Crypto
‘This is dangerous’: This expert says governments have their fingers in their ears about cryptocurrency
When a UK parliamentary committee proposed last month that cryptocurrency be regulated as gambling, it didn’t take long for the Treasury to reject the idea.
But the fact that it was suggested at all is revealing, says Gavin Brown, associate professor in financial technology at the University of Liverpool.
“[The committee] didn’t really understand the technology,” he says.
And in this, they aren’t alone — despite cryptocurrencies, digital currency designed to offer an alternative payment method to traditional money, now being over a decade old.
“I see that all the time. I’ll get a taxi in London and the taxi driver will know ten times more [about cryptocurrency] than the CEO of a multinational bank I’m about to visit,” Brown says.
“We still see that disparity of knowledge, and not just from people on the street, but also from people who are actually making the policies who should know better.”
That’s because crypto is “powerful stuff”, he says.
The largest ever Bitcoin transaction was for just over $US1 billion ($1.5 billion), which, to move without a bank, carried a transaction fee of $US3.56 ($5.35).
“And it cleared and settled in minutes,” Brown says.
He argues that ignorance of cryptocurrency is risky.
“Western Anglo-Saxon economies are stuck between a rock and a hard place, because it’s not going away — and it’s a constant threat.”
‘Deliberate’ targeting and ‘nefarious use’
There are thousands of different cryptocurrencies — Bitcoin is the biggest — and trying to regulate them is anything but simple.
Larger crypto companies are centralised, meaning they are traditional companies with shareholders or a board of directors.
But the same is not true of cryptocurrencies, which are decentralised.
“The problem we have with things like … Bitcoin, is that it’s not really controllable or ban-able in a traditional sense because … [it] doesn’t have a CEO, a head office, any employees, an email address, doesn’t file any accounts, doesn’t have any buildings, has no AGM, has no shareholders,” Brown says.
“Literally, Bitcoin is an idea. It’s a computer program that’s being run globally all over the world at the same time.”
In some senses, that elusiveness is exactly the point.
“[Cryptocurrency] has been deliberately constructed in a way that is anti-state, and almost naturally beyond the reach of regulators,” Brown says.
It’s one of “a ton of downsides [associated with it], like nefarious use by criminals”, he says.
John Reed Stark, a lawyer in Washington DC specialising in the intersection of law and technology, told ABC’s Four Corners last year that “horrific crimes from ransomware attacks, and terrorism, and evading sanctions during war time … drug dealing [and] sex trafficking” are crimes that are “now a lot easier to do because of cryptocurrency”.
Natasha Gillezeau, SXSW Sydney production lead and former Australian Financial Review tech journalist, says “people need to understand how serious [cryptocurrency] is”.
“We have to understand how much of a marketing and advertising push that crypto [companies have] done in the last few years,” she tells ABC RN’s Download This Show.
“We’re talking sports stadiums [sponsored by] crypto.com, we’re talking outreach to influencers … We’re actually in a different point in the cycle of how much the marketing and advertising industry has legitimised it.
“I’ve been in conversations with people who have said, ‘We target people deliberately on Facebook and Instagram, that we know have gambling problems, with crypto ads because they’re more likely to flip than others’.”
‘Very different to gambling’
While Gillezeau doesn’t see the UK’s gambling regulation proposal as the best solution to the problem, she believes it does recognise “the human effects of cryptocurrency”.
“Probably what these British MPs [who raised the proposal] are speaking to is that there are certain segments of society that have been affected and blasted the last few years with crypto-specific advertising, they’ve lost a lot of money … and this is a response,” she says.
If crypto trading was designated as gambling, platforms could face additional licensing rules, requirements to protect vulnerable users, stake limits and closer control of advertising.
Brown can also appreciate some of the motivation to align cryptocurrency use with gambling regulations such as these.
“[Cryptocurrency] has the power to defraud, it has the power for people to lose significant amounts of wealth, it kind of feels a bit like gambling as well. And therefore, by taking that kind of ultra prudent label of gambling and just pinning it on it, it’s quick and it plays to that downside risk agenda.”
It also allows regulators to dip in to, and “just repurpose” ready-made law.
“But that misses a trick,” Brown says.
“These new types of technology are not gambling, they’re very different to gambling, actually. There is no house and punter. In fact, it’s much more nuanced than that.”
‘Can’t afford to get left behind’
Here in Australia, in mid-2022 around one million people owned cryptocurrency. In the UK, 5.2 million people — or one in nine — have either used or owned cryptocurrency.
