5 investors explain why Latin America is poised to weather the crypto winter

The web3 bandwagon really took off in 2021 and 2022 as entrepreneurs and investors both sought to make their mark in the nascent industry.

But Latin America stood out thanks to its comparatively high crypto adoption: According to Kim Grauer, head of research at Chainalysis, Latin America has consistently captured between 8% and 10% of global cryptocurrency activity. Moreover, DeFi implementations have seen a lot of interest given the region’s difficulties with how finance is conducted traditionally.

If my savings were in crypto, I wouldn’t exactly sleep well these days. But then again, neither would I if they were in Argentine pesos.

Indeed, Argentina is a good example of a country where alternatives to fiat currency are looking more attractive, as buying U.S. dollars is getting more and more complicated and expensive. When I spent a few months in Buenos Aires in 2014, you needed dollars all the time, and the best exchange rate you could get was about 10 Argentine pesos for one dollar.

But after Argentina’s economy minister abruptly resigned earlier this month, the informal “blue dollar” exchange rate reached a record 273 Argentine pesos for 1 dollar. Meanwhile, there were also restrictions on buying U.S. dollars in the first place.

We’re widening our lens, looking for more — and more diverse — investors to include in TechCrunch surveys where we poll top professionals about challenges in their industry.

If you’re an investor who’d like to participate in future surveys, fill out this form.

Multiple exchange rates also coexist in Argentina, some of which are artificially disadvantageous. Claire Diaz-Ortiz, the startups committee chair at VC3 and a scout at Kleiner Perkins, pointed to how hard it is to escape the traditional banking system: “If you are a programmer and you work for an overseas company that deposits your salary in the local bank system, your dollars will forcefully be turned to pesos at the official rate of 130 pesos per dollar against the free market value of 270 pesos per dollar.”

Such a situation, she said, makes it “no surprise that crypto has rooted deeply into the local culture.”

Not every Latin American economy is as volatile or politicized as Argentina’s. But from high poverty rates to low financial inclusion, there are common threads throughout the region that explain why trends such as the momentary craze for play-to-earn crypto gaming have seen considerable adoption.

These factors also give us an indication of where crypto might be going. “We believe that crypto has a big opportunity to digitize cash,” said Patricio Jutard, co-founder and general partner of Newtopia VC. “That is, if the startups in this space manage to create easy, accessible, robust, trustworthy and beautiful solutions for the unbanked population.”

Homegrown startups are already playing an important role in leveraging crypto for the Latin American and global markets. The investors we polled felt startups in the region will continue to do so with tailwinds from global investments and partnerships.

The five investors we spoke with are active backers of Latin American startups in the crypto and DeFi space. Below, they share their insights on where the market is going, the increasing presence of women in LatAm’s web3 scene, and, as a crypto winter seems increasingly likely, how they are positioning themselves for a rebound.

We spoke with:

Matias Nisenson, co-founder, DeFi Wonderland
Christine Chang, head of corporate development and ventures, Tribal
Patricio Jutard, co-founder and general partner, Newtopia VC
Claire Diaz-Ortiz, startups committee chair, VC3; scout, Kleiner Perkins
Andy Areitio, general partner, TheVentureCity

Matias Nisenson, co-founder, De-Fi Wonderland

Crypto is often touted as a remedy for those left out by traditional banking services. What steps are you taking to ensure that crypto will alleviate, and not exacerbate, financial access inequalities?

I think we’re all working toward making crypto an alternative to traditional banking. I also think it’ll take time. At Wonderland, we say “DeFi sucks,” and that’s our URL, too: https://defi.sucks. We, and many other players, are doing our best to fix it.

We believe it sucks because of UX. Even someone savvy can make a mistake that costs them thousands (if not millions). A few years ago, it also sucked because of the infrastructure that couldn’t handle a few thousand users at the same time, or because you couldn’t use it from mobile. Today most of these things are solved with L2s [layer 2 solutions] and better wallets — but UX still sucks.

