Byron Gilliam

This is a segment from The Breakdown newsletter. To read full editions, <a href="https://blockworks.co/brand/the-breakdown" target="_blank" rel="noreferrer noopener">subscribe</a>.



<hr class="wp-block-separator has-alpha-channel-opacity"/>



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">
&#8220;I don&#8217;t see it as a bad thing, this process that they call &#8216;dollarization’&#8230; Thank god it exists.”



— Nicolás Maduro
</blockquote>



The New York Times recently <a href="https://www.nytimes.com/2025/10/26/world/americas/trump-maduro-venezuela-economy.html">reported</a> that Venezuela had become “the first nation to manage a large share of its finances in crypto.”&nbsp;



Not by choice, though.&nbsp;



Roughly half of Venezuela’s revenue comes from oil sales denominated in dollars, which Venezuela, being a sanctioned country, cannot legally send or receive.&nbsp;



Previously, sanctioned governments would sell their oil for dollars through a web of shell companies and offshore banks — or barter their oil in return for goods or infrastructure investments.



Now, they have an easier option: Accept payment in stablecoins. Economist Asdrúbal Oliveros <a href="https://www.youtube.com/watch?v=7vp2v8fKXJg&amp;t=279s">estimates</a> that Tether’s USDT stablecoin is the means of exchange for roughly 80% of Venezuela&#8217;s oil sales. The government once banned transacting in stablecoins, which it viewed as a threat to the bolivar. But the crippling effects of US sanctions left Venezuela little choice but to embrace them.



Delcy Rodriguez, now the interim president of Venezuela, recognized the inevitability of crypto-enabled dollarization last August, when she <a href="https://www.reuters.com/business/energy/with-dollars-scarce-venezuela-currency-exchanges-turn-crypto-2025-09-03/">told</a> businesspeople that &#8220;non-traditional mechanisms of management” were being implemented to better manage the bolivar exchange rate.



“The Venezuelan government has since June allowed the use of more USDT,” Reuters <a href="https://www.reuters.com/business/energy/with-dollars-scarce-venezuela-currency-exchanges-turn-crypto-2025-09-03/">reported</a> shortly thereafter. With state approval, banks now sell the USDT earned from oil sales to local businesses, which use them to pay both domestic and international suppliers. They want stablecoins to circulate at the retail level, too: The head of the country’s National Association of Supermarkets recently <a href="https://forklog.com/en/hyperinflation-drives-venezuelas-shift-to-cryptocurrency/">told</a> state television that grocery stores were working to implement systems to accept payment in USDT.



In other words, the Venezuelan government is encouraging the use of dollars issued by Tether in place of the bolivars it issues itself.



As a result, USDT — or “Binance dollars” as many Venezuelans refer to them — is now <a href="https://cointelegraph.com/news/usdt-binance-dollars-replace-bolivar-in-venezuela">used</a> “for everything from groceries and condo fees to salaries and vendor payments.”



So for a stablecoin enthusiast like myself, it was disappointing to see that neither crypto nor stablecoins were deemed worthy of a mention in the US government’s <a href="https://www.justice.gov/opa/media/1422326/dl">indictment</a> of Nicolás Maduro. 



Instead, prosecutors described illicit money moving the old-fashioned way: planes returning from Mexico “loaded with drug proceeds,” weapons like grenades and grenade launchers being bartered for cocaine, protection services paid for by a portion of the cocaine being transported, and a $2.5 million bribe paid in cash dollars.



Why no mention of crypto?&nbsp;&nbsp;



There are two possibilities: 1) The US government no longer says anything mean about crypto, so the prosecutors knew to judiciously leave it out, or 2) crypto and stablecoins aren’t quite capable of moving money in the size Maduro and his associates needed to move it. The former is the more fun explanation, but the latter is the more likely one.&nbsp;



“The state is struggling to liquidate these [crypto] assets expeditiously,” Asdrúbal Oliveros explains, “because moving crypto funds requires passing various controls that are not being met.”



A <a href="https://www.trmlabs.com/resources/blog/understanding-the-use-of-cryptocurrencies-by-cartels">report</a> from TRM Labs reaches a similar conclusion: “Large-scale trafficking organizations continue to rely heavily on physical cash, trade-based laundering, and state or quasi-state protection for moving core proceeds, with crypto generally playing a secondary or complementary role rather than replacing these mechanisms.”



