Will Crypto Expansion Continue In Emerging Markets This Year?

Emerging markets were at the forefront of last year’s massive growth in global cryptocurrency adoption. With this growth widely tipped to continue into 2022, a range of countries will see their crypto markets mature or expand. As OBG detailed at the time, the onset of Covid-19 spurred a massive expansion in the use of cryptocurrency in a number of emerging economies.

For example, Nigeria – Africa’s biggest cryptocurrency market – was the world’s leading country for cryptocurrency adoption in 2020, with Vietnam and the Philippines coming second and third, respectively.

The worldwide growth in cryptocurrency continued throughout 2021.

By the end of the year the segment’s total market capitalisation had grown by 187.5%, while the entire market was worth a combined $2trn.

Meanwhile, according to leading research firm Chainalysis, worldwide adoption had jumped by over 880% year-on-year by August.

Throughout 2021 the most rapid adoption rates were once again seen in emerging markets. In Chainalysis’ annual ranking, Vietnam, India and Pakistan were first, second and third, respectively, while the US was the only mature economy in the top 10.

Brazil – which came in at number 14 – offers a case study in how emerging economies sought to leverage crypto in 2021.

In terms of traditional financial markets, the Brazilian Stock Exchange debuted three crypto-dedicated exchange-traded funds (ETFs). Meanwhile, in the first quarter of this year the country will also see the launch of the world’s first ETF dedicated to decentralised finance networks.

In terms of institutional buy-in, the central bank announced that it was to continue working to incorporate blockchain technology into its services, by way of a series of tests carried out in-house by a dedicated team. It also unveiled plans for a central bank digital currency, which could be launched by as early as 2023.

In terms of legislation, in December the Brazilian congress approved a bill establishing criteria for the regulation of cryptocurrencies in the country.

Lastly, in terms of popular culture, crypto began to become all-pervasive. To take an example, the homegrown Mercado Bitcoin – one of Latin America’s crypto unicorns – partnered with leading football clubs in the expansion of “fan tokens”, while the non-fungible token market also established a foothold, not least through its adoption by musical stars such as such as André Abujamra and Zeca Baleiro.

Naturally, different emerging economies will continue to integrate blockchain-based technology in their own ways. But the Brazilian case is revealing of how crypto can come to permeate a national economy.

Cryptocurrency in 2022

According to research firm Tellimer, the current phase in the evolution of decentralised digital currency is defined by an emphasis on scalability, sustainability, governance and blockchain interoperability. Tellimer has dubbed this phase “Crypto 3.0”.

The key characteristics of “Crypto 3.0”…