I believe in DeFi, but it’ll take time. I believe CeFi [centralized finance, a mix of traditional finance (TradFi) and DeFi] is a good solution for now: It onboards people to crypto and explains basic concepts to them. That’s why I invested in Buenbit, one of the largest exchanges in countries like Argentina and Peru. I’d pick CeFi over banks any day.

We’re still in the experimentation phase, we’re figuring out the tech, we’re figuring out how DAOs work (or don’t work) and a bunch of other things. I believe this movement is being spearheaded by the Ethereum community — to put things in perspective, it’s only seven years old.

Ethereum creator Vitalik Buterin noted that Argentina has one of the biggest crypto communities in the world. As a consumer market, is Latin America currently being served more by homegrown or foreign companies?

It depends on the vertical. If we talk about DeFi, I’m sure the most used protocols are foreign (Aave, Uniswap, Compound, Sushi, etc). If we talk about exchanges, then it’s mostly homegrown (Bitso, Ripio, Buenbit, etc.).

This is mainly due to regulations and compliance that big foreign exchanges haven’t done, because it takes time. It’s easier to acquire a local exchange with on and off ramps to fiat already set (the shopping spree already started).

Do you expect this to change any time soon?

No. I think that this ecosystem is global by nature. I believe in products coming out of nowhere (like my home country, Argentina) and reaching users all over the world.

Even before crypto, Venezuelans had been known to use gaming to earn a living. As Axie Infinity continues to crumble, do you still see play-to-earn crypto gaming as a way to subsist?

I think gaming is a great application for blockchains, especially because of the true ownership of assets — meaning you can play a game, then get bored and sell the assets you spent your money and time on.

My last company, Experimental, was one of the first to launch a blockchain game on Ethereum, back in 2017. We spent a lot of time with the founders of Axie, OpenSea and all the OGs of the crypto gaming space.

Having said this, I don’t see gaming as a magical solution to feed a whole country. I think most cryptogaming economies don’t scale, especially when token issuance is not designed well and value is created out of thin air.

Did you notice any surprising developments or interesting trends around crypto adoption in Latin America?

Well, this question is timely. Argentina’s Economy Minister resigned over the July 2 weekend when markets were closed. Everyone started talking about how the national currency (Argentine peso, or ARS) would “go to zero,” and it did: $1 USD was equal to 238 ARS when the news went out, and 36 hours later, it reached 280 ARS.

Thanks to crypto, I was able to short the peso during the weekend! I took a collateralized loan on Buenbit, I left DAI (a stablecoin cryptocurrency on the Ethereum blockchain) as collateral, and they gave me NuARS (which is a stablecoin pegged to ARS). I used those NuARS to buy more DAI, so when ARS goes down, I can sell my DAI and profit.

Another really cool thing is that before crypto, people wouldn’t have been able to buy USD with their ARS during the weekend, but now they were able to do it before the dollar’s value skyrocketed.

Once again, crypto was able to protect some people from their politicians. The challenge now is to go from “some people” to “most people” and finally to “all people.”

Argentina and Bolivia have restrictions on currency exchange. Does this increase the appeal of stablecoins compared to cryptocurrencies in general?

Yes! This was the main driver for adoption in these countries; they gave people a chance to avoid inflation and escape a financial dictatorship that could only lead them to ruin. I think this use case opened the eyes of the non-believers — those who see crypto as a slot machine with crazy APYs [annual percentage yields] and daily hacks. It showed them that it has real use cases that can make the lives of real people better. It onboarded millions to crypto.

In January, El Salvador rejected a recommendation by the International Monetary Fund to drop Bitcoin as legal tender. What can we learn from this country’s controversial but ongoing bet on Bitcoin?

I believe there’s no harm in adopting BTC as legal tender. I think it benefited the country from various standpoints: It attracted businesses, it promoted tourism, created jobs — it gave them the spotlight for a while!

Other than passing the bitcoin law, they bought some BTC for their treasury. I understand how this can be more controversial and would always keep it to a low percentage of the country’s reserves.

What kind of regulation would help strengthen the DeFi market and encourage more investment? Is any Latin American government taking steps in that direction?

