The Cambridge Centre for Alternative Finance (CCAF) has released a comprehensive report on the crypto ecosystem in Latin America and the Caribbean (LAC), providing valuable insights into the growth and regulatory landscape of digital assets in the region. Published in collaboration with the Inter-American Development Bank (IDB), the report presents findings from targeted surveys and interviews with industry players.
CCAF, renowned for its evidence-based research in the fintech sector, conducted online surveys from June to August 2022. A total of 52 responses were received from companies actively involved in cryptoasset-related activities across LAC. Additionally, interviews were conducted with some of the largest cryptoasset firms in the region to gain a deeper understanding of the industry.
The report draws upon various sources, including the Cambridge Fintech Ecosystem Atlas and the Cambridge Bitcoin Electricity Consumption Index, along with industry reports and data from central banks. Topics covered in the report include central bank digital currencies (CBDCs), decentralized finance (DeFi), digital asset mining, payments, and regulation.
Bryan Zhang, co-founder and Executive Director of CCAF, highlights the need for a better understanding of the rapidly evolving crypto industry. He emphasizes the importance of cooperation and evidence-based policymaking to ensure sustainable development and robust consumer protection. Zhang also notes a more positive attitude from regulators towards cryptoassets, driven by the perception that they can contribute to a more inclusive financial sector.
The report reveals that both private and public sector institutions recognize the importance of increased cooperation, regulatory clarity, and certainty. Private sector respondents identified working with corporate clients and expanding decentralized finance services as promising growth opportunities. Crypto firms are transforming into full-scale fintech providers, offering a wide range of services to investors, consumers, and businesses.
Key takeaways from the report include:
– Cryptoasset companies in LAC are diversifying their services and becoming comprehensive fintech providers.
– Digital assets have witnessed significant expansion, with companies expanding their operations beyond their home countries. Mexico, Chile, and Colombia are the most frequently served countries.
– Regulators in LAC are increasingly favorable towards cryptoassets, with 36% expressing a more positive outlook compared to five years ago.
– Regulators acknowledge the value of cryptoassets in promoting a more inclusive financial services landscape, with only 7% considering them not useful.
– Collaboration between industry players and regulators is crucial to foster a secure and innovative cryptoasset ecosystem in LAC.
– Clear regulatory guidelines and frameworks are essential requirements for both public and private sector respondents.
– The future of the LAC cryptoasset industry involves expanding into corporate services and broadening decentralized finance offerings.
The report also highlights the contrasting regulatory landscape in the US, where the Securities and Exchange Commission has adopted a hostile stance towards the industry. In contrast, the US Congress has shown more support, although legislative advancements are expected to be challenging.
As always, the CCAF report provides valuable insights for both proponents and critics of digital assets. The full report can be downloaded here.
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