Economic Landscape in Guatemala
Guatemala, as the largest economy in Central America, plays a vital role in the region. In 2023, the country’s GDP reached $104.4 billion, with growth projected to reach 4% in 2024. This positive outlook is largely due to the country’s careful fiscal and monetary management, which has helped Guatemala maintain an average growth rate of 3.2% between 2014 and 2023.
Additionally, inflation dropped significantly from 9.24% in 2022 to 4.18% in 2023, mainly attributed to the global rise in energy and food prices, influenced by the ongoing war in Ukraine.
Another significant driver of Guatemala's economy is remittances from Guatemalans in the United States, which grew by 9.8% in 2023 and account for 19.4% of the nation’s GDP.
Notably, around 46% of household income in Guatemala is derived from these remittances
That said, while the country is experiencing steady growth, economic progress has yet to translate into a meaningful reduction in poverty.
In fact, around half of the population still lives in poverty. The unregulated economy, which employs about 71.1% of the workforce, continues to dominate the labor market.
This informal sector, where jobs lack security and benefits, makes it difficult for many Guatemalans to break out of the poverty cycle. Again, the lack of access to essential services like healthcare and education, particularly in rural and indigenous areas, further adds to the country’s social inequality.
On top of these challenges, Guatemala faces the added burden of climate change. Natural disasters, such as hurricanes and droughts, frequently disrupt the country’s infrastructure and agricultural productivity, making it harder for people to escape poverty.
For example, the devastating impact of hurricanes Eta and Iota in 2020 led to infrastructure losses that amounted to 0.56% of the country’s GDP, along with agricultural losses of around 0.20%. Furthermore, Guatemala’s low Human Capital Index shows how much more needs to be done in terms of improving education, healthcare, and overall quality of life for its citizens.
In spite of these challenges, Guatemala has significant untapped potential. The country is incredibly rich in natural resources and is one of the world’s most biodiverse nations, which creates opportunities for growth in sectors like tourism, agriculture, and renewable energy.
Plus, Guatemala’s proximity to the United States opens doors for nearshoring and trade, which could give the country an economic boost.
However, since President Bernardo Arévalo, took office in January 2024, he has been focused on social and economic reforms, anti-corruption efforts, and improving the business climate to attract both local and foreign investments.
These reforms aim to fill gaps in infrastructure, human development, and economic inclusion—helping the country grow in a more equitable and sustainable way.
Current State of Crypto Adoption in Guatemala
Cryptocurrency adoption in Guatemala has been gaining significant momentum in recent years, making the country a notable player in Central America's digital asset landscape. In Guatemala,
According to Statista, user penetration in the cryptocurrency market is expected to reach 1.37% in 2024 and grow to 1.67% by 2028, with the number of users projected to hit 344,300 by 2028.
The average revenue per user (ARPU) in Guatemala is estimated at US$13.38 in 2024, demonstrating the growing economic significance of digital currencies for the country.
With an expanding infrastructure and creative initiatives, Guatemala is becoming a central hub for cryptocurrency transactions, improving accessibility and awareness. For instance, the country now ranks third globally for the number of cryptocurrency ATMs, behind only the United States and Canada, with over 2,700 machines in place.
This impressive growth stems from a partnership between Coincaex, a local cryptocurrency exchange, and ATM provider 5B, making it easier for Guatemalans to convert digital currencies like Bitcoin into their local currency, Quetzales. These ATMs are unidirectional, meaning they allow users to withdraw cash but don’t support deposits or cryptocurrency purchases.
In addition to the infrastructure improvements, community-driven projects have played a key role in spreading cryptocurrency adoption in Guatemala.
Another notable example is Bitcoin Lake, a Bitcoin Beach-inspired project near Lake Atitlán, which has encouraged local businesses to accept Bitcoin as payment. This initiative has helped spark interest in digital currencies, not only among the locals but also among Bitcoin tourists. Another innovative way to further promote Bitcoin adoption has been through free Bitcoin-themed tattoos.