The national security analysts at Lawfare <a href="https://www.lawfaremedia.org/article/sounding-the-alarm-on-digitally-enabled-sanctions-evasion">agree</a>: “Cryptocurrency-based sanctions evasion still represents only a drop in the bucket compared to traditional illicit financial pathways.”



Others are more upbeat about the utility of stablecoins and crypto in, um, “international payments.”



InSight Crime, for example, <a href="https://insightcrime.org/news/us-court-cases-mexico-organized-crime-digital-money/">reports</a> that Mexican drug cartels are being “sustained” by an “industrial-scale crypto laundering pipeline moving dirty cash through digital networks to Chinese chemical suppliers.”



As they detail, stablecoins have found a niche matchmaking between Chinese money brokers who need dollars to sell to clients evading China&#8217;s capital controls and Mexican cartels who need to buy the chemicals they mix into fentanyl from China.



It’s not the product-market fit we crypto enthusiasts have hoped for, but revealed preferences suggest it’s a powerful one. The DEA, for example, <a href="https://www.dea.gov/sites/default/files/2025-07/2025NationalDrugThreatAssessment.pdf">says</a> its seizures of illicit cash are sharply lower because criminal groups are “prioritizing crypto over traditional cash-based laundering schemes.”



Seizures of “virtual currency” are correspondingly higher: From 2020 to 2024, the DEA has seized $2.5 billion of crypto vs. just $2.2 billion of cash.



That might explain why Maduro and his associates have stuck to more traditional means of payment — traceable crypto and freezable stablecoins aren’t quite ready for the largest money-laundering needs.



Nevertheless, Venezuela’s embrace of digital dollars is breaking new ground: “US adversaries have established an operational proof of concept,” Lawfare concludes, “and emerging financial technologies will likely further solidify it.”



If so, it might further solidify the dollar, too.



Being banned from using dollars didn&#8217;t make Venezuela accept, say, yuan for its oil — it just made the government use digital dollars instead.



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Latin America

Venezuela’s sanctions are stablecoins’ proof of concept

James Cirrone

The International Monetary Fund (IMF) published a short piece Thursday discussing how Latin American and Caribbean countries have adopted cryptocurrencies and CBDCs at a breakneck pace compared to the rest of the world, citing Chainalysis <a href="https://blog.chainalysis.com/reports/2022-global-crypto-adoption-index/">data</a>.&nbsp;



The main <a href="https://www.imf.org/en/News/Articles/2023/06/22/cf-interest-in-cb-digital-currencies-picks-up-in-latam-the-caribbean-while-crypto-use-varies">takeaways</a> from the IMF’s economists?



Well-designed CBDCs would simplify remittances and include more Latin American and Caribbean citizens in the financial system. But crypto as a whole is risky and needs to be regulated. 



The IMF highlighted the fact that CBDCs in Caribbean countries have been plagued by “slow take-up and disruptions in access” which could be solved by “investing in public awareness and robust infrastructure” to promote adoption.&nbsp;



Kenya’s central bank also <a href="https://blockworks.co/news/cbdc-kenya-central-bank">pointed to the challenges other nations have faced</a> while attempting to launch a CBDC program in early June, opting to wait and see.&nbsp;



As for the topic of properly regulating crypto, the IMF singled out Latin America and the Caribbean because it says these regions have “a history of macroeconomic instability, low institutional credibility, substantial capital flows, corruption, and extensive informal sectors.”



Its number one concern appears to be countries elevating crypto to the status of legal tender, something <a href="https://blockworks.co/news/el-salvador-went-all-in-on-bitcoin-will-other-countries-follow">El Salvador did with bitcoin in June 2021</a>. Back in 2022, the IMF <a href="https://blockworks.co/news/imf-asks-el-salvador-to-remove-bitcoins-legal-tender-status">pressed the country to remove bitcoin</a> as a government-sanctioned currency, citing “large risks” associated with consumer protections.



