Colombia

U.S Navy Admiral Criticizes South America’s Pro-Crypto Agenda

October 8, 2020 by Blockchain Consultants

Many countries going through challenging times have come to lean on cryptocurrencies for economic support. While experts continue to use this as a testament to cryptocurrencies’ potential, some authorities have decried this operation as being in their way.

Money Laundering and Criminal Activity

Earlier this week, Navy Admiral Craig Faller, the head of the United States Southern Command, explained that the use of cryptocurrencies by several South American economies has made it challenging to spread democracy to their borders.

The Southern Command is one of the unified combatant commands that make up the Department of Defense. Based in Doral, Florida, the Command provides planning, cooperation, and contingency in operations carried out in South America.

Speaking in an interview with the Council of the Americas, Admiral Faller explained that the Southern Command had become wary of Southern American countries rapidly adopting cryptocurrencies. He pointed out that most of these countries tend to be breeding grounds for international criminal organizations, which traffic illegal substances and launder money through their borders.

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“Sixty percent of the cryptocurrency in the world is in this hemisphere, and a lot of that is because folks are trying to avoid regular order in the international financial system,” the Admiral said in part.

The statistic runs against findings from top blockchain analysis firms. In August, a blog post from Chainalysis revealed that the largest crypto market by region is East Asia. The analysis firm published its Cryptocurrency Adoption Index for 2020, reporting that only two of the top ten countries globally by crypto adoption come from South America— third-placed ranked Venezuela and ninth-placed Colombia.

Venezuela Becoming More of a Problem

Admiral Faller particularly singled out Venezuela, explaining that its government appears to be in cahoots with criminal organizations. The country, which has been on a significant crypto adoption spree this year, has long been a thorn in the U.S. government’s side. As Faller explained, the government is studying the impact of these pro-crypto policies on the country. A primary intent of Venezuela’s crypto adoption spree has been to evade U.S.-imposed sanctions. The government has been more open to the prospect of accepting traditional digital assets, and it has tried to increase the adoption of Petro, its oil-backed stablecoin.

Last month, President Nicolas Maduro presented a new bill intending to help the country bypass U.S.-imposed economic sanctions. The bill heavily involved cryptocurrencies, with the government committing to exploring different digital assets in domestic and foreign trade.

“The anti-sanctions bill is the first response […] to give new strength to the use of Petro and other cryptocurrencies, national and global, in domestic and foreign trade, so that all cryptocurrencies of the world, state and private, could be used,” the President said in part.

The National Constituent Assembly, Venezuela’s parliamentarian body, is currently reviewing the bill.

U.S Navy Admiral Criticizes South America’s Pro-Crypto Agenda

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Columbian Congressman Highlights Challenges Of Crypto Legislation

October 3, 2020 by Blockchain Consultants

Mauricio Toro stands as a congressman of Columbia, as well as a member of the Alianza Verde party. Toro has recently authored a draft bill, with the intent to regulate the crypto industry within Columbia. In a recent interview done with Confidencial Colombia, a local news outlet, he highlighted the challenges the proposed legislation could face

Fears Of Lagging Behind

Toro is convinced that Columbia is lagging behind other nations when it comes to the regulation of cryptocurrencies. He explained that one of the key challenges of regulating the crypto industry, is to ensure that it complies with AML procedures as an industry. With AML measures in place, Toro hopes that the negative perception of cryptocurrency could be bypassed within the country. Crypto is frequently associated with crime, due to its nature being very favorable for criminal use.

Trying To Ease Association Of Crypto Crime

Alongside this, the congressman highlighted how any scenario within Columbia could be used to launder money. Thus, crypto isn’t special in its own right, though it should be noted that it’s relatively easier with cryptocurrency. Toro explained that this bill tries to ensure that cryptocurrencies are not used for money laundering, at least not within Columbia.

This can be done by way of special requirements needed for groups wanting to establish an exchange, mandating to report the number of transactions per month. Alongside this, these parties must also disclose who their clients are, who their owners are, and must also pay tax for the commissions themselves.

Toro had once again highlighted the irony of Colombia’s crypto transaction volumes. Despite having no clear mandate in regards to crypto legislation, the country has one of the largest crypto transaction volumes within Latin America.

Things Are yet To Be Debated

As a result of bureaucratic issues, the debate around Toro’s bill had been forced to be delayed. As it stands now, the debate is currently waiting for the Columbian Financial Superintendence to make a clear stance regarding crypto, whether for or against it.

In recent weeks, the country has been making headlines within the crypto space. On the 22nd of September, 2020, the Columbian government had approved a pilot program. This program called for companies to test various crypto transactions within the regulatory sandbox the government provided.

As it stands now, time will tell whether or not this draft bill will be approved. In the interview, Toro stated that there was no way of telling how the Congress would handle it, as it would open the door to further talks of alternative markets, innovation, and other elements unknown at this point.

Columbian Congressman Highlights Challenges Of Crypto Legislation

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The emergence of super apps in Latin America

September 19, 2019 by Blockchain Consultants

Thiago Paiva Contributor

Thiago Paiva is a fintech entrepreneur, writer and investor. He is the co-founder of Liquia Digital Assets, an investment platform for international investments using blockchain technology.

