by Nigeria's Korapay, the largest cross-border remitter in the country, which processes billions in payments through crypto assets. The popularity of stablecoins like USDC in Africa can be attributed to economic disparities, currency instability, and the desire for financial independence, allowing individuals to accumulate wealth in stable digital assets and work for internet-native organizations worldwide. However, the dollarization of these economies also poses risks to fragile governments, and the consequences of regulatory actions regarding stablecoins remain uncertain. Nevertheless, the adoption of digital assets in Africa showcases human resilience and innovation in the Global South, paving the way for a more inclusive and equitable financial future.
Crypto finance, despite its claims of decentralization and independence from state-backed money, is heavily dependent on centralized platforms and is a vehicle for financial speculation rather than a means of escape from state control, according to Ramaa Vasudevan, professor of economics. Moreover, the growth of crypto will compound the volatility of global capitalism and its environmental impact is significant due to the energy-intensive process of mining and validating crypto tokens. The rise of stablecoins has been crucial in the development of crypto finance, but it is ultimately dependent on conventional currencies for stability. The recent crash of crypto finance has revealed its fragility and the absence of central banks as lenders of last resort exacerbates financial instability. Crypto finance fits into the wider picture of financialization and asset-price bubbles, promoting inequality and concentration of wealth. Ultimately, the politics of money and its relationship with the state are contested in the crypto sphere, as it neither depoliticizes nor democratizes money. Finally, crypto finance has become a battleground in the economic competition between the United States and China, with both countries striving for dominance in the digital currency space.
El Salvador's security policies, economic recovery, bond strength, and tourism boom are attributed to the country's adoption of bitcoin as legal tender, according to Vice-president Felix Ulloa, who also highlights the interest from Wall Street investors and collaborations with major companies like Google.
The crypto industry in Asia is flourishing as it attracts projects and investors looking to avoid regulatory uncertainties in the US, leveraging favorable policies and growing crypto adoption in the region.