In its Thursday article, the IMF reiterated what it laid out in its February 2023 <a href="https://www.imf.org/en/Publications/Policy-Papers/Issues/2023/02/23/Elements-of-Effective-Policies-for-Crypto-Assets-530092">guidelines</a> for regulating digital assets. It pointed to the fact that crypto is inherently volatile and could shake the foundations of a country’s monetary system if there are big price swings.&nbsp;



This is certainly something that El Salvador — which <a href="https://blockworks.co/news/el-salvadors-reserves-tumble-as-bitcoin-extends-losses">kept adding bitcoin to its coffers</a> after it was made legal tender — confronted throughout 2022, when bitcoin (<a href="https://blockworks.co/price/btc">BTC</a>) shed <a href="https://blockworks.co/news/crypto-stocks-tanked-2022">nearly 60% of its value</a>. It’s important to note that El Salvador subsequently was <a href="https://blockworks.co/news/el-salvador-makes-good-on-800m-debt-despite-bitcoin-bet">still able to pay off an $800 million external bond</a> in early 2023.



Even though the IMF’s view on bringing bitcoin up to parity with government-issued currency is quite well established at this point, it pushed back on countries that have opted to restrict crypto, <a href="https://blockworks.co/news/argentinas-central-bank-bans-crypto-trading-in-traditional-banks">namely Argentina</a> and the Dominican Republic.



“This approach may not be effective in the long run. The region should instead focus on addressing the drivers of crypto demand, including citizens’ unmet digital payment needs,” IMF staff wrote. 



This shouldn’t be mistaken for the IMF supporting crypto. In fact, it said in February that “crypto assets have been more of a disappointment than a revolution for many users.” It also argued that <a href="https://blockworks.co/news/imf-blockchain-good-crypto-disappoints">private blockchains are preferable to public blockchains</a> like Ethereum.



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cbdcs

IMF lukewarm on crypto, notably receptive to CBDCs

Michael Bodley

A new venture capital firm keying in on Latin American crypto blockchain founders is in the works, according to two sources familiar with the matter and marketing materials obtained by Blockworks.&nbsp;



Emerging asset manager Aztlan Capital is co-led by Lightshift Capital alum Armando Aguilar — a prominent, and fairly sizable, digital asset investment manager that predominantly focuses on blockchain venture capital plays. Aguilar is joined, as managing partner, by Jack Saracco, who has founded a couple of blockchain startups in the region.



Saracco, who is based in Argentina, is also an alum of Silicon Valley’s well-known venture incubator, Y Combinator. Aguilar, who declined to comment on behalf of the startup, is based in Puerto Rico. Both, per sources, work on the investment and incubation side of the business.&nbsp;



Aztlan, which plans to hold a first capital close from limited partners by the end of the first quarter, sees abundant opportunity throughout <a href="https://blockworks.co/tag/latin-america">Latin America</a> when it comes to capitalizing on promising startups that have largely lacked attention from institutional US backers, according to both sources. The same is true for other crypto hotbeds, including Southeast Asia and parts of Europe.



The general sentiment is not a new development in digital assets: Investing in startups in south and Central America typically necessitates “boots on the ground” for conducting proper due diligence, one source said. And it’s somewhat rare for buy-side venture players based elsewhere to have an outpost in the region or make routine enough visits to justify writing checks with much regularity.&nbsp;



Mercedes Bidart, the chief executive of digital assets-focused Quipu Bank, said Latin America’s <a href="https://cointelegraph.com/news/the-driving-forces-behind-crypto-adoption-in-latin-america-in-2022" target="_blank" rel="noreferrer noopener">emerging disruptive technologies</a> have <a href="https://blockworks.co/news/survey-more-than-half-of-latin-americans-have-paid-with-crypto">rendered the region a prime place</a> for crypto funds to deploy capital. Bidart, in an interview, was speaking generally, not about Aztlan specifically.&nbsp;



“Latin America is one of the regions where there’s some crypto funds emerging that are not just looking to Latin America, [but also emerging economies],” Bidart told Blockworks.



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">
“[Several funds] invest in Africa, Latin America and not in other countries. And I think that’s because, even if there’s a crisis, crypto is something that helps our countries to gain more stability or to develop other ways of making our economy work.”
</blockquote>



There were 205 million or so — or a whopping 43% — residents of the region lacking bank accounts in 2021, according to CB Insights data that is still one of the more comprehensive such accounts on the market. That’s good for a disproportionate 12% of the world’s unbanked population, per the same study.&nbsp;



Crypto investors with dry powder to spare — a rare segment these days — are paying closer and closer attention to Latin America, which they view as chock-full of alpha waiting to be tapped. The opportunity, in their view, is that a window of opportunity is closing as others catch on to its digital assets growth potential.



