Guyana, an emerging crypto frontier in LatAm

Category: Americas Blockchain Crypto

Guyana’s economic landscape is changing. Despite its low population and high poverty rate, Guyana is one of the world’s fastest-growing economies. In 2022, it recorded a GDP growth of 62.3 percent, the highest according to the IMF. As more Guyanese citizens gain financial prosperity, the rates of crypto use could increase.

Guyana is often been overlooked when it comes to cryptocurrency activity because Guyana’s crypto landscape is less known.

Guyana has recently seen its economy transform due to the discovery of massive oil reserves. This has led to a boom in the oil industry, generating substantial revenues for the government. However, local companies are struggling to meet the demands of infrastructure projects, relying on foreign firms for completion.

The International Monetary Fund projects that Guyana’s GDP growth rate will be 38 percent in 2023, following a record-breaking 62.3 percent real GDP growth rate in 2022. The non-oil economy is also expected to grow, supported by a rapid public investment programme.

The newfound wealth can lead to hyperinflation, social and political upheaval, and severe income inequality. However, the government is implementing measures to mitigate the impact, including reallocating expenditures towards cash grants and transfers, implementing public investment projects, improving road networks, providing affordable housing, and easing the tax burden on the most vulnerable.

Legal status of cryptocurrency in Guyana

In the global crypto landscape, countries range from fully legalizing cryptocurrencies to outright banning them. Guyana falls somewhere in the middle. Cryptocurrency is not considered legal tender in Guyana, nor is it legally recognized and the country lacks concrete crypto laws to regulate the industry. To date, the government of Guyana has not licensed any crypto trading platforms, and there is no formal process for the country to become a crypto entity. The Central Bank of Guyana has issued several warnings to citizens on the risks associated with crypto use.

This lack of regulation has led some to suggest that there’s an implicit ban on crypto in Guyana. However, this stance appears to be evolving rapidly.

The underdevelopment of crypto regulations in Guyana can be attributed to the perceived insignificance of crypto use in the country. Guyana, the third-smallest sovereign state in mainland South America, has a population of fewer than 810,000 people. Approximately a third of the population lives below the poverty line. These factors suggest that the country doesn’t have the level of crypto use seen in the United States or the United Kingdom. If crypto use is not prevalent yet, it is because the government so far has been hesitant to enact new laws.

Future of crypto in Guyana

As Guyana’s economy expands, the use of cryptocurrency is also expected to rise significantly. Gambling is legal in Guyana, and the government has issued licenses to various establishments. The crypto industry has a significant overlap with the gambling sector, with online casinos accepting bets in cryptocurrency. As the economic power of citizens increases, it’s anticipated that they will explore the potential of cryptocurrency through crypto casinos.

Crypto companies might also set up operations in the country, offering services like crypto ATMs and facilitating crypto payments for goods and services. This would lead to improved crypto laws to accommodate these changes, a trend observed in other countries that Guyana could emulate.

However, there are concerns about Guyana’s preparedness to manage its wealth influx. The “oil curse” has led to the squandering and theft of wealth in other developing nations. It’s crucial for Guyana to avoid the fate of other petrostates that have relied too heavily on unpredictable and finite natural resources.

The discovery of oil reserves has brought significant economic growth to Guyana. It’s essential for the country to manage this newfound wealth effectively to ensure it benefits all Guyanese and contributes to sustainable development.

One area of Guyanese crypto law that needs urgent development is taxation. Currently, there are essentially no crypto tax laws in the country. The Guyana Revenue Authority’s website doesn’t mention cryptocurrency, leaving users with little guidance. The common assumption is that cryptocurrency transactions are not taxed, but this could change as the country’s crypto activity evolves.