🌎 The reality of crypto in Mexico

Extra: Vitalik Buterin arrives in Argentina

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Frontera EC, Abraham Rivv & Abraham Cobos
December 20, 2024

👋 Hi welcome to Frontera, the newsletter dedicated to showcasing the reality of crypto in Latam. Join industry leaders from Binance, Crypto.com, dYdX and others to understand how Latin America has become one of the most dynamic and promising markets in the crypto world and how you can address this market. 

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If you want to build products, invest, or grow in LATAM, this is your place. 

You can listen to today's episode here.

📈 The growth of crypto in Mexico: An expanding opportunity

Mexico is emerging as a key player in the global crypto industry, with more than 3.1 million cryptocurrency holders, representing 2.5% of the population. 

According to Chainalysis' Global Crypto Adoption Index, the country moved up from 28th place in 2022 to 16th in 2023, making it the third most significant country in Latin America according to Chainalysis. With 97 cryptocurrency ATMs operating nationwide, the infrastructure for digital currencies continues to grow.

The primary driver of this adoption comes from remittances, the USA - Mexico remittance corridor is the world's largest reaching a record $66 billion USD in 2023. 

In 2023 Bitso, the main exchange in the country, processed $4.3 billion USD along the Mexico-U.S. corridor. In 2024 they’ve processed $6.5 billion in 2024, marking significant growth. Bitso also reported a 90% growth in its business division, achieving a volume of $12 billion USD. 

Other players, such as Coinbase, have launched initiatives to facilitate remittances with costs up to 50% lower, alongside services like a fee-free wallet for Mexican users.

Regulation in the country: A big challenge

Regulation plays a key role in this ecosystem. 

The "Fintech Law" recognizes cryptocurrencies as digital assets and provides a framework to protect users. This law is so complex that has made it impossible for new startups to operate. Banxico and tax authorities still face challenges in defining a clear fiscal framework and this has hindered the evolution of the crypto product ecosystem in the country. In fact, Banxico has prohibited financial institutions from offering services related to cryptocurrencies.

Despite the Central Bank’s warnings about risks, the freedom to conduct digital transactions has enabled progress in innovative projects such as "Stablebond," tokenized bonds from Etherfuse.

With the recent arrival of Claudia Sheinbaum to the presidency of Mexico, from the ruling party Morena, it marks the likely continuation of the current negative stance on cryptocurrencies in the country.

Companies and startups helping growth

Despite the lack of clarity in the regulation, entrepreneurs and the private sector are building crypto solutions to the country and the world.

✅ Learn more about the key players in Mexico by downloading our report: LATAM Crypto Ecosystem: Leading the New Digital Economy

LATAM Crypto Ecosystem_ Leading the New Digital Economy.pdf6.86 MB • PDF File

With key players like Bitso, Coinbase, Banco Azteca, and innovative projects like Etherfuse and Bando, Mexico is building a robust ecosystem. 

Where are we standing?

In our opinion, Mexico is in a unique position to become a regional leader in the crypto industry. 

Although the Fintech Law has recognized cryptocurrencies as digital assets, there is still a lack of comprehensive regulation that clearly defines the fiscal landscape. With Claudia Sheinbaum elected as president, we don't expect significant changes in the government's stance on cryptocurrencies. 

Another challenge is financial inclusion. Only 58% of Mexican adults have a bank account, and cash remains the predominant method of payment. This limits the reach of digital technologies, though it could present an opportunity to implement stablecoins as tools for economic inclusion.

We believe regulatory and fiscal challenges, lack of financial inclusion, and lack of knowledge about cryptocurrencies will continue to be obstacles. It is currently very difficult to launch a crypto product in Mexico due to the lack of accesible regulation and this creates a lack of diversity of crypto startups in the region. Having a direct fiat on-ramp in Mexico cost at leas $1 million USD in legal fees and operations.