A number of studies over the last couple of years have accordingly found that blockchain usage is growing exponentially. And that’s not to mention <a href="https://blockworks.co/news/bitcoin-now-legal-tender-in-special-economic-zone-of-honduras">governments tapping bitcoin as legal tender</a>.&nbsp;



The thesis of Aztlan and others, often goes something like this: The region’s residents — commonly beset with soaring inflation and a lack of the same banking solutions that the likes of US citizens may take for granted — are “increasingly turning to decentralized networks,” a source said, via cell phones and improving internet infrastructure, generally.&nbsp;



And a preponderance of investor capital and partnerships in the area, per sources detailing the new launch’s view, has historically been concentrated on later-stage venture plays. “Those that didn’t have access to infrastructure when it comes to traditional finance services can form the base for crypto,” one source said.&nbsp;



Here’s how Aztlan is playing out, broadly speaking, its own twist on that thesis, per sources:&nbsp;



<ul class="wp-block-list">
<li>Through the lens of “relatively cheap” valuations among Latin American blockchain-based or focused startups, the firm plans to write checks to early-stage (including pre-seed and seed rounds), often employing an incubation model in doing so.&nbsp;</li>



<li>Tap a crypto-native network composed of like-minded venture capitalists, layer-1 developers and similar partners to drum up Latin American dealflow.</li>



<li>Focused on growth sectors within digital assets: infrastructure, Web3, DeFi, the metaverse and custody, as well as L-1s, L-2s and multi-chain solutions.&nbsp;</li>



<li>Fundraise from peer venture firms, plus private equity entities. The pitch is that Aztlan’s strategy provides more liquidity than their own.</li>



<li>Part of that liquidity proposition: the firm, in addition to pure-play venture tickets, is set to invest in liquid cryptoassets via a strategy designed to drive yield — including engaging in tandem trades of two digital assets carried out via stablecoins.&nbsp;</li>
</ul>



Aztlan’s flagship fund has a seven-year time horizon, with investors able to first redeem after three years, then again three years after that. It carries a $1 million investment minimum for institutional limited partners and imposes a 3% management fee, plus a baseline 20% performance cut under a 5% <a href="https://www.investopedia.com/terms/h/hurdlerate.asp#:~:text=A%20hurdle%20rate%20is%20the%20minimum%20rate%20of%20return%20required,rates%20come%20with%20lower%20risk." target="_blank" rel="noreferrer noopener">hurdle rate</a>.&nbsp;



The firm is set to soon reach out to prospective limited partners, sources said, and is in the process of finalizing partnerships with a number of crypto counterparties.



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Latin America Growing Crypto Hotbed, Per Venture Launch’s Strategy

Bessie Liu

<div id="highlights-block_62daca5a9ce0e" class="highlights">
 <ul>
 <li>Bitcoin is the most popular cryptocurrency for Deel customers, making up 47% of all withdrawals</li>
 <li>The survey compiled results from over 100,000 contract workers worldwide</li>
 </ul>
 
</div>



Cryptocurrencies make up 5% of all global payments withdrawn monthly, according to payroll and compliance provider Deel’s <a href="https://www.deel.com/resources/state-of-global-hiring-report-2022" target="_blank" rel="noreferrer noopener">2022 State of Hiring Report</a>.



The survey, which compiled results from over 100,000 contract workers worldwide, found that crypto payments are most attractive to three predominant groups of people: people who use cryptocurrencies as a hedge against local currency instability, those whose outdated local banking systems slow down payroll, and people who are adding cryptocurrencies to their investment portfolio.&nbsp;



Countries in Europe, the Middle East and Africa (EMEA) and Latin America were more likely to fall into the first two scenarios, according to the survey. Latin America makes up 67% of crypto withdrawals, and the EMEA region makes up 24%. 



Another <a href="https://ripple.com/reports/New-Value-Crypto-Trends-in-Business-and-Beyond-2022.pdf" target="_blank" rel="noreferrer noopener">report</a>, conducted by payment protocol <a href="https://cms.blockworks.co/tag/ripple/" target="_blank" rel="noreferrer noopener">Ripple</a>, found that <a href="https://cms.blockworks.co/74-of-latin-americans-prefer-businesses-that-accept-crypto-report/" target="_blank" rel="noreferrer noopener">74% of Latin Americans</a> are more likely to transact with businesses that accept crypto.



