Cryptoasset ecosystem growing and developing in Latin America and the Caribbean

By Cambridge Centre for Alternative Finance (CCAF)

Key findings

1. Rapid industry growth

The study, which surveyed private sector companies and public institutions in the region between June and August 2022, reveals that the industry experienced significant growth from 2020 to mid-2022, with a median cryptoasset company doubling its number of users in 2020 and experiencing a median growth rate close to 50% in both 2021 and the first half of 2022. This positive trend was further illustrated by growth in active and identity-verified users’ engagement with company services in the same period.

2. New cryptoasset employment opportunities

This user growth has been linked to an increase in cryptoasset company employment, as new employment opportunities in the sector have emerged across the Latin America and the Caribbean (LAC) region in the past few years.

3. Cryptoasset companies as alternative full-service fintech providers

Looking at the industry structure development, the findings show that cyptoasset companies are evolving into alternative full-service fintech providers, serving as a one-stop-shop for investors, consumers and businesses. This was illustrated by all surveyed entities providing more than one service and, on average, offering around four services – including buying and selling, sending, receiving and storing, as well as related educational and consulting services.

4. A more positive attitude towards cryptoassets

A further reason for this growth could be the changing attitude of regulators in the region, with 36% of public sector survey respondents reporting a more positive attitude towards cryptoassets (at the time of their survey response) than they had five years ago. This is further supported by respondents to the private sector survey believing that regulators now have a better understanding of cryptoassets and reporting increased interaction with regulators through innovation hubs and regulatory sandboxes.

5. Regulatory unclarity, the most significant challenge to industry growth

Even though market performance and regulatory development are improving, the findings do show that there remain challenges to be addressed. Private sector respondents highlighted that regulatory unclarity is a more significant challenge to industry growth than any business-related challenge. Results from both private and public-sector respondents suggest that a lack of regulatory staff with an in-depth knowledge of cryptoassets is a concern requiring attention. Further, regulators underlined their need for further training and for more research on the cryptoasset ecosystem.?