Financial Services Advisor

Prince-Alex Iwu, law clerk, and Christian F. Schoepp, international consultant, at Diaz, Reus & Targ, LLP: “Digital currencies’ volatility makes them an inadequate place to store value—a fundamental function of most currencies. Whereas the volatility of gold and other major currencies average around 1.2 percent and between 0.5 percent and 1 percent, respectively, the volatility of Bitcoin for the latest 60-day estimate is 7.49 percent. Latin America has a great affinity for the use of digital currency. High inflation rates (an average of 10 percent in Argentina since 2012, for example) and abysmal growth (0.7 percent GDP growth for 2020 in Latin America) will keep the demand for digital currencies stable, if not increase it as a poor but less-regulated substitute for the dollar. The data shows, according to a 2019 Statista survey, that Brazil, Colombia, Argentina, Mexico and Chile are among the top 10 users of digital currency. Resistant to government foreign exchange policy, and less volatile than inflation in many Latin American countries, many Latin Americans will continue to look to digital currencies for relative stability. There is a move toward…”