Guide for Crypto Projects Entering Emerging Markets

Emerging markets offer potential for growth and adoption for crypto projects. These regions are characterized by youthful, tech-savvy populations, gaps in traditional banking services and a strong appetite for speculation. 

Yet, breaking into these markets successfully requires a nuanced understanding of local dynamics and regulatory environments. This guide outlines key strategies for crypto projects looking to harness the strengths of emerging markets.

Why Emerging Markets?

Emerging markets, including regions such as; Southeast Asia, Latin America and parts of Africa, have shown increasing interest in blockchain and cryptocurrency. Here are a few compelling reasons:

• Underbanked Population: According to the World Bank, nearly 1.4 billion adults globally remain unbanked, with a significant concentration in emerging markets. Cryptocurrencies provide an alternative to traditional banking, allowing people to store value, transact, and save without requiring a bank account.
• High Mobile Penetration: In many emerging regions, mobile penetration is significantly higher than traditional computer access. This allows crypto projects to reach potential users through mobile-friendly applications, opening the door to a larger customer base.
• Inflation and Currency Instability: Countries facing economic instability often see high adoption rates for cryptocurrencies as residents seek safe stores of value and remittance solutions that bypass traditional banking fees.

Recent IMF research underscores the growing influence of emerging markets on both local and global scales. Over the past two decades, the impact of domestic shocks within these economies has intensified, with growth spillovers now reaching levels comparable to those of advanced economies.

References: World Bank (2023), Chainalysis 2023 Global Crypto Adoption Index, IMF 2024 Report.

Understanding Market Dynamics

Each emerging market has its unique characteristics. Here’s what crypto projects need to analyze:

• Regulatory Environment: Stay informed about local regulations. For instance, countries like Nigeria have seen crackdowns on crypto transactions, and well-known leaders in the geo, but are still hubs for peer-to-peer trading due to the high demand for financial alternatives.
• Cultural Preferences: Understanding how locals perceive digital assets is crucial. In regions where cash transactions are deeply ingrained, education is vital to facilitate a shift toward digital currency.
• Tech Literacy: Varying levels of tech literacy across different demographics can influence the type of crypto products introduced. User-friendly apps and comprehensive educational campaigns can bridge gaps.

Strategies for Successful Entry

Partnerships with Local Fintechs and Payment Platforms

Forming alliances with existing fintech companies and payment processors can be instrumental. For example, mobile money services like M-Pesa in Kenya have paved the way for digital financial solutions. By integrating with such platforms, crypto projects can quickly gain access to established user bases.

Focused Education and Outreach Programs

Building trust and knowledge among potential users is essential. This can be done by:

• Hosting workshops and webinars that demystify blockchain technology.
• Creating content in local languages to reach broader audiences.
• Partnering with local influencers to explain the utility of crypto in relatable terms.

Reference: Binance Academy has successfully run educational campaigns in various developing regions.

Offering Solutions for Real-World Problems

To resonate with users, crypto projects should aim to solve specific pain points. In countries where remittances form a significant portion of GDP, offering faster, cheaper cross-border transfer solutions could be a winning proposition. Likewise, stablecoins can serve as a hedge against inflation for those dealing with currency devaluation.

Leveraging Blockchain for Social Impact

Crypto projects that aim to make tangible contributions to societal challenges will often find strong support. Blockchain-based solutions for identity verification, land registry, and micro-loans can address issues that have plagued emerging markets for years. For instance, blockchain initiatives focused on providing transparent charity funding have gained traction and trust in regions where corruption is an obstacle.

Addressing Challenges

Regulatory Compliance: Emerging markets often have regulatory frameworks that are either non-existent or in flux. To mitigate risks:

• Engage with local legal experts to ensure compliance.
• Be flexible in your business model to adapt to new regulations as they arise.

Scalability and Infrastructure Issues: Some regions may struggle with internet reliability or limited access to modern financial systems. Optimizing blockchain solutions for low data consumption or integrating offline transaction capabilities can overcome these barriers.

Financial Literacy: While interest in crypto is growing, financial literacy remains a challenge. Companies should provide resources that simplify blockchain concepts. For example, animated explainer videos and beginner-friendly platforms that do not require prior knowledge can facilitate broader adoption.