I believe DeFi is really hard, if not impossible, to regulate. Anyone can deploy a contract, and that is enough to provide a specific service to millions around the world.

Even if the developer goes to jail, the contract will remain active and users will still be able to interact with it (even if the front end is taken down). Considering this, I think the best option is to regulate the on and off ramps and CeFi companies. I believe regulation is necessary and healthy but DeFi is its own beast.

Many are hoping that the crypto market will eventually recover from its current struggles. How are you positioning yourself for a rebound?

I DCA’d out of crypto when the market got stupid, with celebrities buying worthless NFTs for millions and stuff like that.

[Editor’s note: DCA refers to dollar cost averaging, a strategy that consists in periodically buying (DCA in) and selling assets (DCA out).]

I started DCA’ing back a few weeks ago. My bet is on Ethereum. I trust devs the most — I love the community and believe in their work. I also invest early stage in DeFi protocols and infrastructure. Not sure how long a rebound will take, but I enjoy bear markets a lot; it’s easier to identify quality builders and projects.

What type of crypto innovation coming out of LatAm would you like to see more of?

I think there’s a lot to do in terms of infrastructure but also in terms of user experience. We need reliable infrastructure that can scale to millions of users in the next couple of years. We also need apps that anyone can understand and use.

Crypto is a greenfield and anyone can help build it. We need designers, developers, storytellers. Literally everyone can add value.

Are you open to cold pitches? How can founders reach you?

Sure! They can reach out to me through Twitter! My DMs are always open.

Christine Chang, head of corporate development and ventures, Tribal

Though crypto and web3 are global, it’s important to delineate the use cases that are most relevant in different regions.

In Latin America, where an average 50% of the population is still unbanked, and income inequality is extremely high, of course crypto can further contribute to that, but it’s not necessarily going to make a bad situation much worse.

On the contrary, the reason we’re so bullish on crypto in LatAm is because DeFi has the promise of being the propellant for financial inclusion in the coming years. The incumbents usually have a concentrated market share of 80% amongst four to five banks per country in Latin America.

Crypto-enabled products can enable anyone, regardless of their income or circumstances, to make international transfers at low or no-cost in real time. With Mexico-U.S. being the largest remittances corridor in the world, this has a huge potential impact if you’re able to save families, small business owners and even startups time and money versus traditional remittances.

USD savings accounts is another strong and compelling use case, as it breaks down the typical barriers to digital and financial inclusion in many emerging markets. Typically, only the very wealthy in Latin America have access to dollar-denominated financial services.

In terms of protecting against volatility, again, this is relative if you look at how volatile some currencies are in the region. For example, Argentina is tracking at 58% inflation this year, Brazil at nearly 12%, not to mention Venezuela, where inflation is at 165% and averaged 3,730% from 1973 until 2022. In markets with high or super high inflation, solutions like Belo and LemonCash, which allow transacting in crypto or holding in crypto with a POS conversion to fiat, make a lot of sense.

In Latin America, I see crypto not as a possible remedy for those traditionally excluded from the financial system, but the probable remedy.

First of all, if you want to see how crypto is creating real impact, you have to go to Argentina. It’s big steps ahead of where the world is going with the true potential of crypto and DeFi in everyday life.

The crypto startups that we have seen at Tribal Global are about half and half. Many foreign companies in the market have been associating themselves with local platforms, e.g., Bitpoint with Movii in Colombia; Paxos with Nubank; BitPay with Rappi, etc.

This makes sense when you have a very diverse customer base in terms of sophistication with digital and financial products as well as different regulatory environments. It helps tremendously to partner with a local player to enter the market faster and hit the ground running.

Meanwhile, local companies don’t have to build from scratch and can focus more on user education and acquisition.

Even before crypto, Venezuelans had been known to use gaming to earn a living. As Axie Infinity continues to crumble, do you still see play-to-earn crypto gaming as a way to subsist?

