August 3, 2022·5 min read
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Accustomed to living in the most stable economy in Latin America, residents of Chile are turning to stablecoins to protect their assets from recent record inflation and the increasing devaluation of the peso. Local crypto exchanges have seen a 50% increase in stablecoin transactions in the last three months.
CryptoMarket, a Chile-based exchange with 200,000 users in the country, registered a 50% increase in purchases of the two most commonly used stablecoins, tether (USDT) and USD coin (USDC), during the second quarter of 2022, CryptoMarket Chile country manager Eduardo Pérez de Castro told CoinDesk.
Stablecoins are a type of cryptocurrency whose value is tied to an outside asset, such as the U.S. dollar or gold, to stabilize the price. USDT and USDC are pegged 1:1 to the U.S. dollar.
“Today, stablecoins represent 30% of users’ total purchases, and what they mostly choose to buy if it is their first time using the platform,” Pérez de Castro added.
Buda.com, which in 2015 was one of the first crypto exchanges to launch in Chile, has also seen increasing interest in stablecoins. Stablecoin market share on the platform rose from 11% in June up to 20% in July. USDC, which has been on the platform for less than a year, is the third-most-traded currency after bitcoin (BTC) and ether (ETH).
“We see this as a huge trend and something users are taking as an opportunity to buy U.S. dollars easily without having to go to a bank or exchange house,” said Jazmín Jorquera, chief operating officer at Buda, which has more than 500,000 users and operations in Chile, Argentina, Peru and Colombia.
Stablecoin’s increasing use is tied to Chile’s faltering macroeconomic situation. In June, the country’s year-to-year inflation rose to 12.5%, the highest record in 28 years. One month later, its peso currency hit a record low of 1,045 per U.S. dollar, dropping 3.7% in one day and forcing the central bank to make a $25 billion intervention in the foreign exchange market to stop a higher devaluation.