“[Latin American] and EMEA are both regions that have historically experienced periods of significant monetary turbulence,” fintech platform Banxa CEO Holger Arians told Blockworks.&nbsp;



“Years-long periods of hyperinflation in countries ranging from Venezuela to Turkey have created lasting and severe consequences for consumers who are forced to watch their spending power go up or down based on the decisions of their central bank,” he said.



For many of these individuals, cryptocurrencies become a clear currency alternative as they are not held by any central authority and provide consumers with the ability to make transactions autonomously, Arians said.&nbsp;



“Their growing utility and long-term promise — along with this increasing adoption, even in developing parts of the world — is a clear indication of the need to build infrastructure that allows consumers to buy, sell, and trade cryptocurrencies,” Arians said.



Offering cryptocurrency payments also benefits many employers, Dan Westgarth, the chief operating officer at Deel, told Blockworks.&nbsp;



“As economic uncertainty makes different coins appealing to various markets and digital banking helps workers get paid amidst political instability,” Westgarth said.



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">&#8220;The option is more attractive than ever for employers.”</blockquote>



Despite bitcoin&#8217;s volatility, <a href="https://cms.blockworks.co/survey-more-investors-say-bitcoin-likely-to-hit-10k-instead-of-30k/" target="_blank" rel="noreferrer noopener">especially as of late</a>, it still remained the most popular crypto payment for Deel customers, making up 47% of currency withdrawals this year, followed by <a href="https://cms.blockworks.co/tag/USDC/" target="_blank" rel="noreferrer noopener">USD Coin</a>, which made up 29% of withdrawals.



According to Arians, bitcoin’s dominance can partly be attributed to its head start. “For many years, bitcoin had first-mover advantage as the only decentralized digital asset before alternatives came along,” he said.



Bitcoin legitimacy has been further strengthened in recent years, as many businesses now endorse it as a means of payment. Big tech companies including Microsoft, PayPal and Visa all accept bitcoin transactions.&nbsp;



“Consumers have used bitcoin as a store of value since its inception, and its current level of ubiquity demonstrates bitcoin’s clear staying power,” Arians said.



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Bitcoin

Employees Want To Be Paid in Crypto, Report Shows

Jack Kubinec

<div id="highlights-block_62d08527198b8" class="highlights">
 <ul>
 <li>50% of Latin American respondents said crypto will have a massive impact on finance and society</li>
 <li>Asian consumers are up to three times more likely to purchase NFTs for emotional benefits</li>
 </ul>
 
</div>



Latin America and the Asia Pacific region are bullish on crypto, according to a <a href="https://ripple.com/reports/New-Value-Crypto-Trends-in-Business-and-Beyond-2022.pdf" target="_blank" rel="noreferrer noopener">new report </a>from Ripple.



The regions agree that digital currency will impact society, the survey found, but the data showed two distinctions in the regions’ support.



Latin Americans are more interested in using crypto for business transactions, while respondents from the Asia Pacific region are most likely to buy virtual items for “emotional benefits.”



The report, released Thursday, found that 74% of Latin Americans are more likely to transact with businesses that accept crypto, compared with just 41% in Europeans. This demand is increasingly being met by businesses in Latin America — in a <a href="https://mastercardcontentexchange.com/news/latin-america/en/newsroom/press-releases/pr-en/2022/june/latin-america-s-crypto-conquest-is-driven-by-consumers-needs/" target="_blank" rel="noreferrer noopener">separate survey</a>, more than half of Latin American respondents <a href="https://cms.blockworks.co/survey-more-than-half-of-latin-americans-have-paid-with-crypto/#:~:text=El%20Salvador%20became%20the%20first,in%20bitcoin%20and%20other%20cryptocurrencies." target="_blank" rel="noreferrer noopener">reported</a> having already paid for goods and services using crypto.



While Latin Americans most strongly favored crypto’s economic benefits, Asian respondents had more interest in emotional benefits from virtual assets. According to the report, Asian consumers were up to three times more likely to purchase an NFT to commemorate an important moment than respondents from other regions.



Hong Kong, Singapore, China and Taiwan lead the world in <a href="https://www.statista.com/statistics/1265980/nft-online-search-interest-country/" target="_blank" rel="noreferrer noopener">overall NFT (non-fungible token) interest</a>, and the Philippines dominated <a href="https://www.statista.com/statistics/1314090/axie-infinity-players-by-country/" target="_blank" rel="noreferrer noopener">Axie Infinity’s user base</a> during its 2021 bull run, according to data from Statista.