For example, Osmo Wallet, a Guatemalan-based Bitcoin company, partnered with Soul’s Anchor Tattoo Shop in Guatemala City to offer free tattoos to customers who participated in a Bitcoin merchant adoption competition.
Although cryptocurrency adoption is on the rise, Guatemala is still in the early stages. Many business owners are still wary about accepting digital currencies, primarily due to concerns over volatility.
However, solutions like instant Bitcoin-to-fiat conversion at payment terminals are helping alleviate these concerns, enabling merchants to bypass the risks associated with fluctuating Bitcoin prices. This approach has been growing in popularity, making it easier for businesses to integrate Bitcoin into their payment systems without being exposed to unnecessary risk.
Currently, approximately 205 businesses in Guatemala accept cryptocurrencies, which shows steady growth in the adoption of digital currencies as a practical financial tool. With cryptocurrencies offering lower transaction fees compared to traditional credit card payments, they present an attractive alternative for both merchants and consumers.
Crypto Law and Regulation
Unlike El Salvador, which made history in 2021 as the first country to adopt Bitcoin as legal tender, Guatemala has chosen a more cautious approach. Cryptocurrencies are not recognized as legal tender in Guatemala and do not constitute an official means of payment.
The central bank, Banco de Guatemala, has repeatedly issued warnings about the risks of digital currencies, emphasizing their speculative nature and lack of regulatory oversight. As it stands, there are no comprehensive regulations governing cryptocurrencies in the country, leaving a significant legal gap.
Cryptocurrency Regulations By Country In Latin America
Guatemala's regulatory ambiguity mirrors the broader trend in Latin America, where attitudes toward cryptocurrency range from enthusiastic adoption to outright bans. For instance, countries like Honduras and El Salvador have embraced cryptocurrency integration, while nations such as Bolivia and Ecuador have imposed stringent restrictions to safeguard their financial systems.
In contrast, Guatemala and Nicaragua remain in a grey area, issuing warnings but refraining from outright prohibition. The lack of clear legislation in Guatemala creates a double-edged sword for businesses and individuals.
On one hand, the absence of regulations exposes users to risks such as fraud, security breaches, and volatility.
“As the central bank has warned, Cryptocurrencies lack the backing of any authority, and users assume all associated risks.”
This uncertainty deters many from exploring the crypto space. On the other hand, the absence of restrictive policies provides room for innovation and experimentation, particularly for tech-savvy entrepreneurs seeking to capitalize on the decentralized nature of digital currencies.
Additionally, the rise of central bank digital currencies (CBDCs) in Latin America reveals an alternative direction some nations are exploring.
While Guatemala has yet to develop a CBDC or comprehensive crypto framework, other countries like Brazil and the Bahamas are advancing digital versions of their national currencies to promote financial inclusion and streamline payment systems. This posits the potential for regional innovation even amid regulatory challenges.
We may also speculate that for Guatemala, the path forward will likely depend on striking a balance between engendering innovation and addressing security and financial stability concerns. As seen in countries like Mexico and Argentina, implementing Anti-Money Laundering (AML) and Know Your Customer (KYC) requirements can help mitigate risks while encouraging broader adoption of cryptocurrency technologies.
However, until such measures are introduced, users and businesses in Guatemala will continue to operate in an uncertain, unregulated environment that both limits and fuels the potential of the crypto industry.
Factors Driving Crypto Adoption in Guatemala
High Remittance Dependency
Given the country's heavy reliance on cross-border remittances, cryptocurrencies present a more cost-effective and quicker solution for money transfers, offering advantages over traditional remittance channels.
Financial Exclusion
With a large portion of the population unbanked, cryptocurrencies are gaining traction as an alternative means of accessing financial services, bypassing the need for conventional banking systems.
