The following article is an opinion piece by João Victor Alves Souza Boletim Bitcoin.
Stablecoins have increased enormously in popularity in recent years, together with the broader market for digital assets. The Stablecoin market in particular gains fame in emerging economies, such as Brazil and other Latin American countries.
Remarkable, Dollar necklaceUSD Coin and other Stablecoins promote a kind of silent dollarization in the Brazilian economy. Statistics about the adoption of Stablecoins in the region show a growing interest in tokens supported by Dollars.
Brazil and Hyperinflation
Brazil and Latin American countries in general have a long history of inflation crises. The country knew decades of high inflation and hyperinflation in the 20th century.
This made investments in real estate, gold and dollars popular over time. The economic situation of Brazil was stabilized by the Real Plan, which was implemented in 1994.
However, the risk of hyperinflation has plagued the Brazilian economy. In just one year, the Brazilian Real fell by around 25% compared to the US dollar.
Dollarization via stablecoins
Stablecoins are really one of the most useful instruments on the entire cryptocurrency market. No wonder that the market value of the sector is now more than $ 200 billion.
It is striking that Brazilians and Latin Americans are generally increasingly looking for stable dollar figures.
Data from the Brazilian federal tax authorities show that in July 2024 4.1 million individuals registered transactions with digital assets. It is striking that the dollar tether transactions represent more than 90% of the amount traded by Brazilians.
A triple-a study of May 2024 showed that 26 million Brazilians invested in the digital assets market. This figure represents around 7.8% of the population of the country.
Moreover, strange cases of adoption have emerged in recent years. Various reports indicate that Dollar Stablecoins have been used for trade in 25 De Março, the largest shopping center in Brazil, located in São Paulo.
This great acceptance of the Brazilian market was even noted by Polo Ardoino, CEO of Tether Limited:
“In the first quarter of 2023, USDT dominated cryptocurrency and stablecoin transactions in Brazil, with a total of 37.1 billion Reais, which represents 81% of the total value that was traded in cryptocurrencies and Stablecoins in the first quarter.”
“Although Brazilian banks are still familiar as safe ports for money, there is a growing market for residents who use USDT for fast and easy access to the financial system. That is why partnerships such as SmartPay with Tether, which make USDT access possible at more than 24,000 ATMs throughout the country, are so important for residents who prefer to use tether tokens via PIX to pay for their accounts or goods and services.
The adoption of stables in the emerging markets in particular is very positive for the American economy. This is because dollar stables are mainly supported by American government bonds. In this way they help to realize the American federal national debt.
At the same time, the adoption of stables contributes to the deterioration of the national currency. This is because many Brazilians continue to exchange the local currency for digital dollars, which tends to influence the wider Forexmarkt.
This article was originally published by the Brazilian Cryptocurrency Coinext.