This wave of play-to-earn was the tip of the iceberg. In the most recent and first iteration, what got me so excited was seeing that digital, financial and crypto inclusion is absolutely possible via gaming and play-to-earn.

There were scholarship programs that were helping unemployed single moms in Argentina, Cuba and Venezuela learn how to play and generate an income. They were going through the entire setup process, playing with NFTs and earning in crypto! They may not have known all of that but they were doing it. Same as in the Philippines, where there were entire villages and people of all ages playing to earn.

There are adjustments to be made to optimize, for sure, but again we have to remember that it’s a viable option in a context where there is high unemployment and where, for example, gig economy and informal workers subsist on $2 to $3 per hour.

Gaming isn’t the only option. There are a number of options, like exercise-to-earn (Stepn), learn-to-earn, etc. Lots of exciting possibilities for alternative sources of income while incentivizing desired behaviors. And partnerships such as Stellar Development Foundation and Moneygram are making it easier for crypto earnings to be off-ramped and cashed out in fiat.

Did you notice any surprising developments or interesting trends around crypto adoption in Latin America?

Per Gemini’s Global State of Crypto report, LatAm is actually ahead of the curve in terms of women in crypto. In developed nations, a third of crypto owners are women, whereas in Latin America it’s 43%. Amongst non-owners who plan to buy crypto in the next year, 47% of this group in developed countries are women versus 54% in LatAm.

This is especially important in these regions, where access to financial institutions is lacking for women — for example, in Mexico, only 43% of women have a bank account.

What kind of regulation would help strengthen the DeFi market and encourage more investment? Is any Latin American government taking steps in that direction?

The IDB [Inter-American Development Bank] is conducting a survey and kicking off work for regulation at a regional level. Any sort of regulatory framework is useful in terms of creating more certainty for startups to jump in (local and foreign) as well as for mainstream VC investors to have more confidence in the space. It’s similar to what happened with the Mexican fintech law in 2018, which created more certainty for the ecosystem to really come online and grow.

It’s no coincidence that Brazil is the largest crypto market in the region and that it’s one of the first to create a regulatory framework.

Governments like Brazil, Mexico and Peru announcing that they will have their own CBDC [Central Bank Digital Currency] also adds weight and consumer confidence to the market.

Many are hoping that the crypto market will eventually recover from its current struggles. How are you positioning yourself for a rebound?

Great companies are built during bear markets. We hope to see more startups addressing real needs. Some who were building nice-to-haves will probably fall away.

What type of crypto innovation coming out of LatAm would you like to see more of?

Remittances and cross-border payments.
Access to stablecoins for dollar-backed financial products.
Access to cheaper cost of capital connecting DeFi and TradFi.
Access to crypto rewards as cash back.

Are you open to cold pitches? How can founders reach you?

Startups can send us their pitches via bit.ly/pitchTribalGlobal.

Patricio Jutard, co-founder and general partner, Newtopia VC

We understand that we are still in the early days of crypto as a platform for financial inclusion. Not only because the immature DeFi protocols have still to prove their robustness and security across a longer period of time, but also because the general user experience for crypto apps, specially for ramp up, are still too hard to use and understand.

At Newtopia, we are only investing in startups that are tackling the UX problem for a broader inclusion as their main goal. Some are doing this from within the gaming space (with a play-to-earn approach) and others from the wallet side.

In Latin America, we have great consumer-oriented crypto companies like Belo, Defiant, Lemon and Bitso that are onboarding a lot of people to crypto.

I believe that in crypto, as in the fintech landscape, local players tend to serve customers better since they know local financial systems better and therefore customer needs, as well as local regulations specific to financial products. Furthermore, we are seeing the emergence of large new projects, as well as companies in the region that have already proven to be world class now being positioned well.

Even before crypto, Venezuelans had been known to use gaming to earn a living. As Axie Infinity continues to crumble, do you still see play-to-earn crypto gaming as a way to subsist?

Axie Infinity is an example of a complex UX with high barriers of entry for the common player. We believe that a new generation of games that are super easy to pick up and that allow for a casual gameplay will be a good income stream for a lot of people.

