Over the past two years, cryptocurrencies have gained unprecedented traction, attracting stakeholders that have refrained from backing them in the past due to crypto’s high price volatility and fears of government regulation. Now, not only individuals but also institutional investors are beginning to bet on the decentralized finance revolution. Venture capital firms have also shown significant interest, reportedly investing $4B in crypto firms in the second quarter of 2021.
The decentralization of finance has been a particularly interesting trend in the case of Latin American countries. After many inflation crises in countries like Venezuela and Argentina, increasingly more people are starting to question the government’s ability to control the stability of the national medium of exchange. The idea of a safer digital currency holds a particularly appealing promise for these nations. Some firms have already identified this niche in the Latin American market and are implementing these technologies throughout Latam. In fact, this crypto startup boom recently led to the creation of two unicorns valued at over $2B.
While these industries are still in their infancy in a constantly evolving market, there are several key players that are already making waves in the region. Here are 10 startups worth exploring in Latin America’s ecosystem that are currently defining the cryptocurrency revolution in the region.
Top 10 crypto and blockchain startups in Latam
1. Bitso (Total raised: $378.4M | Series C | HQ: Mexico)
Bitso is the first crypto unicorn in Latin America, valued at an astounding $2.2B. The Mexico-based company is an exchange platform that allows its users to buy and sell nine different cryptocurrencies including Bitcoin, Etherium, and Litecoin. It also allows users to send cryptocurrencies around the world and make deposits in local currency. Users can start with as little as 100 pesos (~$5) and make deposits directly from their bank or at Oxxo (7-Eleven-type stores).
2. Mercado Bitcoin (Total raised: $200M | Series B | HQ: Brazil)
Mercado Bitcoin is another crypto unicorn and currently the most popular crypto exchange in Latin America. Headquartered in Sao Paulo, Brazil, the company is currently valued at $2.1B and has been famously backed by SoftBank. Beyond buying and selling cryptocurrencies similar to that of Bitso, the platform offers its users a broad selection of other crypto assets such as utility and fan tokens. Mercado Bitcoin currently has over 2.8 million clients trading on its platform.
3. Ripio (Total raised: $44.4M, Initial Coin Offering | HQ: USA)
The Argentine founded Ripio is the only startup on the list that has created its own cryptocurrency (RCN) through an Initial Coin Offering (ICO). The company helps merchants process international transactions with credit cards or bitcoins for a fraction of the cost as well as consumers to buy and sell bitcoin and other cryptocurrencies. Ripio also offers its users a unique service called Ripio Earn which allows individuals to earn fixed monthly earnings on their crypto wallets.
4. Hashdex (Total raised: $26M | Series A | HQ: Brazil)
Hashdex is perhaps the most unique firm on the list with a mission to bridge the traditional and crypto markets and unlock the blockchain potential to mainstream investors through Exchange Traded Funds (ETFs). They were the company that collaborated with the Nasdaq Stock Exchange to design the Nasdaq Crypto Index (NCI). In February 2021, Hashdex launched the Hashdex Crypto ETF, which tracks the NCI index on the Bermuda Stock Exchange (BSX). The Hashdex Crypto ETF is the world’s first crypto asset-based ETF and is available on the BSX to accredited non-US investors at this time.
5. Buenbit (Total raised: $11M | Series A | HQ: Argentina)
Buenbit is another crypto exchange and a cross-border payment platform. Headquartered in Argentina, a country with a 50% annual inflation rate, Buenbit also offers its users the ability to purchase Dai, a coin pegged to the value of the US dollar, in order to avoid potential inflation on Latin American currencies.
6. Bitt (Total raised: $8.5M, Acquired by a VC firm | HQ: Barbados)
Bitt is a Caribbean-based digital asset exchange whose core focus is on providing access to cryptocurrencies in emerging markets. It offers an array of services for different stakeholders. Central Banks can work with Bitt to develop a CBDC, while financial institutions and merchants can use Bitt’s technology to allow payments with CBDCs to their clients.
7. RSK Labs (Total raised: $7.3M | Seed | HQ: Argentina)
RSK Labs is focused more specifically on blockchain technology development and smart contracts. It is the first open-source smart contract platform with a 2-way peg to Bitcoin that also rewards the Bitcoin miners via merge-mining, allowing them to actively participate in the Smart Contract revolution. RSK’s goal is to add value and functionality to the Bitcoin ecosystem by enabling smart contracts, near-instant payments, and higher scalability.
8. Valiu (Total raised: $5.6M | Seed | HQ: Venezuela)
Valiu is a digital remittance platform that provides borderless financial services to all Venezuelans. It is a mobile application that offers migrants access to a convenient dollar savings and transfer system to send money across borders to family members, regardless of their socioeconomic status or the range of their phone, and in spite of the country’s hyperinflation crisis.
9. CryptoMKT (Total raised: $600K | Seed | HQ: Chile)
CryptoMKT is another fast-growing crypto exchange, headquartered in Chile. Beyond giving its users access to a broad range of cryptocurrencies to buy and sell, the platform is equipped with advanced trading tools, such as trading view and stop-limit orders.
10. Xcapit (Total raised: $560K | Pre-seed | HQ: Argentina)
Xcapit is an ecosystem that includes a wealth manager, crypto investment products, a non-custodial DeFi wallet, a card for buying coffee with crypto, and a place to learn about personal finance. It is a unique company that allows users to operate their finances in an automated way powered by AI. For instance, users can deposit money and choose an AI-powered crypto investment strategy that will manage their wallets for them.
The crypto space in Latin America has produced a number of exciting companies whose influence in decentralized finance goes beyond just the region. Should the crypto boom continue, we might see more companies in this space with similarly impressive funding rounds to those of Bitso or Mercado Bitcoin.
The developments in the crypto space might be of particular interest to venture capitalists who have not jumped on the trend yet but still have a chance to do so as new companies emerge. Even individual investors in Latin America can soon capitalize on crypto companies’ growth, as more crypto and blockchain startups around the world begin to sell substantial equity stakes to mainstream investors.
In the United States, leading crypto exchange Coinbase recently pursued an IPO and was listed on the Nasdaq. Another top stock and crypto exchange, Robinhood, has recently followed suit. Perhaps Latin America will soon have similar assets available on its stock exchanges giving everyday investors’ wallets the ability to tap into crypto markets without directly purchasing crypto assets.
However, it’s important to note that the crypto space faces a number of challenges that could hamper its future growth. For instance, the sustainability concerns related to Bitcoin’s proof of work system which uses significant amounts of electricity have already managed to shake the crypto market in the past. Furthermore, regulatory concerns and governments’ reluctance to give away their currency control to decentralized systems could make it harder for investors to purchase and use digital assets. One could also point at crypto’s volatility: if the price of a bitcoin can change by tens of percent in a single day, how can an investor currently regard it as a safe store of value?
This debate does not have a clear-cut answer. What appears clear, however, is that the decentralized finance trend in Latin America cannot be ignored and that we will likely see more interesting developments in this space, whether they will be positive for the growth of crypto and DeFi or not.