Fifty percent of Latin American respondents said crypto will have a “massive impact” on finance and society, compared with 35% in Europe. The study showed the Middle East and North Africa generally falling between bullish Latin America and bearish Europe on crypto sentiment.



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asia pacific

74% of Latin Americans Prefer Businesses That Accept Crypto

Jocelyn Yang

<div id="highlights-block_62b3866c0a6ba" class="highlights">
 <ul>
 <li>While digital payments are being embraced, consumers want to see more flexibility in the use of crypto and traditional payments interchangeably</li>
 <li>Latin Americans are willing to use emerging payments methods such as biometrics, digital currencies and QR code</li>
 </ul>
 
</div>



Latin American consumers are looking for more crypto- and digital payments-related services,  according to a <a href="https://mastercardcontentexchange.com/news/latin-america/en/newsroom/press-releases/pr-en/2022/june/latin-america-s-crypto-conquest-is-driven-by-consumers-needs/" target="_blank" rel="noreferrer noopener">new survey</a> from Mastercard. 



Around 51% of survey respondents in the region have already made a transaction with crypto, and over one-third say they have made a payment for an everyday purchase with a stablecoin, according to the survey of new payment methods released this week. 



Latino consumers are also embracing emerging payment technologies — the survey found about 86% have used at least one emerging payment method in the past year. 



While 77% of Americans and 74% of Europeans prefer traditional payment methods to newer ones, Latin Americans are willing to use emerging methods such as biometrics, digital currencies and QR code — in addition to contactless payments.



“Increasingly Latin Americans are turning to technology to conduct their financial transactions, and this trend is expected to continue to rise, with an overwhelming 95% planning to use a digital payment method in the coming year and 29% acknowledging having used less cash in the past year,&#8221; Walter Pimenta, Mastercard Latin America and the Caribbean&#8217;s executive vice president of products and engineering, said in a statement.  



The findings are based on a survey conducted between March and April 2022 among more than 35,000 people around the world.



More than half of Latin American consumers are optimistic about the performance of digital assets as an investment, according to Mastercard. Two-thirds want greater flexibility to use crypto and traditional payment methods interchangeably in their day-to-day operations — a growing trend for both consumers and businesses. 



“We definitely see consumer interest, but even more so merchant interest in accepting crypto to earn crypto — not necessarily to convert it back to fiat,” Elion Chin, co-creator of peer-to-peer electronic cash system Nimiq, told Blockworks.&nbsp;



Meanwhile, Mastercard found financial institutions&#8217; support of crypto could also boost consumers&#8217; confidence in the space: About 69% of people in Latin America and the Caribbean would feel more confident investing — and 67% would feel comfortable in making or receiving payments in crypto — if “they were issued or backed by a trusted organization.”



Another 82% of respondents acknowledge they would like to have crypto-related functions available directly from their current financial institution.



<a href="https://cms.blockworks.co/el-salvador-buys-550-bitcoins-officially-adopts-the-crypto-as-legal-tender/" target="_blank" rel="noreferrer noopener">El Salvador</a> became the first country to adopt bitcoin as legal tender last year. In other countries like Colombia, Mexico, Costa Rica, Panama, Argentina, Brazil and Chile, more <a href="https://newsinamerica.com/en/business/2021/latin-american-countries-accept-payments-for-houses-in-bitcoin/" target="_blank" rel="noreferrer noopener">real estate companies</a> allow homebuyers to purchase or rent homes in bitcoin and other cryptocurrencies.



In April, Colombian delivery app <a href="https://www.reuters.com/technology/delivery-app-rappi-begins-accepting-cryptocurrency-mexico-2022-04-11/" target="_blank" rel="noreferrer noopener">Rappi</a>, with operations in nine Latin American countries, partnered with Bitpay and Bitso to launch a crypto payment pilot program in Mexico as a first foray into crypto payment adoption.



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Survey: More Than Half of Latin Americans Have Paid With Crypto

Sebastian Sinclair

<div id="highlights-block_624f9b06fec12" class="highlights">
 <ul>
 <li>A special economic zone on the island of Roatan has legalized bitcoin and crypto as a form of money</li>
 <li>Residents and foreign businesses can now also pay taxes and fees as well as issue bonds utilizing the asset class</li>
 </ul>
 
</div>



A Caribbean island off the northern coast of Honduras has officially recognized bitcoin as legal tender.