It remains to be seen whether players can make a living out of these games. We want this to be a reality, but it depends on a lot of factors.

What’s for sure is that whether the play-to-earn space will succeed depends mostly on game developers. We need better crypto games that are more entertainment- and gameplay-focused than what we’ve seen until now.

Did you notice any surprising developments or interesting trends around crypto adoption in Latin America?
LatAm’s day-to-day commerce is still run mostly on cash. We believe cash/paper money is on its way to extinction globally, no doubt about it. The problem is that in LatAm there’s no trust in traditional financial institutions, and there’s almost no access to credit.

We believe that crypto has a big opportunity to digitize cash. That is, if the startups in this space manage to create easy, accessible, robust, trustworthy and beautiful solutions for the unbanked population.

Another interesting trend is that several companies that are tackling real-world problems of traditional industries through web3 are becoming the entrance to crypto adoption. A good example of this is Agrotoken, which is tokenizing commodities and onboarding new users to DeFi. Another example is TravelX, which is tokenizing air tickets and will help onboard travelers into the crypto space.

Argentina and Bolivia have restrictions on currency exchange. Does this increase the appeal of stablecoins compared to cryptocurrencies in general?

In LatAm, the volatility of exchange rates and the inflationary local currencies are pushing people from fiat toward stablecoins. But at the same time, the lack of formal credit sources and investment opportunities are making Latin Americans invest in all types of crypto assets.

In January, El Salvador rejected a recommendation by the International Monetary Fund to drop Bitcoin as legal tender. What can we learn from this country’s controversial and ongoing bet on Bitcoin?

We believe most countries should learn from Salvador and its bet on the future. In order to tackle our planet’s most challenging problems, it is extremely important that governments and countries understand the importance of innovating through technology adoption. The pace of regional transformation will depend on our leaders’ willingness to embrace change.

What kind of regulation would help strengthen the DeFi market and encourage more investment? Is any Latin American government taking steps in that direction?

Regulation is great! We believe that by regulating the space, governments are validating the crypto space.

In general, our view is that there will be polarization in the space. Solutions will be either fully decentralized or fully centralized and regulated. In the future, there will be no space for gray areas.

Many are hoping that the crypto market will eventually recover from its current struggles. How are you positioning yourself for a rebound?

We are not betting on cryptocurrencies as an investment, so price is not relevant to us. We believe that the crypto ecosystem and blockchain-based solutions are here to stay. Some may fail and others will succeed as long as they solve real problems.

Are you open to cold pitches? How can founders reach you?

Definitely! Newtopia has only invested in 50 startups so far and our $50 million fund will invest in over 100, so there’s room for more early-stage startups that are willing to innovate from LatAm. Just submit your application via https://newtopia.VC.

Claire Diaz-Ortiz, startups committee chair, VC3; scout, Kleiner Perkins

The global volatility of crypto is nothing in comparison to the regular old volatility of Argentina. That’s why Argentine DeFi founders and the venture capitalists who love them are perfectly poised for crypto winter.

Ultimately, the insanity of Argentina’s economic and political history has created the perfect storm for DeFi innovation; the very issues that make crypto a high-risk bet in much of the world make it an opportunity here.

Yes, Vitalik came down to Buenos Aires during Crypto Summer recently, and I think it’s safe to say he agreed that foreign companies coming in can’t hold much of a candle to the homegrown innovation here.

In the vein of “anything you can do I can do better,” there’s a feeling down here of “anything a crypto founder elsewhere can do, an Argentine one can do better.” (Also, Venezuelans! I heart Venezuelan founders.)

But all of these Latin American founders still need more VC dollars, especially at the pre-seed and seed stages.

Do you expect this to change any time soon?

No.

When it comes to Latin America (and all emerging markets), first came the missionaries, then came the aid workers, and then came the venture capitalists. The solutions Silicon Valley founders want to impose on Latin America won’t be anywhere near as innovative or relevant as anything Latin American founders come up with on their own.