Technological Growth
The growing penetration of smartphones and internet access is empowering more people to use digital wallets and engage in cryptocurrency transactions, fostering greater financial inclusion.
Inflation and Currency Instability
Cryptocurrencies offer a safeguard against inflation and currency depreciation, making them a compelling choice for saving and transferring money in an uncertain economic climate.
Benefits of Crypto Adoption
Access to Financial Services
Cryptocurrencies provide unbanked populations with opportunities to engage in the financial ecosystem. For example, in Guatemala, individuals in rural areas can use mobile-based crypto wallets to save and transfer money without relying on traditional banks.
Lower Transaction Costs
For cross-border remittances, cryptocurrencies drastically reduce transaction fees. Platforms like Bitso, popular in Latin America, enable families to receive funds faster and at lower costs compared to traditional services like Western Union.
Economic Empowerment
Projects like Bitcoin Lake in Guatemala illustrate how digital currencies can stimulate local economies, enabling small businesses to transact with global customers and bypass costly financial intermediaries.
Greater Financial Autonomy
Cryptocurrencies empower individuals by giving them full control over their assets. In regions with unstable currencies, such as Guatemala, crypto adoption allows residents to store value without fear of devaluation.
Diversified Investment Options
Digital currencies present new investment opportunities for Guatemalans, offering an alternative to conventional savings methods. For instance, some individuals use stablecoins to hedge against inflation while exploring the broader crypto market for potential gains.
Challenges to Crypto Adoption in Guatemala
Regulatory Ambiguity
The lack of a defined legal framework creates uncertainty, posing risks for users and impeding the widespread adoption of cryptocurrencies in Guatemala. Without clear guidelines, businesses and individuals may hesitate to engage in crypto-related activities.
Insufficient Digital Literacy
A significant portion of the population in Guatemala lacks the digital knowledge required to use cryptocurrencies effectively. This gap in understanding limits the ability to take advantage of crypto's benefits and inhibits wider adoption.
Infrastructure Deficiencies
In rural regions, limited internet connectivity and access to smartphones prevent many from participating in the crypto space. These infrastructural challenges hinder the ability of citizens to fully engage with digital currencies.
Security Concerns
The absence of robust security measures leaves cryptocurrency users vulnerable to cyberattacks, fraud, and scams. Without comprehensive regulations or adequate protection, individuals may be reluctant to trust crypto platforms.
Volatility of Cryptocurrencies
The inherent price fluctuations of cryptocurrencies present a challenge for users in Guatemala who may struggle to maintain stable value in their digital assets. This volatility undermines confidence and deters potential adopters from using cryptocurrencies for everyday transactions or saving
The Future of Cryptocurrency in Guatemala
Cryptocurrency adoption in Guatemala could change the country’s financial system and open up new opportunities for growth. For example, the idea of Central Bank Digital Currencies (CBDCs) could help modernize the financial sector, just as it has in places like the Bahamas and Jamaica.
Additionally, blockchain technology has the potential to improve public services, like land registries and voting systems, by making them more secure and transparent. Projects like Bitcoin Lake already show how cryptocurrencies can help local economies grow.
However, for wider adoption to happen, Guatemala needs clear regulations to reduce risks and encourage investment. At the same time, focusing on digital literacy and improving internet access, especially in rural areas, will be key to making sure everyone can benefit from crypto.
With the right support and investment in infrastructure and education, cryptocurrency adoption in Guatemala has the potential to drive substantial financial growth and innovation, positioning the country to thrive in the digital economy
Conclusion
The potential for cryptocurrency adoption in Guatemala is promising, with its ability to drive financial inclusion and economic empowerment. While the country faces challenges such as regulatory uncertainty, digital literacy gaps, and infrastructure limitations, these hurdles can be overcome with targeted investment in education and technology.
Similarly, with the right regulatory frameworks and continued innovation, Guatemala can harness the power of digital currencies to create a more inclusive and robust financial system, positioning itself as a leader in the region’s digital economy.
