Volatility, hyperinflation and uncertainty: How everyday Venezuelans are using stablecoins to protect their livelihoods

Customers of stablecoin payment app Reserve express their dependency on technology for everyday transactions.

Last month, Cointelegraph interviewed Reserve CEO Nevin Freeman and the payment decentralized application’s community manager Yens Michiels about the company’s mission to provide access to stable currencies. More recently, Cointelegraph spoke to a couple of users based out of Venezuela and Colombia who shared their positive experiences with Reserve. 

Reserve is a tool to exchange fiat currency like Venezuelan bolivares for U.S. dollars via the Reserve (RSV) stablecoin. From everyday purchases to family remittances, Reserve has said that its use cases are increasingly growing in Latin America. After one year on the market in Venezuela, Colombia, Panama and Argentina, there are over 100,000 weekly app visitors and more than 8,000 merchants accepting it as a means of payment.

Sasha Antunez and Alicia Stephany are two Reserve customers who offered their perspective on the app’s role in their daily lives and on the economic situation in Venezuela. Antunez is a neurologist living in Maracay, Venezuela and a self-proclaimed “Reserve Ranger” who uses Reserve both at home and at work. Stephany is a Venezuelan living in Bogota, Colombia who uses Reserve to support her family members that still live in Venezuela.

Antunez explained how she uses Reserve for daily expenses:

“I have my Reserve dollars saved in the app. Suppose I have to go to the supermarket and I have around $20. I do the exchange so that I have bolivares in my bank account and can pay for everything at the supermarket. But I also know that I can take my bolivares, turn them into Reserve dollars, and then into USDT.”

Most customers use it to save their money. If they get paid in their local currency, they do not have to worry about its devaluation if it is in U.S. dollars. And if they need to buy something in a local currency, as Antunez described, they can always convert it back or pay directly with the RSV stablecoin if the merchant accepts it. Most don’t even realize that it has to do with cryptocurrency, like Stephany.

“The Venezuelan bolivar loses value so fast that if you have bolivares, you need to change it as soon as you can to protect them,” she explained, adding the example that if she’s in Colombia and her father is in Venezuela, but “I needed to pay for his things, then instead of only exchanging what I needed at the supermarket, I was always looking for someone to buy extra dollars from me. So, I convinced the people from the supermarket and the pharmacy I use to download Reserve.”

Related: Venezuelan international airport to accept Bitcoin payments: Report

The government introduced a re-denomination of the currency in October, the third one since 2008, in order to ease computations. The economy, however, had already been increasingly unofficially dollarized. This means that prices in stores are marked in dollars, corresponding to the black market rate rather than the official exchange rate, as more and more merchants use PayPal, Zelle or, now, Reserve. With Reserve, users can exchange currencies at rates closer to those of the central bank.

Couple this volatility with hyperinflation, and mistrust in the government and the banking system is bound to surge among citizens. When asked about the prospects of the economy getting better in Venezuela, Antunez said:

“I believe that technology will play a big part because cryptocurrencies allow financial freedom and free access for everyone. That’s how we need to address this situation, by giving people the tools to protect their money. Here, we don’t have any solutions, at least not right now. And I don’t see things getting any better. In the meantime, we’re just trying to protect the little money we earn from our jobs.”

At the time of publication, the project’s iPhone app was the No. 1 most downloaded app in the Venezuelan app store under the finance category. Binance and MetaMask, two other cryptocurrency trading apps, are among the top 10 as well.

Tribal Credit taps Bitso and Stellar to enable cross-border B2B payments

The partnership between Tribal Credit, Bitso and Stellar Development Foundation will rely on crypto to streamline B2B transactions in Latin America.

Enterprise payment platform Tribal Credit has partnered with Latin American crypto exchange Bitso and the Stellar Development Foundation to create a new cross-border payment service for businesses, opening the door to broader use cases for blockchain technology in the region.

The new service, which is geared towards small- and medium-sized enterprises, enables companies in Mexico to pay for goods and services in their native peso currency and have their counterparts in the United States receive the payments in dollars. The service will rely on the Stellar blockchain, a decentralized open-source payment network specializing in cross-currency transactions.

Tribal Credit’s cross-border payment system will be facilitated by Bitso, a multi-billion-dollar crypto exchange that will enable merchants to convert pesos to Stellar’s USDC stablecoin. Bitso was a key partner in the rollout of El Salvador’s state-issued Bitcoin (BTC) wallet Chivo. 