That said, Silicon Valley loves to fund Silicon Valley founders, so those folks (even when building for ecosystems they aren’t in) get the money. In order to make sure local founders are building the local solutions, you need both local VCs and global VCs to care.

Even before crypto, Venezuelans had been known to use gaming to earn a living. As Axie Infinity continues to crumble, do you still see play-to-earn crypto gaming as a way to subsist?

Yes. Any place where — due to inflation or other economic instability — the average income is in the hundreds of dollars a month, play-to-earn crypto gaming is obviously a way to earn money. That said, I don’t think I’m fully on board with the long-term vision; is play-to-earn the new gig? Not sure.

Did you notice any surprising developments or interesting trends around crypto adoption in Latin America?

There’s something in the water when it comes to women in web3 down here.

In Buenos Aires, we have seen the growth of some amazing women-led crypto communities, which have produced some incredible women founders. The theory of how ecosystems get built is endlessly fascinating to me and watching Buenos Aires wave the flag of the women-led web3 movement is very cool.

I’ve written about this on TechCrunch: Venture capital is the least meritocratic industry in existence and is completely at the mercy of homophyly, the sociological concept that “like attracts like.”

In crypto, we know that things are even worse for women. While around 20% of all startups globally have a woman co-founder, when it comes to web3, women are estimated to account for less than 5%.

So what the hell is happening in Argentina?

Well, we also know that you can’t be what you can’t see. In the case of women, the visibility of a few key women in web3 and women-focused groups early on has really pushed other women to join the ranks. Groups like mujeres en crypto do an incredible job of bringing women together.

That said, to build inclusive ecosystems; it’s important to have more than just bottom-up engagement. You also need top-down support in a visible way.

We also know that you have to keep funding the women. The founder of the Argentine Venture Capital Association, Marta Cruz, has helped develop women VCs throughout Latin America with her organization WeInvest. Since we know that women investors are three times more likely to invest in women founders, this is essential in ecosystem building.

That’s why I’m so hopeful for the new decentralized VC fund and DAO I’m involved in alongside 150 other VCs — all Kauffman Fellows from 28 countries. Through everything I’ve studied about ecosystem building and diversity, I think our weird VC3 model has the chance to truly disrupt venture capital’s diversity problem.

Argentina and Bolivia have restrictions on currency exchange. Does this increase the appeal of stablecoins compared to cryptocurrencies in general?

One million billion percent. It’s difficult to understate the degree to which Argentina’s insane economic history and its current economic recessions have affected the development of a DeFi ecosystem down here.

Overwhelmingly, Argentina has created a perfect storm for startup innovation in DeFi. The opportunities, particularly at the incubation and seed levels, for entrepreneurs funded by venture capitalists are incredible given the current arbitrage with the USD.

In January, El Salvador rejected a recommendation by the International Monetary Fund to drop Bitcoin as legal tender. What is there to learn from this country’s controversial but ongoing bet on Bitcoin?

I’ve wanted to organize some women in crypto to head to El Salvador to check things out on the ground, but from afar, I can say that in general, the main critique is around how much of this is actual innovation versus distracting confetti being thrown around.

Many are hoping that the crypto market will eventually recover from its current struggles. How are you positioning yourself for a rebound?

This is a time to build. Since venture capitalists largely invest in USD, the arbitrage opportunities to invest in the incubation and seed stages are incredible — Argentine founders right now are en fuego.

What type of crypto innovation coming out of LatAm would you like to see more of?

Nearly half of LatAm investments are fintech, for many of the reasons I stated above, so anything in DeFi is great. Where DeFi meets proptech is also of great interest to me. Anything focused on community building, DAOs and financial literacy is also of great interest.

I’m always going to say I want more women in crypto. Data shows that to get more women founders in an industry you need more women investing partners. I’m lucky to hang out with amazing women founders down here in Argentina, and despite loving men and living with many small ones I birthed, I’d prefer to throw dollars at women founders every day of the week.

Are you open to cold pitches? How can founders reach you?

On Twitter @claire or claire@clairediazortiz.com.

