Banks in Venezuela are paying closer attention to accounts that frequently involve crypto transactions. More than 75 cases of accounts that have been stopped or are under investigation have been registered since the end of 2021, according to a blog post by Legalrocks, a Venezuelan law firm that specializes in cryptocurrencies and blockchain.
According to Ana Ojeda, CEO of Legalrocks, shutting these accounts for using them to collect fiat money in exchange for cryptocurrencies shouldn’t be justified. She adds, however, that if there are convincing indications that the money spent in these transactions is connected to unlawful or criminal activity, then this can alter.
Due to the economic crisis and the severe devaluation that the country’s fiat currency (the Venezuelan bolivar) has seen this year, Ojeda notes that stablecoin exchanges through P2P markets are commonplace. In other words, individuals use stablecoins as a store of value, buying them when they receive fiat money in exchange for something, and then exchanging them back for fiat money to make purchases and pay bills.
Venezuela ranks third among the nations that have adopted cryptocurrencies the most, per a report the UN presented in July. Ojeda asserted that Venezuela has long been the region’s leader in terms of using cryptocurrency to safeguard itself against inflation and the depletion of its savings capacity.
In Venezuela, stablecoin-based P2P markets have grown to be so widespread and well-liked that some observers think they might be having a significant impact in the fluctuations of the dollar-bolivar exchange rate. Asdrubal Oliveros, an economist, suggested that the FTX collapse, fear of holding money on custodial exchanges, and the interaction of the crypto markets and the larger economy as potential causes of the bolivar’s 40% decline against the US dollar in November.
In terms of crypto adoption, South America is at the top of the list. According to some analysts, the decreasing value of their fiat currency is one of the major reasons for these high adoption rates. They literally hedge against their national currency with cryptocurrencies like Bitcoin and other major stablecoins.
Residents of Argentina and Chile can protect themselves from a depreciating currency by acquiring Bitcoin. The International Monetary Fund has frequently criticised El Salvador’s government for its choice to make Bitcoin, the most popular cryptocurrency, its legal tender. According to the leadership, the initiative has purportedly increased tourism and promoted financial inclusion.