Here is the face of struggling crypto entrepreneurs in Latin America

Amid the global slowdown in startup funding, the crypto market faces its own unique challenges and opportunities. Although entrepreneurs are adapting to these challenges by seeking alternative funding avenues and navigating regulatory environments, lack of finance can inhibit innovation.

Latin America's cryptocurrency scene shows a history of tolerance, paving the way for an inclusive and technological future.

Interest in Cryptocurrency Wanes

The area of ​​funding, an important aspect for startups, has seen a dramatic decline. In the year In 2023, startup funds in Latin America decreased by 83% compared to last year, with only $1.1 billion invested.

Likewise, global venture capital funding for crypto companies fell sharply in the first quarter of 2023, down 80 percent from last year. This reduction brings the investment down from $12.3 billion in 2022 to $2.4 billion in 2023.

“Only 12% [of family offices] He expressed his desire for the future [in crypto]Decreased by 45%. Last year's high crypto market volatility seems to have dampened their interest, as 62% report not investing and not interested in crypto futures, up from 39%,” Goldman Sachs research said.

This decline reflects a broader global trend driven by macroeconomic factors such as high interest rates that drive capital toward lower-risk investments. As these rates adjust, there is a chance for a resurgence in startup investments, but the situation remains challenging.

Finding funding for crypto entrepreneurs in Latin America is a crucial but difficult task, especially this year. While startups have the potential for organic growth, strong funding can greatly accelerate their growth.

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Cristobal Pereira, CEO of Blockchain Summit Latham, told BEncrypto that crypto entrepreneurs should explore alternative sources of funding. Although often small in size, various protocols and quadratic grants provide “strong alternative” support to businesses operating with limited resources.

“Grants are specifically designed to support the deployment of applications on new infrastructure. It is important to be alert to these opportunities as any assistance is useful when working with a limited budget,” said Pereira.

Overcoming regulatory barriers

Government and regulatory frameworks also have a significant impact on crypto entrepreneurship. Brazil is a leader in adopting Web3 innovations with progressive technology infrastructure and regulations. However, the rest of the region has lagged behind, with many countries still disputing rules that other jurisdictions settled on years ago.

Strong regulation is especially critical in the financial system, where blockchain technologies could fundamentally change the sector.

“In matters related to the financial system, the lack of basic regulation often leads to issues, because banks in Latin America close the bank accounts of entrepreneurs and their startups when dealing with digital assets. This obviously creates a big challenge for those who want to venture into this field,” added Pereira.

For this reason, education, language, ecosystem (Blockchain) ecosystem (Blockchain) ecosystem (Blockchain) ecosystem (Blockchain) ecosystem (Blockchain) ecosystem (Blockchain) ecosystem (Blockchain).

A shared understanding between entrepreneurs, users, investors and regulators is critical to identifying opportunities and mitigating risks. Especially in the region where 50% of the population has access to a bank account and 80% own a smart phone.

“I believe there is an opportunity for crypto startups in this area. Showing how simple and easy it is to use this technology by showing the potential of financial operations at any time and day shows the potential of the technology. The majority of people can simply download the application and start receiving digital assets, using it in their daily lives. ” emphasized Perera.

Still, the current state of financial capital poses challenges. Although Web3 financial products and services can offer higher savings and loan rates than traditional media, investment is also affected by this. A lack of available capital limits investment opportunities in crypto startups, severely hampering their growth potential.

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Looking ahead, Latin America has significant potential for crypto industry growth despite significant challenges. While international companies are realizing the region's potential, local crypto entrepreneurs also have the opportunity to create solutions that can succeed globally.

“Latin America has a significant contribution to leading the adoption of cryptocurrencies and reaching the first billion crypto users. Considering the widespread adoption of crypto in the region, I can confirm that a large part is already underway. In the market, entrepreneurs can explore new solutions to offer these users, This will contribute to the professionalism and development of the market,” Pereira concluded.

Education, adaptive strategies, and a focus on building consumer trust and awareness are key to overcoming current barriers and fostering mainstream adoption.