“It’s come that far in 13 years,” Brown says.
“Go forward another 10 years. What happens if that number [in the UK] is 30 million or 40 million?
“What happens if every British person or every Australian person wakes up and says, ‘I’m a bit sick of … inflation, I’m sick of interest rates, I’m sick of my government or whoever controlling money in a certain way. I want a different type of money’.
“Well, guess what? There is this alternative type of money … and all you need is an internet connection to access it.”
The more a population uses alternative currency, the more difficult it becomes to control its economy, Brown says.
“If people aren’t using that [traditional] currency, you’re completely emasculated. That right hand of your two-handed approach is gone.”
After presenting on cryptocurrencies to the UK Treasury six years ago, Brown was asked, “If people start using this [cryptocurrency], who pays for schools? Who pays for roads? Who pays for defence?”
“This is dangerous”, the person said.
And Brown agrees.
“For so long cryptocurrencies and digital assets have been kept at arm’s length … our fingers in the ears, ‘let’s hope it’ll go away, let’s hope it’ll disappear’.
“Nation states would like it to go away, but it’s just not going away.
“The challenge we have, especially for countries like the UK and Australia, is because financial services are such an important part of the economy, we can’t afford to get left behind.”
Governments must have an effective digital strategy, he says. And while crypto itself might be extremely difficult to regulate, the same is not true of the people and companies who interact with it.
“If someone says, ‘Hey, we’re a cryptocurrency bank’, well, guess what? I can regulate you as a bank of a digital asset.
“If someone says, ‘I’m a prime broker’, or ‘I want to be a custodian of Bitcoin’, or ‘I want to be a financial adviser of digital assets’, we can regulate those people because they are companies and individuals in a traditional sense.
“And that’s a much more pragmatic thing to do.”
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Bitcoin fell for the first time in four days with speculative bets being pared across financial markets after Federal Reserve officials suggested greater caution over how quickly they can continue reducing borrowing costs.
The original cryptocurrency fell as much as 5.3% to $100,752, a day after climbing above $108,000 for the first time in what’s been a record-breaking rally this year. The seven largest digital tokens as measured by market value were all lower, data compiled by Bloomberg show.
Cryptocurrency adoption in Latin America is
experiencing explosive growth, driven by a mix of factors in the area like
economic instability, financial innovation, and regulatory evolution. Countries
like Brazil, Argentina, and Mexico are emerging as global leaders in
cryptocurrency usage, offering a fertile ground for both individuals and
businesses to explore digital assets as practical solutions for real-world
financial challenges.
To learn more about Latin America’s rapidly
evolving crypto market, download our whitepaper, “Unlock the Potential of Latin
America’s Booming Crypto Market.”
Read the report on the Latam’s blooming cryptocurrency market.
The rising wave of crypto in Latin
America
Cryptocurrency adoption in Latin America is
accelerating, fueled by inflation and currency devaluation. In Argentina, where
inflation has devastated the peso, Bitcoin and stablecoins have played an
important role in protecting savings. Around 15% of the population uses crypto
regularly, finding it a critical hedge against inflation.
In Brazil, crypto is even being integrated
into mainstream finance. The country was one of the first to approve
cryptocurrency exchange-traded funds (ETFs), and by 2023, the value of USDT
transactions was equivalent to $55 billion, more than 80% of its crypto volume.
This makes Brazil a key player in the global crypto market.
Mexico has carved out a niche in crypto
remittances, with Bitso processing over $3.3 billion in cross-border payments
in 2022. Crypto is emerging as a more efficient solution for these
transactions, benefiting millions of families reliant on remittances.
Regulatory evolution driving market growth
The regulatory environment across Latin
America is evolving, creating opportunities for businesses to expand. For example,
El Salvador made history by becoming the first country to adopt Bitcoin as
legal tender, with further initiatives like Bitcoin-backed bonds and a
government-sponsored crypto wallet. This bold experiment has positioned El
Salvador as a global trailblazer for cryptocurrency adoption, even as its
long-term effects are being evaluated.
Meanwhile, Mexico’s fintech law from 2018
recognized cryptocurrencies as virtual assets, establishing a clear regulatory
pathway for businesses. This clarity has helped companies like Bitso thrive. Meanwhile,
Colombia’s regulatory sandbox has promoted crypto experimentation in a
controlled environment, attracting fintechs and positioning the country as a
future hub for innovation.