In the special economic zone located on the island of Roatan, known as Prospera, bitcoin and other cryptos can now be used as a form of payment for individuals and businesses, according to a Thursday <a href="https://prospera.hn/news/press-releases/pr%C3%B3spera-announces-bitcoin-bond-authority-in-the-first-crypto-friendly-jurisdiction-that-is-fully-aml-kyc-compliant" target="_blank" rel="noreferrer noopener">statement</a>.



The move follows the lead of neighboring country El Salvador, which sanctioned bitcoin as legal tender on Sept. 7. El Salvador&#8217;s case, a world-first, has drawn the ire of policymakers in the US and has <a href="https://cms.blockworks.co/us-house-bill-seeks-to-study-el-salvadors-careless-gamble-on-bitcoin/" target="_blank" rel="noreferrer noopener">prompted legislation</a> in the House and Senate, which seek to study the potential risks to the world&#8217;s largest economy.



Prospera, established in 2020, is a privately-managed <a href="https://restofworld.org/2021/honduran-islanders-push-back-libertarian-startup/" target="_blank" rel="noreferrer noopener">settlement</a> in Honduras with its own political system at the judicial, economic and administrative levels. The area is subject to the national government&#8217;s Zone for Employment and Economic Development law which is attempting to boost investment and employment opportunities in largely uninhabited parts of the country.



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">&#8220;This new form of foreign direct investment, combined with Prospera’s services, can help transform impoverished communities into flourishing centers of innovation and prosperity,&#8221; a section of the statement reads. </blockquote>



Municipalities in Honduras are also now allowed to issue bonds in bitcoin to entice foreign investment. All companies and local governments, except those registered within the US, are eligible to apply, the statement reads.



Bonds are tradable debt instruments designed to raise capital in public and private markets. An issuer sells bonds to raise or borrow money for projects on the primary market to investors. Investors receive compensation in the form of fixed-rate coupons which are typically paid out on a quarterly, bi-annually or annual basis.



Both the sale of bonds and the ability to use bitcoin as legal tender will be &#8220;undergirded by world-class anti-money laundering (AML) and know-your-customer (KYC) standards&#8221; to ensure regulatory compliance.



El Salvador&#8217;s President Nayib Bukele <a href="https://cms.blockworks.co/el-salvador-plans-bitcoin-city-funded-by-bitcoin-bonds-and-powered-by-a-volcano/" target="_blank" rel="noreferrer noopener">announced</a> plans in November to build a “Bitcoin City” funded largely by the sale of bitcoin bonds with a coupon rate of 6.5% for the first five years. The amount of $1 billion raised will be split into funding and building the city while the other half will be used to purchase additional bitcoin.



Bukele&#8217;s government had scheduled the bond launch for March, but that has since <a href="https://cms.blockworks.co/el-salvador-pushes-volcano-bond-issue-unveils-state-owned-company-backing/" target="_blank" rel="noreferrer noopener">been postponed</a> due to unfavorable market conditions and the war in Ukraine.



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Bitcoin Now Legal Tender in Special Economic Zone of Honduras

Ben Strack

<div id="highlights-block_61dc74a1aad2d" class="highlights">
 <ul>
 <li>Blockchain.com wants to be one of the biggest financial institutions in Latin America, Chief Business Officer Lane Kasselman said</li>
 <li>A large traditional bank buying Blockchain.com or other large crypto firms is unlikely in the current regulatory environment, the executive argued</li>
 </ul>
 
</div>



Blockchain.com made several notable acquisitions last year and is looking at more such opportunities to expand across several emerging markets.&nbsp;



The <a href="http://blockchain.com" target="_blank" rel="noreferrer noopener">London-based crypto firm</a>, which offers users the ability to buy, sell and trade crypto, has 80 million wallets across 200 countries. Its $300 million investment round in March gave the company a $5.2 billion valuation.



Blockchain.com is focused on building its footprint across regions such as Latin America, Africa and Eastern Europe, Blockchain.com Chief Business Officer Lane Kasselman told Blockworks in an interview.&nbsp;&nbsp;



“We are looking at markets where the customers need crypto, because they’re much more sticky, they don’t react the same way to market volatility and they’re much more interested in a wide variety of products and services,” he explained.



