Regulations, policies in South America and how Stellar Blockchain fits into the future
Bitcoin lit the match that sparked the flames of blockchain technology that is systematically engulfing every aspect of our lives. Their uses depend on a host of factors that include the need for an easy access remittance currency, privacy and location, particularly if you're living in a country with adverse monetary policies from the central bank or equivalent governing body.
As people look further down the financial rabbit hole through blockchain lenses, a certain consciousness in their financial reality is borne out of the process. This consciousness often leads to people realising the cracks that exist in the traditional financial system and a generally increased feeling of self-sufficiency in their personal financial management of the masses.
In virtually every country around the world, people have chosen to take charge of their finances by storing the value in cryptocurrencies like Bitcoin, Ethereum, XLM(Stellar), Hive and a host of others.
Government versus the people
The rationale for holding these digital assets vary. It may be due to stringent tax laws, your national currency in free fall due to corruption, the need for a simple way to make payments or all of the above. The general consensus is that holding and putting them to use keeps you safe from the manipulative arms of the government.
Monetary policies and decisions of the government have a far-reaching effect on the populace. One group of people that have suffered extensively at the hands of negative policies is the Venezuelan population and economy.
Venezuela is a country neck deep in inflation. Statista estimates that the inflation currently stands at a bit over 400%, putting it firmly in hyperinflation territory. The situation has practically rendered Bolivar, the local currency, completely useless for international transactions.
For the average person living in such dire circumstance that was created due to the failings and mismanagement of the government, looking for an alternative store of wealth is a no brainer.
Venezuelan authorities have a somewhat complicated stance towards blockchain and cryptocurrencies. As far as we can tell, there aren't any specific laws prohibiting the trade and use of mainstream cryptocurrencies.
In fact, Under Decree 3196 of December 8, 2017, the Venezuelan government created the Petro, a cryptocurrency that was meant to be physically backed by barrels of crude oil. According to the decree:
One petro would be backed by a purchase-sale contract for one barrel of Venezuelan oil as quoted in the OPEC Reference Basket, as well as other commodities, including gold, diamond, coltan, and gas
The petro cryptocurrency was allegedly airdropped on households and it was apparently supposed to facilitate normal payments like electricity bill and whatnot. However, while the petro received varying levels of acceptance and trust, considering it is a CBDC, I suspect the general population will naturally be sceptical.
Recent research showed that despite the mitigating economic challenges in the South American nation, peer-to-peer (P2P) transactions are at the center of the country’s evolving crypto space. The reportsuggested that the rise in crypto adoption in Venezuela is embedded in a host of factors that includes general distrust for the government, overexposure to the Petro and security of asset value.
The report suggested that peer to peer transaction has played a big role in strengthening the country's GDP, amidst this nightmarish economic crisis that's perpetuated by the government.
This is why Venezuela is a hotbed for numerous cryptocurrency trading companies, including Spectrocoins that facilitates OTC trading of XLM(Stellar).
One of the byproducts of hyperinflation is sanctions from other countries. The US in particular has applied a hands-off approach in trade with the South American country. This is why president Nicolas Maduro, in late 2020, discussed the potential of the country performing local and international trades with cryptocurrencies to circumvent the sanctions.
On the surface, this seems like a good move from the government, since it offers an alternative route to resolving economic frailties in their system. This also makes the country a fertile ground for the use and development of cryptocurrency-based projects like XLM.
XLM is the cryptocurrency of Stellar blockchain, and while not very popular in Venezuela, offers a readymade, fast, low cost, and robust structure, capable of handling transactions for institutional or government level trading activities.
The above-mentioned features of Stellar blockchain that make it easy and convenient to mint externally backed tokens, as well as distribute makes it the perfect place for achieving the government's plan.
Hands-off or Hands-on Dominican?
Unlike the struggling economy of Venezuela that has embraced cryptocurrencies as an escape route, the government of the Dominican Republic have taken a rather distant and hands-off approach towards cryptocurrencies.
The consolation is that you're not an outlaw or considered a criminal for holding or trading cryptocurrency in the country. However, just like Nigeria, you get no support from the government and financial authorities like banks will also not facilitate crypto acquisitions.
The country with the Eighth lar
gest economy in Latin America with Agricultural exports accounting for the largest part of their slightly more than $88 Billion GDP has chosen to, officially at least, pay deaf ears to the crypto movement.
At the time of writing, there are at least 10 function cryptocurrency ATMs operating in the country. That is an astonishing number for a country with a government that seemingly has an anti-cryptocurrency stance.
The simple fact is that the populace of developing countries generally resonant with the tenets of cryptocurrencies by default. In a country where tourism accounts for 11% of the national GDP, little wonder why there are so many crypto ATMs and businesses.
Like Jamaica and the other Caribbean States, tourism plays a major role in the Dominican economy. To get a competitive edge, countries in this region have looked to cryptocurrency and blockchain-based products like Travala that enables the use of XLM for facilitating payments.
In Argentina, like much of South America, there's a subtle indifference from the government towards cryptocurrencies, but only just. The government of the Second largest economy in South America offers no protection and guidelines that affect the use or trade of cryptocurrencies.
However, the constitution also ironically stipulates that profit realised from the sale of cryptocurrencies is considered to be income and taxed. This ironic view of offering no protection to crypto traders but leeching off profit is typical of Governments around the world.
For a country like Argentina whose economy largely depends on the export of agricultural and mining products, having partners like Stellar that facilitate payments sounds like a match made in heaven.
For starters, the use of cryptocurrencies will hasten trade between neighbouring countries like Chile, Colombia and many other South American countries that have no regulatory policies mitigating the use of cryptocurrencies for remittance.
Despite the different regulatory approaches within the South American and Caribbean regions, there's a constant theme amongst the populace. People simply need crypto because it makes life easier, facilitates payments and will invariably improve their lives.
From South America to the Caribbean and all the way down to Africa, largely occupied by developing economies, cryptocurrencies like XLM exist to simplify trade by bringing down the barriers that inhibit free trade.
For the common businessman and individual who needs to procure goods, pay for services or simply hold a digital asset free from the adverse inflationary situation of their country, Stellar blockchain offers a reliable solution.
Marino A Marrero B. CEO Mercantil