Despite this, Mexico's crypto ecosystem has great growth potential because of remittances and B2B payments. The B2B payments market in Latin America is valued at $600 billion in 2023 and could reach $1.37 trillion by 2030.

📰 Latam Crypto News 📰

This edition is presented by Bando

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Key stories of crypto in LATAM this week

🔎 Bitso reports that Latin America’s crypto regulatory landscape remains uncertain, with countries like Argentina, Brazil, Colombia, and Mexico leading the way. This creates a legal "gray area" for crypto operations in the region.

Key info by country:

  • Argentina: Lacks fintech law, with a mixed crypto regulatory environment. Despite restrictions, platforms like Mercado Pago are thriving.

  • Brazil: Clear regulatory framework, leading the region in crypto adoption with strong infrastructure and support for blockchain-based payments.

  • Colombia: Growing fintech sector but regulatory uncertainty hampers blockchain solutions; plans for new payment systems (Bre-b, Drixi) could transform payments.

  • Mexico: Strong e-commerce and remittance market but struggles with crypto regulations, despite the 2017 fintech law and growing crypto adoption.

MetaMask introduces its debit card in Brazil, Mexico, and Colombia, allowing users to spend crypto at any Mastercard-accepting merchant. The card supports USDC, USDT, and WETH.

Strike expands its services in Latin America by enabling USDT deposits and withdrawals for eligible customers in Argentina, Brazil, Mexico, El Salvador, and other countries. This move aims to simplify access to Bitcoin and support the adoption of stablecoins like Tether in the region.

🇦🇷 Argentina

🔥 Vitalik Buterin arrives at Crecimiento in Argentina

This is what has going on in Crecimiento:

“On December 9th, the Aleph de Verano began in Buenos Aires, a pop-up city organized by the Crecimiento movement, running until December 20th. This event features key players in the ecosystem offering talks and workshops on major industry topics such as ZK technology, AI agents, and regulation. The highlight of the event is the presence of Vitalik Buterin, who will attend during the final week. The first weekend included a hackathon. 

At the event's opening, Crecimiento announced its web3 startup acceleration program in collaboration with Graph Paper Capital, as well as the Founder School program, which, over two months, helps founders or aspiring founders leverage emerging technologies like blockchain, cryptocurrencies, and artificial intelligence.” - Odisea Team

You can see Vitalik Buterin's full appearance in Crecimiento here.

Argentina's President, Milei, will close the Central Bank, allow Bitcoin and free currency competition, cut 90% of taxes, and boost state-led tax competition to combat inflation and attract investment.

Bitcoin saw record growth in Argentina via Lemon: 3.2M+ transactions, 510K new accounts, and 485 BTC held, proving BTC as a hedge against economic challenges.

Fintech credits reached 6M users in Argentina by mid-2024, driving financial inclusion and capturing 18.8% market share, according to ITBA and Argentina Fintech Chamber.

🇧🇷 Brazil

The regional director of Coinbase for America confirms that Brazil is one of the top 10 markets, it is no surprise that Coinbase is the leading crypto app in downloads in Brazil. Coinbase plans to expand, focusing on the growing Brazilian crypto market.

🇲🇽 Mexico

With 3.1M crypto users in 2024, Mexico is preparing for a major shift, including the launch of its national digital currency in 2025 to drive adoption and financial growth.

🇧🇴 Bolivia

Meru brings a blockchain wallet and Visa card to Bolivia, enabling freelancers and remote workers to receive, store, and earn crypto yields, all linked to traditional financial services.

🇸🇻 El Salvador

El Salvador aims to partner with 25+ nations on crypto after signing a mutual agreement with Argentina to boost the digital asset industry.

🇨🇴 Colombia

Nequi users in Colombia can now buy COPW stablecoin and trade it for other cryptocurrencies like BTC, ETH, and SOL, boosting crypto adoption.

Colombia secured $6.79B in Bitcoin transactions in 2024, with stablecoins representing 66% of crypto transactions. The country is a leader in crypto adoption and remittances in LATAM.

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