The Stellar Development Foundation, or SDF, is a non-profit organization supporting the growth and adoption of the Stellar blockchain. Stellar’s native XLM cryptocurrency has been a mainstay in the digital asset market over the past four years and currently ranks 26th by total market capitalization. (Interestingly, two members of SDF were inducted into the Cointelegraph Top 100 for 2021.)

When asked about why Tribal Credit selected Stellar for its cross-border payment service, chief research scientist Ehab Zaghloul told Cointelegraph that the protocol aligns with Tribal’s mission to “promote financial inclusion and democratize access to financial services.” Stellar is also “fast and charges nearly nothing for transactions, making it far more affordable and efficient than its competitors,” he said in a written statement. 

Fast and efficient cross-border payments are one of the most promising use cases of blockchain technology in an age where traditional wire transfers remain cumbersome, expensive and slow. As Cointelegraph reported, credit card giant Visa acquired cross-border payment fintech Currencycloud in July for an undisclosed amount. The acquisition is intended to help Visa improve its foreign exchange business.

Related: B2B firms want cross-border payments but skeptical of crypto: Survey

Tribal Credit has identified Latin America as one of the world’s fastest-growing markets for cross-border transactions involving businesses. Led by Mexico, the region represents a $175 billion market opportunity that could be ripe for disruption by companies willing to experiment with blockchain technology. 

“Economic conditions in Latin America certainly do make the region receptive to crypto payment services,” Tribal Credit’s chief strategy officer Mohamed Elkasstawi told Cointelegraph in a written statement. “Crypto and stablecoins serve as a hedge against inflation and currency devaluation not just in Latin America, but in many other countries as well.” Elkasstawi also credited widespread adoption of smartphones for crypto’s growing mainstream appeal in the region:

“It’s also worth considering that everyone with a smartphone can transact in crypto, so in a region where not everyone lives a reasonable distance from traditional financial institutions, cryptocurrencies provide a useful supplementary financial service for many individuals across Latin America.” 

Gemini partners with Colombia’s biggest bank for crypto trading

The partnership will allow Bancolombia customers to trade a number of popular cryptocurrencies including BTC, ETH, and LTC.

New York-based crypto exchange Gemini has announced that it will be expanding into Latin America through an upcoming partnership with Colombia’s largest bank, Bancolombia.

The partnership will take effect Dec. 14, and will permit customers from Bancolombia to trade 4 crypto assets: Bitcoin (BTC), Ether (ETH), Litecoin (LTC), and Bitcoin Cash (BCH).

A limited number of users will be able to buy crypto directly from their Bancolombia bank accounts through the Gemini exchange, which will provide crypto-specific infrastructure for exchange and custody of assets. It remains unclear whether the users will be able to withdraw the crypto holdings directly from their accounts.

In a Dec. 6 announcement about the partnership, Gemini stated that it “serves as an important step toward the strategic expansion of Gemini’s presence in Latin America.”

“We believe that crypto can play an important role in the development of Latin America as interest in blockchain and innovative technologies proliferates throughout the region.”

The partnership will run as part of a year-long pilot program run by Colombia’s financial regulator, the Superintendencia Financiera de Colombia (SFC). The regulatory sandbox, “la Arenera” was approved by the Ministry of Finance and Public Credit in September 2020.

In January, the SFC announced that it had chosen 9 out of fourteen crypto exchanges that applied for the project including Gemini, Binance, and the Mexican exchange Bitso.

Since El Salvador adopted BTC as a legal tender on Sept. 7, Latin America has moved in strides towards mainstream crypto adoption. In Oct., CEO of multicurrency investment platform Uphold JP Thieriot told Cointelegraph that Latin America stands to “benefit the most from crypto.”

Gemini currently operates in over 60 countries, including Argentina, Brazil, Chile, El Salvador, Panama, Peru, and Uruguay in Latin America.

Related: Blockchain.com acquires SeSocio to cement presence in Latin America

Bancolombia operates in Colombia, Panama, Guatemala, and El Salvador. According to an internal report from last year, it has 17.8 million users.

In March, Colombia’s oldest bank Banco de Bogotá also announced that it would also be piloting crypto services as part of la Arenera. A year prior in March 2020, Cointelegraph reported that Latin America is the region with the third-largest number of crypto users in the world.