Argentina, while still working on a
comprehensive regulatory framework, has seen increased interest in crypto
regulation under its new pro-crypto government. Colombia’s sandbox model is
providing fintechs with a controlled environment to test their offerings,
positioning the country as an emerging leader in the digital asset space as
well.
Emerging opportunities
Despite infrastructure and regulatory
challenges, Latin America offers immense opportunities for crypto growth.
Argentina and Venezuela, with their hyperinflationary economies, continue to
see widespread crypto adoption as citizens seek alternatives to their unstable
currencies. Stablecoins like USDT and USDC can help individuals and businesses
in these countries by providing greater financial stability.
Mexico’s growing role in crypto remittances
and Colombia’s fintech-friendly environment highlight the region’s potential
for further expansion. Tokenization is another area of growth, with Brazil’s
agricultural commodity token project, Agrotoken, revolutionizing access to
credit for small farmers. Brazil’s Drex initiative also highlights the
country’s commitment to developing a fully digital economy and integrating
blockchain technology into mainstream financial systems.
Latin America’s complex economic landscape,
combined with its openness to crypto solutions, makes it an exciting market for
businesses seeking to leverage digital assets. By addressing regulatory and
payment infrastructure challenges, companies can unlock the full potential of
this rapidly evolving crypto market.
The role of payment solutions in this evolving
market
Cross-border payments and regulatory
complexities are significant hurdles for businesses expanding into the Latin
American crypto market. The region’s rising demand for remittances, along with
fragmented payment infrastructures, means businesses must navigate
multi-currency transactions. Additionally, evolving regulatory landscapes
require businesses to stay compliant while managing operational risks.
Paysafe addresses these challenges by
offering solutions that streamline cross-border payments, supporting multiple
currencies and reducing transaction costs. With strong integration into key
local systems, Paysafe helps businesses deliver the seamless payment options
customers expect.
Furthermore, Paysafe’s regulatory expertise
ensures businesses remain compliant across diverse markets, while its advanced
security features protect against fraud, providing businesses with the trust
and reliability they need to thrive in the region’s fast-growing crypto
ecosystem.
Conclusion
Latin America is a prime market for
cryptocurrency adoption and its growth shows no sign of slowing down. From the
pioneering efforts of El Salvador to the sophisticated regulatory framework in
Brazil, the region offers diverse use cases for businesses looking to enter or
expand their crypto operations. Our whitepaper highlights that despite
challenges like regulatory fragmentation and cultural nuances, Latin America
presents tremendous opportunities for growth.
For more detailed insights and strategies,
download our whitepaper, “Unlock the Potential of Latin America’s Booming
Crypto Market.”
Read the report on the Latam’s blooming cryptocurrency market.
By leveraging Paysafe’s comprehensive
payment solutions, businesses can seamlessly navigate the complexities of the Latin
American crypto landscape, unlocking the full potential of one of the world’s
fastest-growing markets.
Disclaimer:
This article is not intended to be
financial, investment or trading advice. This article is for information and
solely for education purposes. It does not protect against any financial loss,
risk or fraud.
Why Paysafe
Paysafe supports Latin American businesses
with over 25 years of experience, offering top-tier fraud, risk, and compliance
support. Their solutions streamline cross-border payments, support multiple
currencies, and reduce transaction costs, enabling confident expansion in the
crypto market.
Cryptocurrency adoption in Latin America is
experiencing explosive growth, driven by a mix of factors in the area like
economic instability, financial innovation, and regulatory evolution. Countries
like Brazil, Argentina, and Mexico are emerging as global leaders in
cryptocurrency usage, offering a fertile ground for both individuals and
businesses to explore digital assets as practical solutions for real-world
financial challenges.
To learn more about Latin America’s rapidly
evolving crypto market, download our whitepaper, “Unlock the Potential of Latin
America’s Booming Crypto Market.”
Read the report on the Latam’s blooming cryptocurrency market.
The rising wave of crypto in Latin
America
Cryptocurrency adoption in Latin America is
accelerating, fueled by inflation and currency devaluation. In Argentina, where
inflation has devastated the peso, Bitcoin and stablecoins have played an
important role in protecting savings. Around 15% of the population uses crypto
regularly, finding it a critical hedge against inflation.
In Brazil, crypto is even being integrated
into mainstream finance. The country was one of the first to approve
cryptocurrency exchange-traded funds (ETFs), and by 2023, the value of USDT
transactions was equivalent to $55 billion, more than 80% of its crypto volume.
