Source: Xiaguang Society

Latin America, a remote and exotic land full of magical realism, is now becoming a natural fertile ground for the burgeoning cryptocurrency industry.

Latin America is in the midst of an economic upswing, with a rising middle class and booming consumption. However, traditional financial supply is poor and demand exceeds supply. Therefore, the entrepreneurial boom in inclusive finance is booming at the right time. On the other hand, many Latin American countries have serious inflation and frequent exchange rate fluctuations, and the influx of foreign capital and foreign companies has driven strong demand for cross-border payments. Based on this, blockchain technology is used to process transactions between different currencies, as well as transactions between transactions. Settlement is increasingly becoming a necessity.

Maggie Wu, a Chinese entrepreneur who has been involved in the blockchain encryption industry since 2017, accurately captured this business opportunity. At the beginning of 2020, Maggie Wu and her team founded the brand TruBit in Latin America—a compliant digital currency platform that integrates a wallet (TruBit), a trading platform (TruBit Pro), and a commercial payment platform (TruBit Business). Since its establishment, TruBit has obtained financial technology and payment regulatory licenses from Mexico (VASP), Argentina (VASP and PSP), and Peru (VASP). It has also connected with local banks and opened up deposits and withdrawals from cryptocurrency to legal tender. .

Today, TruBit has become the platform with the largest number of cryptocurrency licenses and fiat currency deposits and withdrawals in Latin America, and has never had any security incidents in its four years of operation.

Today, decentralized financial services have become an important development trend of Global Fintech. TruBit is starting from Latin America and gradually exploring the possibilities of the global market.

Recently, Xiaguangshe and Maggie Wu had an in-depth exchange of views on the development status and future opportunities of the Latin American financial technology market.

The following is a summary of Maggie Wu’s views:

Today, Latin America, represented by Mexico, is becoming an emerging manufacturing industry emerging under the restructuring of global supply chains and “near-shoring” in the United States. Center, more and more companies from all over the world have settled in Latin America, and the import and export trade volume between them and Latin America is also increasing year by year, thus driving a booming cross-border payment demand. However, the banking system in Latin America is relatively backward. 26% of the population still does not have a bank account, the flow of funds is relatively slow, and countries such as Argentina are in serious exchange difficulties. On his third day in office, Argentina's new President Milai devalued Argentina's local currency, the peso, by more than 50% to 800 pesos per U.S. dollar. From then on, he will maintain a stable depreciation pace of 2% every month. In this case, overseas companies need stablecoins as intermediaries for asset transactions and settlements, and blockchain technology provides this option. Whether it is cryptocurrency payment or transactions for cross-border scenarios, this is what TruBit is doing now, to a considerable extent.This greatly saves high handling fees and time costs.

From the perspective of the Latin American cryptocurrency industry, whether it is positions or comprehensive transactions, Latin America ranks high in the world, with more than 50 million people holding cryptocurrency. The cryptocurrency markets in Mexico, Brazil, Argentina, and Venezuela are all very strong and diversified. Especially in Argentina, the stablecoin market is in a leading position in Latin America. According to the "2024 Cryptocurrency Geography Report" released by blockchain analysis agency Chainalysis, Argentina's stablecoin transaction volume share is 61.8%, slightly higher than Brazil's share (59.8%) , much higher than the global average (44.7%). Although compared with the United States, the largest market for cryptocurrency, Latin America as a whole is still a niche market and has not yet reached a large size. However, compared with other countries in the world, the Latin American market is already very active. One of the most watched summits in the field of cryptocurrency, the "Ethereum Developer Conference", will also be held in Latin America in 2022. It will be held in Bogotá, the capital of Colombia. Vitalik Buterin, the founder of Ethereum, also came to the event in person.

The current economic development momentum in Latin America is indeed relatively good, and local wages are getting higher and higher, driving the booming development of the consumer market. Moreover, Latin Americans are very daring to consume. Most of their families are multi-generational. Latin Americans spend their money on daily household needs and have almost no saving habits. From the perspective of consumer demand, there is indeed a strong tendency to borrow and consume ahead of schedule; but from the perspective of traditional financial institutions, Latin American banks are mostly European and American banks such as Citibank, BBVA, and HSBC, but most of these institutions serve high-end users. There is no incentive to update services to cover more income groups and promote inclusive finance. The huge gap between the demand side and the supply side makes Latin America's financial technology track promising. Among the top ten unicorn companies in Latin America, 80% are financial technology companies, accounting for 70% of the market value.

In addition to strong consumer demand and lack of financial service supply, Latin America itself also has some economic foundations and business environment that can enable financial technology entrepreneurship. First of all, Latin America has a relatively large population base, with a population of 650 million, and a per capita GDP of more than 10,000 US dollars, which is almost the same as that of Latin America. Secondly, the Internet penetration rate here is relatively high, and the official attitude towards cryptocurrency is relatively friendly; and Brazil, Argentina, etc. have relatively strict regulations. exchange controls , inflation is very serious, so settlement through stablecoins has become an urgent need; this is a market with very obvious market needs and pain points, but doing financial technology in Latin America not only faces language challenges, but also meets regulatory compliance requirements. There is also a multi-faceted knowledge system in legal affairs, technology, finance, etc., and the requirements for entrepreneurs are high. Therefore, Latin American financial technology is still a blue ocean market.

Generally speaking, there are still very few people with Chinese backgrounds starting Fintech businesses in Latin America. The bigger ones are Stori and TruBit, and the others are mostly financial lending companies going overseas to Latin America. At present, competition in the small and micro lending market in Latin America hasThe experience is very fierce because there are not many thresholds and competition barriers in this industry. At present, the main force of the Latin American entrepreneurial ecosystem is basically composed of two types of people: one is Hispanics who were born and raised in the United States, get venture capital funds from Silicon Valley or Wall Street, return to Latin America to start their own businesses, and have a relatively high success rate; Because he has copied the business model that has been proven and mature in the United States to Latin America according to local conditions, he has some comparative advantages compared with local entrepreneurs in Latin America; the other is a relatively prestigious and resourceful family in Latin America. But Chinese entrepreneurs are not in these two systems, so basically Chinese who have previous entrepreneurial experience or work for leading financial technology companies in the United States will devote themselves to the Latin American financial technology innovation track, but what they really do is There are only a handful of people who can do this.

Conclusion: In the past, when you used a bank account to transfer money to any foreign bank account, you needed to fill in a code called Swift Code. It might take two to three days or even five or six days to get the money, because the whole process A large number of intermediary participants are required for confirmation. But now, with stablecoins based on blockchain technology, the timeliness has been greatly shortened. Swift's annual capital transaction volume exceeds the global GDP, so even if only 0.1% of transactions are settled using blockchain, this is still a trillion-level volume. Today, decentralized financial services have become a global financial technology entrepreneurial trend. Under this general trend, at the beginning of this year, TruBit announced its official entry into the Asian market, and its exploration in the global strategic layout continues.