The Americas’ Great Divide: Chainalysis Unveils Crypto Adoption Drivers in the US and LATAM

• Exchange-traded funds (ETFs) have played a key role in driving institutional crypto adoption, particularly in the US.
• Retail investors in LATAM, MENA, Eastern Europe, and Africa prefer DeFi platforms over centralized exchanges.
• Individuals and businesses in LATAMresort to stablecoins for international transfersdue to economic instability.

What Drove the Crypto Bull Run in the Americas webinar by Chainalysis takes a deep dive into the drivers of crypto adoption across the world.

We joined it to share the key findings with you.

Let's unpack why LATAM is a hotbed of stablecoins, how ETFs affect the US crypto market, and what's ahead on the regulatory horizon.

India Leads Crypto Adoption, US Ranks #4

Chainlaysis detected meaningful blockchain activity in 170 countries. At first glance, geographically attributing crypto activity may seem impossible due to the blockchain's anonymity.

But Eric Jardine at Chainalysis claims that understanding crypto's regional dynamics is easier than fiat's.

Chainalysis methodology

Chainalysis breaks down blockchain activity on a platform by attributing it to web traffic. This approach doesn't consider the use of VPNs or transaction size but has proven to be sufficiently reliable. Additional factors Chainalysis considers include crypto activity's time zone and fiat currency pairs.

Findings suggest India leads global crypto adoption with the highest centralized service value. However, DeFi in the region lags behind countries like Indonesia and Nigeria.

The US ranks fourth globally with a strong institutional centralized service ecosystem, yet retail services still face adoption and regulatory hurdles.

Brazil is the only LATAM country that got on the listdespite the region's overall crypto-friendliness.

Institutions Drive $BTC Adoption in 2024

Global adoption spiked in Q4 2021, possibly caused by Bitcoin's ($BTC's) surge to its former all-time high of $65K, the meme coin craze, and the rise of DeFi applications.

Another boom happened in 2024, and this time, it's driven by institutional adoption - namely, by crypto ETFs, says Diane Seo, Data Analyst at Chainalysis.

We see an explosive rise in demand for $BTC and altcoins among institutional investors. Meanwhile, retail investors express significantly more interest in Ethereum ($ETH) and stablecoins.

Retail investors in LATAM, MENA, Eastern Europe, and Africa prefer DeFi over centralized platforms, unlike US investors. Diane explains this by the lack of financial inclusion and trust in government institutions outside of the US.

Adoption in the US: ETFs, ETFs, ETFsThe webinar's main focus was regulations, and it's easy to see why - excessively harsh policies may hinder adoption, just like a complete lack of guidelines.

But, despite the SEC and presidential candidates grabbing headlines of crypto media outlets throughout 2024, Head of Chainalysis Public Policy Jason Somensatto says there haven't been any notable regulatory changes in the US.

Instead, the surge in institutional adoption has to do with the approval of $BTC ETFs.

One may think that the aggressive stance of some US regulators drove demand for crypto ETFs. However, Somensatto believes that US investors have always had an appetite for crypto investment vehicles, and regulation has come second.

Besides, as soon as you slap an ETF status on an asset, it falls under ECC's purview.

Policymakers view $BTC as a unique asset class that's here to stay and are looking for ways to integrate it into the traditional financial system (whether for investor protection or surveillance).

From Dollars Under the Mattress to StablecoinsWhen you think of reasons for [crypto] adoption, you have to take a step back and look at [internal] issues like government corruption and inflation.Daniel Cartolin, Account Executive at Chainalysis

LATAM's political and economic hurdles created a fertile ground for crypto ecosystem development.

Argentina went from hiding dollars under the mattress to using stablecoins.Daniel Cartolin, Account Executive at Chainalysis

Devaluation of the peso forced Argentinians to seek alternatives to the US dollar for international transfers.

Stablecoins like Tether ($USDT) and Circle ($USDC) are the obvious resort because they are pegged to the dollar and allow for fast, cheap global transactions.

And Argentina isn't alone. In Bolivia, $USDT is more ingrained into the financial system than USD. Cartolin claims some countries are also considering non-USD stablecoins for their treasuries.

Boring industries,' as Cartolin calls the likes of export and manufacturing, fostered a multibillion-dollar stablecoin market in LATAM. We can expect regulators to cooperate as businesses demand banks to settle their crypto transactions.

What's On the Regulatory Horizon?

Speculating on the foreseeable future, Jason Somensatto says the US will see more stablecoin regulations due to the sheer volume of stablecoin activity.

Besides, stablecoins change the nature of global payments using USD. But Somensatto doesn't think stablecoins compete with central bank-issued currencies - on the contrary, they reflect the demand for USD internationally.

As for LATAM, Daniel Cartolin considers each country's case unique. For instance, Mexico is a high adopter of digital assets but has no clear regulation, so developing general guidelines would be the first thing on its agenda.

On the other hand, countries like El Salvador already treat $BTC as legal tenderand may take a more focused approach.

Ultimately, governments across the LATAM are welcoming crypto as a solution to their economic challenges.

Not A One-Size-Fits-All'

Crypto adoption is not uniform across the globe. Different regions have unique drivers, challenges, and regulatory environments that influence it.

Understanding the interplay of these economic, political, and cultural factors is the only way for policymakers to develop adequate regulations.

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