Blockchain.com announced in November its acquisition of SeSocio, an Argentina-based crypto company that also has a presence in Brazil, Chile, Colombia, and Mexico. The addition of SeSocio’s 100 employees brought Blockchain.com’s global headcount to roughly 400.&nbsp;



While the acquisition made Blockchain.com the largest crypto company in the region, Kasselman said, it is now looking to become one of the biggest financial institutions in Latin America.



“Companies that try to parachute in and build their business in countries where they don’t have a significant staff presence often times stumble,” the chief business officer noted.



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">“The real strategy is acquiring somebody who’s already one of the market leaders and working through them to really grow your business.”</blockquote>



Kasselman noted that there are more than 200 million unbanked individuals in Latin America, which he said is often due to unsafe or inaccessible banking systems. Crypto has helped solve that issue and has opened them up to a digital ecosystem.&nbsp;&nbsp;



“Maybe they’re looking for a safe store of value,” Kasselman said. “But they’re also looking for access to Netflix and Spotify, and so their crypto wallet or blockchain wallet becomes an onramp.”



The executive said that Blockchain.com is not currently focused on building its presence in India due to an uncertain regulatory environment in the country.&nbsp;&nbsp;&nbsp;



<h3 class="wp-block-heading">Product outlook for Blockchain.com</h3>



Kasselman noted that the first financial services accounts for some younger investors, such as recent college graduates, is a crypto wallet. He added that the demand for such customers, and others, is often around crypto offerings that mirror more traditional financial services.



The company launched margin trading on its exchange in October to allow users to access margin with up to five times leverage in the bitcoin-to-US dollar and ether-to-USD trading pairs in more than 150 countries. It has also set up a waiting list for debit cards, Kasselman said. 



Different markets have different needs, he added, noting that users in Latin America and Africa are more interested in seamless remittances to move value across borders, as well as less volatile tokens that may provide a safer store of value.



“Blockchain.com is less in the business of predicting what customers want and more in delivering to them exactly what they are asking for,” Kasselman explained.



<h3 class="wp-block-heading">Crypto M&amp;A more broadly</h3>



In addition to its purchase of SeSocio last year, Blockchain.com acquired artificial intelligence startup AiX last May to bolster its institutional business. The company also bought French consumer startup Storm Inc. and Magic Carpet, a machine learning and AI company, in October.&nbsp;



Mergers and acquisitions within the crypto sphere accelerated last year, a trend that <a href="https://cms.blockworks.co/what-could-crypto-ma-look-like-in-2022/" target="_blank" rel="noreferrer noopener">industry watchers have predicted</a> will continue in 2022. M&amp;A deals involving at least one company in the crypto sector totaled 169 in 2021, as of mid-December, compared to 59 deals in the year prior, according to data from M&amp;A advisory firm Architect Partners.&nbsp;



There is no shortage of ideas and teams within the crypto space, Kasselman explained, but many struggle to attract users.



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">“Everyone wants to move fast in crypto, and it’s really hard to move fast unless you have access to a big customer account,” he said. “I think we’ll see a lot of rapid consolidation, especially if the market continues to be a little less hot.”</blockquote>



Bitcoin’s price was at about $41,300 at 1 p.m. ET, according to <a href="https://www.coingecko.com/en" target="_blank" rel="noreferrer noopener">CoinGecko</a>, a decrease of roughly 13% from seven days ago.&nbsp;



SkyBridge Capital Founder Anthony Scaramucci <a href="https://cms.blockworks.co/are-tradfi-and-crypto-set-for-an-ma-explosion/" target="_blank" rel="noreferrer noopener">previously said</a> he expects that a big bank frustrated by the growth of decentralized finance could buy a crypto firm such as Coinbase.&nbsp;



Though some banks have dabbled in crypto by offering clients indirect exposure to the asset class, Kasselman noted that such a transaction, or one involving a large traditional firm buying Blockchain.com, is unlikely in the current regulatory environment.



“I do think we are at the beginning of what is a two-year cycle of a permanent regulatory framework being established across the US and the EU, so it’ll look very different in a couple of years,” Kasselman said. “But right now it’s very hard for those sort of old, stoic, publicly traded companies to think about entering a space…that doesn’t really have clear rules.”

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