Case Studies of Emerging Market Implementations

• Stablecoins in Nigeria, India, Indonesia, Turkey and Brazil: Stablecoins are increasingly used in emerging markets for purposes beyond speculative trading, with 69% of users substituting their local currencies and 39% using them for cross-border payments and goods. This trend highlights stablecoins’ role as a reliable digital dollar alternative, enabling savings, efficient currency conversion, and financial inclusion in regions with limited access to traditional banking. Below you may find some statistics on stablecoin use in the emerging markets stated above.

• Bitso in Latin America: Bitso has leveraged its user-friendly interface and focus on local remittance needs to become a leader in the Latin American crypto space.

References: CoinDesk reports, Bitso and CastleIsland VC data and reports.

Leveraging Strengths of Emerging Markets

To take full advantage of these markets, crypto projects should:

• Adapt to Mobile-First Economies: Design platforms that prioritize mobile experiences, ensuring compatibility with basic smartphones.
• Embrace Community Building: Grassroots movements and word-of-mouth marketing are powerful. Crypto initiatives should foster community groups where users can share experiences and best practices.
• Innovate with Local Solutions: Develop blockchain use cases that cater specifically to local issues, such as transparent aid distribution and localized lending platforms.

Conclusion

For nearly a decade, Gravity Team has focused on empowering emerging markets by ensuring consistent access to liquidity and balancing supply and demand across the global crypto landscape. Our deep liquidity solutions equip local exchanges with the tools to provide a seamless trading experience, marked by competitive, market-driven spreads.

Entering and thriving in emerging markets as a crypto project demands an understanding of regulatory nuances, solutions tailored to local needs, and strategic partnerships that build lasting trust. While challenges are real, the potential rewards are substantial—not only in adoption but also in the positive economic and social impact blockchain can foster.

Emerging markets represent a unique opportunity for crypto projects to drive meaningful change on a global scale. If you’re an exchange seeking to enhance liquidity or a project interested in market-making services tailored to these regions, we invite you to reach out. Together, we can leverage the power of crypto to support economic growth and financial inclusion where it’s needed most. For more information regarding market making in emerging markets, please find a link here. 

Further Reading

1. World Bank via Financial Inclusion: The World Bank’s Global Findex Database provides in-depth data about financial inclusion, highlighting the significant number of unbanked individuals in emerging markets. This data can be used to emphasize the potential for crypto adoption as a financial alternative: Source.
2. Chainalysis via Crypto Adoption Reports: Chainalysis publishes comprehensive Global Crypto Adoption Index reports annually. These reports offer insights into which countries lead in crypto adoption and detail the motivations behind such trends, such as inflation and currency instability: Source.
3. Bitso and Latin American Remittance Growth: For insights into Bitso’s success, Forbes and Reuters articles, along with Bitso’s own blog and press releases, provide data on how the company became a leader in remittances across Mexico and Latin America: Source.
4. M-Pesa’s Influence in Africa: GSMA Intelligence and articles from BBC or Quartz Africa detail how M-Pesa has transformed digital payments in Africa, serving as a model for integrating financial tech in mobile-first economies: Source.
5. Binance Academy’s Educational Initiatives: Articles on Binance’s global outreach and local blockchain education initiatives are often covered in Cointelegraph, CryptoSlate, and Binance’s press releases: Source.
6. IMF and Emerging Market Trends: The International Monetary Fund (IMF) publishes papers and reports on the economic dynamics of emerging markets, including cryptocurrency usage as a response to economic challenges: Source.
7. Blockchain for Social Impact: Stanford Social Innovation Review and World Economic Forum articles often discuss the application of blockchain technology for positive social change, such as identity verification and transparency in aid distribution: Source.
8. Reports on Financial Literacy in Emerging Markets: Reports from organizations like OECD and UNESCO often cover financial literacy statistics and initiatives in developing countries. This can provide context for the need for education-focused strategies in crypto adoption: Source.
9. Stablecoins via The Emerging Market Story: This report highlights the growing use of stablecoins in emerging markets, where they are increasingly serving as a substitute for local currencies, facilitating cross-border payments, and enabling savings in stable assets. Source.

Disclaimer: This article is for informational purposes only and does not constitute financial, investment, or legal advice.