The super apps WeChat and Alipay became an integral part of the Chinese mobile ecosystem, growing to more than 1 billion monthly active users (MAU) and 1 billion annual active users (AAU), respectively. They both offer services from food delivery and bike sharing to a full suite of financial services such as payment, insurance and investments.

Now, companies from around the world are trying to replicate the successful Chinese model in their region. And Latin America is an especially compelling region for the emergence of super apps, due to its vast population, almost 650 million, distributed in more or less similar countries regarding language, culture and religion. It also has a mobile-first population with 62% of smartphone penetration, according to GSMA data.

The expansion of the super apps model

After the incredible success of WeChat and Alipay, many companies around the world decided to replicate their model in different regions. Due to the proximity to China and its influence and money, Southeast Asia was one of the first regions in which super apps started to appear. The Singaporean ride-hailing Grab and the Indonesian Go-Jek both raised billions of dollars to not only successfully block the expansion of Uber in the region but also to expand their portfolio of services provided beyond ride-hailing to food delivery, payments and other services.

Note that not all super apps are the same.

In India, payTM is expanding beyond its core service and positioning itself to be the leading player in the country, especially after Tapzo was acquired by Amazon last year and closed.

It is interesting to note that not all super apps are the same. Alipay came from the e-commerce Alibaba and is more focused on financial services, while WeChat started as a messenger app, expanding not only to financial services but also to daily services such as e-commerce, gaming, travel and many others. In Southeast Asia, Go-Jek and Grab started as ride-hailing, expanding to delivery before going to financial services, and payTM started as a prepaid recharge mobile platform and then moved to offer a range of financial and daily services.

So, what to expect in Latin America?

Latin American super apps should develop themselves in their own particular way, as the environment in the region is quite different from the one in China.

The internet ecosystem in the region is highly influenced by European and American tech companies that dominate segments such as communication, music, search and many others. It is quite hard for a local startup to compete in those markets. However, there are a few battlegrounds that are not as easy to dominate from abroad, such as ride-hailing, food delivery and finance. Those are on-the-ground or highly regulated industries that are very hard to scale, especially across different countries. Those are precisely the industries in which we have seen the emergence of some super apps candidates, fueled by an unprecedented amount of venture capital investment in the region.

The most prominent candidate to super app in the region is the Colombian on-demand delivery Rappi. It is one of the most funded startups in Latin America, backed by titans such as Sequoia, Andreessen Horowitz and SoftBank, which have poured US$ 1.4 billion in investments so far. Although it started offering just food delivery, it now provides services such as e-scooter, payments, P2P transfer, movie theater tickets and a debit card. It also operates in the most relevant countries in the region: Brazil, Mexico, Colombia, Argentina, Chile, Uruguay and Peru.

Another strong candidate is the financial side of the e-commerce behemoth Mercado Libre (MELI), Mercado Pago. It started as a way to enable payment between users in the marketplace; however, it grew to offer a diverse portfolio of financial services such as online and offline payment, bill payments and, more recently, investment (through its Mercado Fondo). Thanks to its parent company, it’s pretty much all over Latin America, and processes around 400 million transactions annually.

The Brazilian Movile is also positioning itself as a strong competitor. The company already has a diverse portfolio of services, from delivery food to event tickets, courier and even a kids Netflix, operating in Brazil, Mexico, Colombia and Argentina. Not only did it raise a total of US$395 million investment, but also one of its companies, iFood, raised a total of US$592 million.

Latin America is an especially compelling region for the emergence of super apps.

The Spanish Cabify is another company trying to position itself as a super app. It recently started to offer e-scooters and bike service, as well as financial services through its own fintech company, Lana. Even though it raised US$477 million in funding, it will be hard for Cabify to become a super app, as the ride-hailing competition is getting quite intense in the region. Its competitors Uber and Didi are also adding more services and trying to position themselves.

An interesting potential competitor would be Nubank, the Brazilian decacorn (private companies with more than US$10 billion of valuation). It already has more than 8 million customers in Brazil and is starting to expand in the region to Mexico, Argentina and Colombia. Although Nubank still only offers traditional financial services, it has Tencent as a significant investor and has raised US$1.1 billion, so far. Therefore, it would be no surprise if it decides to follow a similar path as WeChat.

Also, in Brazil, Banco Inter (BIDI11) recently launched a marketplace to expand the offer to its customers beyond financial services to e-commerce, travel and more. The challenger bank is already a public company with around US$7 billion valuation, but it is now backed by SoftBank after its latest share offer.

Those are the most well-positioned candidates to be super apps in Latin America. Even so, other players could surprise, such as Magazine Luiza, leading retail and e-commerce in Brazil. Its CEO is transforming the company from a brick-and-mortar retail to a technology company and already showed its ambition to transform MagaLu (its app) into a super app offering many other services. Although it could compete in the Brazilian market, it would be doubtful that it becomes a regional player, as its primary business operates only in Brazil.

Super apps in Latin America will not be the same as in China

We are starting to see the rise of the super apps in Latin America, but they will not follow the Chinese path as the markets are very different. A better comparison could be with the Southeast Asian players as the markets are more similar; however, Latin American’s super apps will probably be the result of the unique environment in the region.

As more companies are looking into the Chinese success stories, we will probably see even more players competing to become the Latin American super app. The venture capitalists are already placing their bets on who will become the leading players in Latin America. One thing is certain: It will be exhilarating to see how the market unfolds in the region — the customers will be the true winners in this battle.