The United States-based crypto firm Ripple has partnered with the foreign exchange platform, Travelex, to facilitate cross-border payments between enterprises. Accordingly, the new development would see Travelex utilize Ripple’s XRP token to process transactions in Brazil.
Meanwhile, Travelex will use RippleNet’s On-demand Liquidity (ODL) to facilitate payments between entities using XRP. The Brazilian Central Bank approved Travelex Bank as the first financial institution to operate in foreign exchange.
Ripple’s ODL in Latin America
Before this latest collaboration, no bank in Latin America had used Ripple’s ODL product. However, other established Latin American financial institutions like Banco Rendimento and Banco Topazio have previously used RippleNet’s services.
Travelex will facilitate the first phase of transactions between Brazil and Mexico as part of the agreement. Plans are underway to open more payment gateways in the region. More importantly, Travelex will ensure that each use case suits the enterprise’s business needs.
According to Ripple’s CEO, Brad Garlinghouse, the crypto-friendly guidelines in Brazil are what make it an excellent fit for Ripple’s ODL. Garlinghouse added that Brazil is Latin America’s anchor in crypto businesses and expansion.
Furthermore, the new development came following the Brazilian government’s approval of its first “Bitcoin Law” in April 2022. The latest Bitcoin law aims to create a holistic regulatory framework for the crypto ecosystem in Brazil.
Brazil is still working on rolling out its central bank digital currency (CBDC), which turned out to be a controversial project. A Brazilian economist, Fabio Araujo, believes that CBDC will halt the bank’s smooth operations. He also added that some individuals would face restrictions on access to money for their use.
Latin America and Rising Crypto Adoption
Cryptocurrency adoption in Latin America is poised to accelerate further, given the region’s transactions in digital assets. Brazil and Argentina spearhead the region’s drive to use crypto as a utility more than those from developed economies.
The billion-dollar industry is rapidly expanding in Latin America, buoyed by institutional players’ entry into the ecosystem. Some of the biggest financial services providers are rolling out new crypto-based products to meet rising demand.
Interestingly, card payment service provider Mastercard has also ventured into the space and is using Binance. The two companies jointly launched a crypto prepaid rewards card in Argentina in the first week of August. The initiative is to help boost spending on cryptocurrency.
Likewise, the Mexico-based crypto exchange, Bitso, clocked one million users in July after just a year in operation. According to data from the on-chain crypto tracking platform, Chainalysis, there has been an explosion in crypto establishments between July 2020 and June 2021.
Aided by inflation and weak economic policies, crypto adoption is soaring in Latin America. There is a deep distrust of the government’s monetary policy caused by mismanagement. To make ends meet, people resort to trading in digital assets.
Meanwhile, it has also become the go-to alternative to fiat amid the declining value of the currency. This makes Latin America more of a haven for crypto transactions than any other region.