Creating a More Inclusive Financial System With Crypto
Mexico’s economic uncertainty and volatile currency means that many Mexicans use US dollars to protect their assets. This is extremely difficult for the one-third of the country’s 125 million people who are unbanked, which explains why Mexico is now one of the world’s fastest-growing crypto markets.
“The big power of crypto is the democratization of access,” says Daniel. “[In Mexico] if you don’t earn over a certain amount of money, you’re just not interesting to [traditional] financial institutions. Crypto solves that problem.”
Though consumers and businesses want to store long-term value in dollars, their day-to-day spending still requires Mexican Pesos. Bitso uses Ripple’s On-Demand Liquidity (ODL) service to ensure customers can move money between currencies quickly and cost-effectively.
“We want to make sure that people can go in and out of crypto…seamlessly using our rails,” Daniel explains. “On-Demand Liquidity is a service that allows fiat currency conversion using crypto technology. In our case, we’re assisting in the conversion of US Dollars to Mexico Pesos where the digital asset XRP is a bridge currency. We’re processing close to 10% of the remittances from the US to Mexico through ODL.”
With more than one million users and an accelerating growth rate over the past year, Bitso is now Latin America’s leading crypto exchanges. But it hasn’t always been easy for the company that Daniel co-founded in 2014, especially given Mexico’s regulatory uncertainty for most of those intervening years.
“It’s been a long journey for us navigating the regulatory landscape in Mexico,” he recalls. “We’ve played a strong hand in shaping it as well. Today, Mexico has a…comprehensive set of regulations if you want to build a crypto business in the country. I am very pleased that we’ve been able to secure meetings with folks at basically every relevant regulatory institution in Mexico or a regulatory agency in Mexico. We have always found individuals in each of those institutions that are willing to listen and who are intrigued by the technology.”
Bitso faces a new regulatory challenge in Argentina where it has recently expanded its operations. Once again, the company is entering a volatile market where people are crying out for a reliable solution. More than 100,000 Argentineans have joined the exchange, turning Bitso into the largest exchange in Argentina after 8 months of launching. Daniel is excited by the opportunity for crypto to make a real difference to people’s lives there, as well as across the rest of the region.
“We believe that in Latin America you have an immediate area of opportunity for building real use cases…because trust in financial institutions is eroded, access is very limited and there’s just a very big need for these financial services and products. We really believe that a radically improved financial system is being created on top of this technology.”
Listen to the latest Block Stars podcast episode to hear more from Daniel on the state of crypto in Latin America, how Bitso almost became a videogames payments specialist and to find out which rock band didn’t have an entry in his parents’ encyclopedia set.
The post Creating a More Inclusive Financial System With Crypto appeared first on Ripple.