Andy Areitio, general partner, TheVentureCity

First, I think that processes like KYC [Know Your Customer], AML [Anti-Money Laundering] and efficient regulation are crucial, very much like in any other market.

Second, I think the use case in LatAm is very different than in the U.S. I see two main use cases (problems) that people in LatAm are trying to solve thanks to crypto: first, the cost of remittances, and second, fighting eternal and systemic inflation.

In both use cases, the users are already part of the financial system. The reason why they leverage crypto is because the established financial system is acting in a way that is depredatory and, many times, unreliable.

In a less horizontal approach than the financial one, we can also mention other use cases in LatAm like play-to-earn and learn-to-earn.

In my view, crypto in LatAm is being built by exceptional LatAm founders. There are two reasons why I think that way: One, the founders from here know their problems best, and two, they are the ones best equipped to navigate the regulatory challenges ahead.

Do you expect this to change any time soon?

I don’t see why. It is more of the contrary. Investors in the U.S. are finally investing in startups and funds in LatAm. Now that capital is more available to founders in LatAm, I see an increasing amount of innovation coming from founders in the region.

Even before crypto, Venezuelans had been known to use gaming to earn a living. As Axie Infinity continues to crumble, do you still see play-to-earn crypto gaming as a way to subsist?

What I’m sure of is that gaming communities are here to stay, and that crypto and DeFi can definitely add value to those communities.

Did you notice any surprising developments or interesting trends around crypto adoption in Latin America?

I like that the use cases around DeFi are closer to the daily life of the people (mostly savings, remittances and payments).

Argentina and Bolivia have restrictions on currency exchange. Does this increase the appeal of stablecoins compared to cryptocurrencies in general?

Yes. Stablecoins can drastically reduce the friction in international remittances and cross-border payments, fostering commerce in the region. In general, I think stablecoins will play an instrumental role in the adoption of crypto in the region.

For instance, thanks to the partnership between Settle Network and Stellar, we now have two stablecoins in the region: ARST for Argentine Peso and BRLT for Brazilian Reais. Both stablecoins are fully backed by domestic currencies and preserve a close 1:1 rate between them and local currencies.

Once ARST and/or BRLT are credited to users’ wallets, users can trade BTC to ARST, ETH to ARST and BTC to BRLT to ARST. Another move in this space happened recently with Tether launching its MXNT token pegged to Mexico’s peso.

I profoundly respect what El Salvador is aiming for. I think the fact that the country is trying to adopt Bitcoin at an institutional level speaks of the value El Salvador sees in the traditional financial system.

However, for a regular citizen to hold their savings solely in bitcoin today can be too risky due to its volatility — more so during the global financial crisis.

What kind of regulation would help strengthen the DeFi market and encourage more investment? Is any Latin American government taking steps in that direction?

In general, the largest economies in LatAm (Brazil, Mexico, Argentina) are becoming increasingly friendly with DeFi, not to mention El Salvador’s championing of Bitcoin. On the other extreme, Bolivia has banned the use of any cryptocurrency.

In terms of regulation, I think the most important pieces are (a) clarity and (b) protecting both consumers and businesses. Specifically, I expect more regulation for aspects like tax evading, money laundering, KYC, promoting ecological miners, sandbox for crypto business, etc.

Overall, I expect the countries adopting crypto to gradually have a comprehensive regulatory framework.

Many are hoping that the crypto market will eventually recover from its current struggles. How are you positioning yourself for a rebound?

When “the going gets tough, only the tough gets going.” What I mean is that in the coming months, or next year, we’ll see the projects, founders, investors that are here for the long run. We want to partner with those who are in the space for the long term.

What type of crypto innovation coming out of LatAm would you like to see more of?

We see crypto as a transformational lever for the region. We’d like to see more projects bringing the power of crypto and web3 to regular people. For instance, we like crypto innovation that creates new sources of income for communities and creators, regardless of their location, or helps citizens in the region create wealth and fight inflation.

Are you open to cold pitches? How can founders reach you?

Yes — andy@theventure.city.