A Latin American eCommerce company has announced that it is banning crypto-related listings from its platform – days after it received a $750m investment from PayPal.
MercadoLibre – dubbed by some as “the eBay of Latin America” – emailed users with cryptocurrency listings to warn them that they needed to complete their transactions as soon as possible because they would be taken down on March 19. Prepaid cards and listings for in-game currencies are also affected by the new restrictions.
As of 2018, the company had more than 267 million registered users in 18 countries – and the decision to ban crypto is likely to be a big blow for buyers and sellers alike.
Cripto Facil, a local news site, has estimated that there are more than 5,600 ads containing the term “Bitcoin” in Brazil alone, with 2,600 listings featuring the keyword “Ethereum” and more than 11,100 using the word “Ripple.”
Venezuela is one of the countries served by MercadoLibre – a nation where cryptocurrency has become increasingly popular over recent years amid political instability. Rampant hyperinflation, which recently hit an annual rate of 830,000% has also rendered food, medicines and other essential supplies unaffordable for many consumers using the bolivar, its national currency. Recent pictures showed the piles of cash needed to purchase one roll of toilet paper, which would normally cost just 40 cents.
MercadoLibre’s ban is all the more unusual considering that the eCommerce platform was actively opening up to cryptocurrency platforms until very recently. The company had allowed Bitcoins to be bought and sold on its site since 2017 – and last year, it unveiled partnerships with two crypto exchanges after experiencing a surge in demand from its user base. At one point, it was estimated that Bitcoin sales on the platform were two times higher than Amazon gift cards.
Although it isn’t certain whether or not PayPal had a hand in MercadoLibre’s decision to pull cryptocurrencies, the timing is certainly interesting. A week ago, the global payment processing platform confirmed it had committed to making a $750m strategic investment in the company through the purchase of common stock.
At the time, PayPal CEO Dan Schulman had said:
“Digital commerce in Latin America is experiencing tremendous growth and MercadoLibre is well-positioned for continued leadership. We see great opportunities to integrate our respective capabilities to create unique and valuable payment experiences for our combined 500 million customers throughout the region and around the world.”
Mr Schulman’s scepticism towards crypto has long been documented. Earlier this year, he told reporters at the World Economic Forum that regarded crypto as “more of a reward mechanism for implementing blockchain as opposed to a currency.” In the CNBC interview, he added that very few retailers who use PayPal had actually started to accept cryptocurrencies as a payment method.
MercadoLibre translates into English as “free market.”