Is this a South American Silver lining for Bitcoin, Ethereum?

Saif Naqvi
Source: Pixabay

With cryptocurrencies becoming vastly popular in Latin American countries, the region’s largest digital bank, Nubank, has allowed its users to trade Bitcoin and Ether directly on its platform. Up until now, Nubank users could only invest in crypto through exchange-traded funds available through its investment unit.

The Sao Paolo firm, which holds a notable $1 Billion funding from legendary investor Warren Buffet, launched a crypto trading app to its Brazilian customers on Thursday, offering Bitcoin and Ethereum trading starting at BRL $1.00 (around the US $0.20). The firm also said that it would curate more trading options in the future and provide educational resources for its customers who are interested in trading digital assets.

The deal is made in conjunction with Paxos, which will act as a custody provider and broker. Paxos is a blockchain infrastructure company that is most famous for running a stablecoin on the Ethereum network called Paxos Standard.

Additionally, Nubank’s parent company, Nu Holdings will allocate roughly 1% of its balance sheet cash to Bitcoin. An official statement read “The transaction reinforces the company’s conviction in the current and future potential of Bitcoin in the region’s financial services landscape“.

Brazil becoming a crypto hotspot in Latin America?

Nubank’s offerings in Latin America come amid growing crypto adoption in the region. As per a Chainalysis report, the Latin American continent registered 9% of the world’s crypto transaction activity in 2021. It also ranked third in the highest P2P activity, placed after Africa and Asia.

The boom was initially driven by investors in Brazil, Argentina, and Venezuela, who turned to digital assets in 2016 after economic perils wiped out a chunk of value from local fiat currencies.

Over time, however, a stronger economy allowed Brazil to outshine other countries in the region. Between June 2020 and July 2021, Brasil became the largest crypto market in Latin America, recording $91 billion in transaction volume – over three times bigger than Venezuela.

In 2021, Brazil ranked fifth worldwide in terms of cryptocurrency owners according to research firm Triple-A. A KuCoin report also added that 34 Million Brazilians were currently invested in crypto.