Cryptocurrency exchanges have generated new financial opportunities for everyone. However, in emerging markets, where it is more common to be unbanked, they are real revolutions, since the only barrier to entry is Internet access. How are cryptocurrency exchanges positioned in these emerging markets? Do they mean anything to your future?
The Paris Blockchain Week Summit answers these questions, thanks to an excellent panel made up of the following experts:
- Paolo Ardoino, CTO of Bitfinex
- Jeff Mei, Director of Global Strategy, Huobi Global
- Mounir Benchemled, Founder of Paraswap
- Charlie Meraud, CEO of Wortoon
What are the most common use cases of exchanges and cryptocurrencies in emerging markets?
We have to remember that cryptocurrencies are being created to address and confront very different problems. However, in general, the idea is to help people and offer an alternative solution to traditional financial systems that they may not be able to access. To achieve this, people from these economies use cryptocurrency exchanges.
According to Paolo Ardoino, one of the use cases that we see the most is that of Latin America, but also that of Turkey. He comments that in these places people see access to cryptocurrencies “as a way to protect themselves from their national currency, which usually has a devaluation problem against other currencies.” As an example, he mentioned that the Turkish lira “lost more than 50% in the last six months, and we are seeing similar patterns in Argentina and Venezuela.”
In general, experts mentioned the following most common use cases:
- As a hedge against the local currency.
- A new form of payment, for salaries or wages, especially in the economy of creators or artists.
- For sending remittances.
- To have a safe place where you can deposit your national currency.
They also mentioned that a vibrant market has emerged around Stablecoins, thanks to their ability to serve as a savings account. This is particularly noticeable in Latin America, Southeast Asia and Central Africa.
Another perspective of use: to invest
Although in principle everyone agreed that the use cases of exchanges can be summarized in the above points, Jeff Mei offered another particularly valid vision in Southeast Asia.
According to Mei, there is also a “more proactive” perspective in this region. «We see people who want to invest. They want a vehicle where they can make a profit from their money, from their savings. We see that they are very active on their mobile phones all the time. Mobile penetration is very high throughout Asia. So we want to give them a way to invest in all these great projects that everyone is doing».
With this, it is clear that those who use exchanges in emerging markets are not always vulnerable people who are forced to use them. For many it is simply an investment vehicle with some comparative advantages over the traditional financial world.
In that sense, Mounir Benchemled assured that there are many “very sophisticated” users, especially of DeFi. According to him, this is due to the fact that information is accessible to everyone equally. «We see people farming, trading and leveraging. They come to use us for some benefit. (…) There has been a lot of sophistication from those countries, in particular, from countries like Nigeria, from South America and others».
How does the marketing or promotion of cryptocurrency exchange platforms work in these regions?
In general, the panelists recognized that the markets are very different from one country to another. In addition, the marketing channels are not so sophisticated. According to them, most “non-custodial” services are isolated from traditional advertising channels. For example, they do not have access to advertising on Facebook, Twitter or Google in most cases.
Therefore, they highlighted the role of investing in product quality, and transforming users into ambassadors of the same. The most common way of transmitting a site’s advertising in these emerging markets is usually “word of mouth”.
In reality, the product itself creates ambassadors who become the marketers of that product.
Mounir Benchemled, Founder of Paraswap
An example of this methodology is the cryptocurrency Tether (USDT). Ardoino mentioned that this stablecoin is “a clear winner” in emerging markets. «One of the things I’m most proud to be a part of is when I listen to people from Latin America, Turkey or India. They all know Tether, so they want to use it. It’s one of the most important things for me because we never invested in marketing for Tether in those regions. It just has a growth. Adoption is achieved only because it is useful».
What are the future challenges for the promotion of cryptocurrency exchanges in emerging markets?
Something that Jeff Mei highlighted was the need to get licenses in those jurisdictions. «It’s about getting the right licenses to get the connections with fiat money. That is, so that people can directly buy cryptocurrencies with Fiat on the exchanges“, he explained.
For the Huobi manager, this is the next challenge they have to take on, since it is the only way in which the crypto space can develop. He also stressed that “that’s the way institutions can come in and provide real liquidity». However, he also stressed that the speed of obtaining such licenses also plays a crucial role in this progress.
About regulation
On the other hand, Mei considers that regulation is not a challenge, but a step that everyone has to take. “Right now we are working a lot with two big Hubs: Singapore and Dubai. We are going to see a lot of companies going there because their governments are very open,” he added.
Then he went on to say “We are working hard to help them create that initial base. And that’s a lot of education, training of personnel in local markets about crypto, about the development of engineering, working with policies. (…) It’s not about going against them, just about cooperating and trying to build together».
Relate
