🚀Tether Represents 80% of Brazil's Crypto Volume,☠Asia's SWIFT Slayer,💪Blockchain Fights Corruption in Ukraine

October 28, 2023

Your 5 minute emerging markets web3 weekly update

In This Issue

Latin America and the Caribbean
🔸Tether Dominates Brazil, USDT Represents 80% Of Crypto Volume
🔸Cryptocurrency Adoption Soars in Latin America, User Base Doubles in Two Years

Asia
🔸SWIFT Killer: Cross-Border CBDC Project Set to Launch in Mid-2024
🔸Asia Likely To Lead The Way in Web3 and Crypto Gaming: Bandai Namco Exec

Africa
🔸Kenya's HoneyCoin Expands To Europe, Aims to Lower Remittance Costs to Africa
🔸Africa's Next CBDC: Ghana's eCedi - Token-Based and Built on the Hedera Hashgraph Network

Eastern Europe
🔸Blockchain's Use in Ukraine: From Fighting Corruption To Documenting War Crimes
🔸Russia’s CBDC Expected to Cause Moderate Losses to Its Banking System

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Latin America and the Caribbean

Image Credit: Dall-E 3

The IRS in Brazil has released a report indicating the significant growth of stablecoins in the country, with Tether's USDT surpassing Bitcoin in trading volume. USDT alone represents 80% of cryptocurrency volume in Brazil while other stablecoins, such as Circle's USDC and Brazilian real-backed BRZ, have also gained popularity. This shift in investor behavior towards stablecoins is of concern to authorities due to potential implications for tax and regulatory policies in the country.

A study by the Cambridge Center for Alternative Finance has found that the user base of cryptocurrency companies operating in Latin America has grown by an average of 100% in the past two years. The study identified 100 Latin American headquartered crypto companies, with Brazilian exchange Mercado Bitcoin growing from 1 million users to over 3 million users between 2019 and 2022, and Argentine platform Ripio expanding from 350,000 users in late 2019 to 3 million users. The research also noted a concentration of crypto companies in Brazil, Argentina, and Mexico, the three countries with the highest cryptocurrency adoption rates in the region.

Asia

Image Credit: Dall-E 3

mBridge, a cross-border Central Bank Digital Currency (CBDC) project involving the Bank for International Settlements (BIS) and the central banks of China, Hong Kong, Thailand, and the UAE, is scheduled for a mid-2024 launch. The primary aim of mBridge is to lower bank costs associated with cross-border payments by utilizing digital currency technology. Unlike the traditional Swift messaging system, mBridge offers atomic settlement, removing the need for message-movement separation and correspondent banks, resulting in reduced capital tied up in foreign bank accounts. While the project faces governance challenges due to Chinese influence, it has the potential to streamline international payments, particularly for banks seeking to reduce the need for Nostro accounts.

Japanese game publisher, Bandai Namco, is actively exploring blockchain's potential role in video games, particularly in the Asian market where Web3 has less stigma compared to the West. The company's SVP of Corporate Development, Karim Farghaly, mentioned that they are researching how blockchain can fit into their mobile-focused business model. Farghaly believes that Web3 and crypto adoption will likely gain traction in Asia, where blockchain gaming activity is more prominent, especially among large publishers in Japan and Korea.

Africa

Image Credit: Dall-E 3

HoneyCoin, a Kenyan web3 payments and financial services aggregator startup, is set to launch in Europe through a partnership with licensed E-Money Institution MyKOBO. This collaboration aims to address the high costs of remittances from Europe to Sub-Saharan Africa and other regions by enabling seamless digital euro transactions to and from all 27 EU Member States. By leveraging blockchain technology, HoneyCoin and MyKOBO intend to make digital tokens accessible and financially inclusive by reducing fees, accelerating transaction times, and enhancing the overall remittance experience.

The Bank of Ghana is pursuing a token-based approach for its Central Bank Digital Currency (CBDC), known as the eCedi, and it will be built on the Hedera Hashgraph network. Unlike the account-based model used by other CBDCs, the eCedi operates in the form of tokens that can be stored locally on mobile phones or cards. The Bank of Ghana is responsible for producing and distributing the eCedi to third parties, including banks and merchants, and the eCedi wallets are designed to be accessible offline.

Eastern Europe

Image Credit: Dall-E 3

Ukraine's Ministry of Digital Development is researching how to adopt blockchain in the public sector and developing its strategy for implementing Web3 technologies. The Ministry believes that blockchain technology offers opportunities for enhancing digital public services, particularly in protecting state registers, increasing transparency, and reducing corruption. Additionally, blockchain is being used to document Russian war crimes, with initiatives like Starling Lab's Dokaz project capturing and digitizing evidence for international justice purposes.

The introduction of the digital ruble in Russia may lead to moderate losses for banks, with estimated annual losses ranging from 45 to 95 billion rubles (~$477mm-$1b) by 2027, according to a report by the National Rating Agency. However, the impact on bank profitability is projected to be modest considering the sector's profit of 2.7 trillion rubles (~28.6B) over nine months. These calculations are based on an 8-10% penetration level of the digital ruble and banks' financial results as of September 2023. However, experts suggest that banks can offset these losses by offering new products based on smart contracts and receiving cashbacks from retailers, mitigating the impact on their profitability.

Thanks for reading and have a great week ahead!

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Written by Jon Lira. Connect with him on LinkedIn.

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