Will FTX’s ill wind reach the Global South? Maybe not

With the crypto world still reeling from the FTX collapse, Brazil recently passed legislation that legalized cryptocurrency use for payments in the country. How to reconcile this with all those declarations in the West that crypto is having its “Lehman moment”? 

Brazil may have inadvertently revealed a cleft between the developed world and emerging markets with regard to the uses and misuses of cryptocurrencies. (The legislation still requires a presidential signature before it becomes law.)

Unquestionably, FTX’s Nov. 11 bankruptcy filing hurt crypto exchanges and other crypto-focused enterprises in Brazil, as well as many crypto-based companies all through Latin America (LATAM). But this latest gale in the crypto winter is generally not seen as an existential threat — as it is sometimes portrayed in Western media.

“It [FTX’s implosion] was certainly a net negative everywhere,” Omid Malekan, author and adjunct professor at Columbia Business School, told Cointelegraph. “But how much people are deterred is a function of whether they have access to stable currencies or reliable payment products.”

Many businesses in South America have felt pain from the crypto winter, David Tawil, president of ProChain Capital, told Cointelegraph. There’s been a slowdown in trading activity, layoffs and a decline in venture capital investments. Yet crypto practitioners in South America “are still plowing ahead,” he said, because through much of the region, “crypto is functional, it has a real utility” in ways that are not fully understood or recognized in the West.

Stablecoins like Tether (USDT) and USD Coin (USDC) are much more important in countries like Argentina and Brazil where the government has implemented capital controls that limit the purchase of U.S. dollars. In Brazil, for instance, “There is only one currency — the local Brazilian real,” Thiago César, the CEO of fiat on-ramp provider Transfero Group, told Cointelegraph. “You can’t have dollar accounts. You can’t have euro accounts. So, in that context, a Brazilian stablecoin is very important for Brazilians.” Stablecoins enable users to participate in international markets.

“Unlike the more developed economies, where crypto is seen as an investment,” and the focus is obtaining profits from one’s holdings, César continued, “in Brazil, that’s actually not the case.” Sales of stablecoins like USDT, USDC, and the Brazilian Digital Token (BRZ), a token backed by…