This makes Brazil a key player in the global crypto market.
Mexico has carved out a niche in crypto
remittances, with Bitso processing over $3.3 billion in cross-border payments
in 2022. Crypto is emerging as a more efficient solution for these
transactions, benefiting millions of families reliant on remittances.
Regulatory evolution driving market growth
The regulatory environment across Latin
America is evolving, creating opportunities for businesses to expand. For example,
El Salvador made history by becoming the first country to adopt Bitcoin as
legal tender, with further initiatives like Bitcoin-backed bonds and a
government-sponsored crypto wallet. This bold experiment has positioned El
Salvador as a global trailblazer for cryptocurrency adoption, even as its
long-term effects are being evaluated.
Meanwhile, Mexico’s fintech law from 2018
recognized cryptocurrencies as virtual assets, establishing a clear regulatory
pathway for businesses. This clarity has helped companies like Bitso thrive. Meanwhile,
Colombia’s regulatory sandbox has promoted crypto experimentation in a
controlled environment, attracting fintechs and positioning the country as a
future hub for innovation.
Argentina, while still working on a
comprehensive regulatory framework, has seen increased interest in crypto
regulation under its new pro-crypto government. Colombia’s sandbox model is
providing fintechs with a controlled environment to test their offerings,
positioning the country as an emerging leader in the digital asset space as
well.
Emerging opportunities
Despite infrastructure and regulatory
challenges, Latin America offers immense opportunities for crypto growth.
Argentina and Venezuela, with their hyperinflationary economies, continue to
see widespread crypto adoption as citizens seek alternatives to their unstable
currencies. Stablecoins like USDT and USDC can help individuals and businesses
in these countries by providing greater financial stability.
Mexico’s growing role in crypto remittances
and Colombia’s fintech-friendly environment highlight the region’s potential
for further expansion. Tokenization is another area of growth, with Brazil’s
agricultural commodity token project, Agrotoken, revolutionizing access to
credit for small farmers. Brazil’s Drex initiative also highlights the
country’s commitment to developing a fully digital economy and integrating
blockchain technology into mainstream financial systems.
Latin America’s complex economic landscape,
combined with its openness to crypto solutions, makes it an exciting market for
businesses seeking to leverage digital assets. By addressing regulatory and
payment infrastructure challenges, companies can unlock the full potential of
this rapidly evolving crypto market.
The role of payment solutions in this evolving
market
Cross-border payments and regulatory
complexities are significant hurdles for businesses expanding into the Latin
American crypto market. The region’s rising demand for remittances, along with
fragmented payment infrastructures, means businesses must navigate
multi-currency transactions. Additionally, evolving regulatory landscapes
require businesses to stay compliant while managing operational risks.
Paysafe addresses these challenges by
offering solutions that streamline cross-border payments, supporting multiple
currencies and reducing transaction costs. With strong integration into key
local systems, Paysafe helps businesses deliver the seamless payment options
customers expect.
Furthermore, Paysafe’s regulatory expertise
ensures businesses remain compliant across diverse markets, while its advanced
security features protect against fraud, providing businesses with the trust
and reliability they need to thrive in the region’s fast-growing crypto
ecosystem.
Conclusion
Latin America is a prime market for
cryptocurrency adoption and its growth shows no sign of slowing down. From the
pioneering efforts of El Salvador to the sophisticated regulatory framework in
Brazil, the region offers diverse use cases for businesses looking to enter or
expand their crypto operations. Our whitepaper highlights that despite
challenges like regulatory fragmentation and cultural nuances, Latin America
presents tremendous opportunities for growth.
For more detailed insights and strategies,
download our whitepaper, “Unlock the Potential of Latin America’s Booming
Crypto Market.”
Read the report on the Latam’s blooming cryptocurrency market.
By leveraging Paysafe’s comprehensive
payment solutions, businesses can seamlessly navigate the complexities of the Latin
American crypto landscape, unlocking the full potential of one of the world’s
fastest-growing markets.
Disclaimer:
This article is not intended to be
financial, investment or trading advice. This article is for information and
solely for education purposes. It does not protect against any financial loss,
risk or fraud.
Why Paysafe
Paysafe supports Latin American businesses
with over 25 years of experience, offering top-tier fraud, risk, and compliance
support. Their solutions streamline cross-border payments, support multiple
currencies, and reduce transaction costs, enabling confident expansion in the
crypto market.
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