Differing economic conditions around the world are driving the existence of two different crypto markets — one resembling the original vision laid out over a decade ago, and the other driven by a more modern evolution, Crystal writes.

Driving the news: Dollar and other currency-pegged stablecoins are proving their worth in countries where the value of the local currency swings from one day to the next.

• But the "disproportionate embrace of DeFi" in the U.S. and Canada has led to a very different cryptocurrency market, according to a new report from research firm Chainalysis.

By the numbers: Crypto transactions in the Latin America region reached $562 billion as of June 2022, up 40% from last year's total, according to Chainalysis's 2o22 Geography of Cryptocurrency report published Thursday. (Here's last year's.)

• Folks in the region at large appear to be reaching for crypto to save, send payments, or seek alpha, the report said.

The other side: In areas where storing value and sending payments dominates activity, crypto markets could develop differently than, say, areas where decentralized finance is embraced.

• In the U.S. and Canada, the focus on DeFi has led its market to behave differently than the rest of the world's over the last year, Chainalysis found.
• That is, the swings have been wilder.

Quick take: Applying a set of uniform rules across jurisdictions would ignore the wildly different ways in which crypto markets are developing — which are not necessarily in lockstep.

Details: In pockets of Latin America with record-high inflation and unstable local currencies, folks use stablecoins for purchases or as a store of value, Chainalysis' report says.

The big picture: Several country-specific trends have emerged:

Mexico's largest exchange, Bitso, shows how big crypto payments can be.

• Bitso processed more than $1 billion in U.S.-to-Mexico remittances in 2022 as of June — roughly 4% of Mexico’s remittance market — posting a year-over-year growth of 400%, according to Chainalysis' report.
• Of note: The U.S.'s largest centralized exchange, Coinbase, which before the announcement of layoffs and curbing expenses, started a pilot program for payments aimed at international growth.

Brazil is a rare spot in Latin America where the dominant use for crypto is for speculative trading, Chainalysis said, citing Thomaz Fortes, the crypto lead at Nubank, one of the world’s largest digital banking platforms.

• “Customers want a way to expand their earnings,” Fortes said.
• Of note: Nubank this week said it was planning its own token; Warren Buffett's Berkshire Hathaway is among its backers.

Argentina has embraced stablecoins, and USDT, USDC, and USDD are popular — simply because they are pegged to the dollar, are digital and have no purchase limits.

• More than 31% of Argentina’s small retail-sized crypto transaction volume comes from the sale of stablecoins, compared to just 26% of Brazil’s and 18% of Mexico’s, according to Chainalysis.
• Of note: Folks there get paid in crypto, with a blockchain community developing there.

The bottom line: "Users in countries with weaker economies tend to rely on cryptocurrency for remittances and, if inflation is high, for savings preservation, while users in more developed markets like Brazil treat cryptocurrency more as a speculative investment," Chainalysis' report said.

A decline in transaction volumes across centralized exchanges and DeFi amid crypto winter is to be expected, Crystal writes.

• Only the change in centralized exchange transaction volumes in North America was positive in the second quarter from the previous quarter, while DeFi saw a substantial decline, according to a recent Chainalysis report.

State of play: Data suggests investors were likely "more drawn to high-yield opportunities in DeFi" during the boom, and are now sitting on the sidelines due to perceived risk.

The intrigue: It's the first time transaction trends across DeFi and centralized exchanges have diverged.

The world of crypto runs 24/7 and has no borders, but it's no monolith.

• The rules, however, might be applied as if it was. And the global watchdog aiming for consistent application of crypto rules appeared to evoke Securities and Exchange Chairman Gary Gensler, Crystal writes.

The big picture: The Financial Stability Board (FSB), the international advisory group to G20 member countries, wants to create guardrails for establishing regulation and monitoring activities of digital assets.

• The challenge: "Law is jurisdictional, but crypto is not," says Mitzi Chang, a partner at Goodwin, who also serves as co-chair of its fintech practice and digital currency and blockchain technology practice.

Why it matters: While it's uncertain whether the FSB's proposal would lead to any meaningful change in each country's independent efforts to create rules, it's noteworthy that they care at all.

Context: Indeed, when the FSB references the year's "turmoil," the collapse of Three Arrows Capital, Terra, and other events come to mind.

• And that underscores the importance of securing financial stability, as well as having cross-jurisdictional cooperation to keep bad actors in check.

The latest: The FSB proposed an international framework of rules last week in an effort to "promote the consistency and comprehensiveness of regulatory, supervisory and oversight approaches."

• They were grounded in "same activity, same risk, same regulation.”

Between the lines: To Chang, those words were evocative of Gensler's stance that existing securities laws should apply to crypto.

• "To me, I don't see what's the same," she tells Axios. This is 100% a new way of doing things.
• "Like in the U.S. applying decades-old securities laws to something that's new — we need to make sure that [complying to the rules] can operationally work, that it can actually be done."

Yes, but: As influential as the FSB is as an advisory group, there is no regulatory or enforcement authority that would make sure their recommendations are heeded.

• The FSB will finalize its proposed recommendations by mid-2023.
• Again, those are "non-binding" and any country can opt out. In the meantime, they're soliciting public comments until December.

What's next: Several members of the G20 group are already putting together their own rules for digital assets and could have them finalized before the FSB finalizes their own guidelines.

The intrigue: Countries could try to nurture industry growth, though, which could mean more relaxed rules in some areas versus others.

• "There is likely always going to be some form of regulatory arbitrage in any industry so it would not be surprising that certain countries may want a lighter or different regulatory approach," Chang says.

Go deeper.

❤️‍🩹 Voyager Digital customers might recover 70% from the crypto lenders's bankruptcy sale per a tentative deal to sell itself to FTX US. (Bloomberg)

🦦 Solana wallet Ottr raised $3 million in funding. (Axios)

👮‍♀️ Two men in Massachusetts were sentenced for taking over folks' social media accounts and stealing their crypto using techniques like SIM swapping. (Department of Justice)

🚗 Elon Musk's electric vehicle company Tesla reported third-quarter earnings and showed no change in its bitcoin holdings. (Tesla)

UK Prime Minister Liz Truss resigned Thursday to a hail of memes pitting her against photos of a head of lettuce, which apparently lasted longer than her tenure, Crystal writes.

• And a few opportunistic folks from the crypto community ran with the news to pump their coins.

State of play: Truss' pro-business stance won her some crypto clout, but her abrupt resignation leaves two bills on regulating digital assets in the lurch.

• One of them seeks to pave the way for stablecoins to be used for payments, among other things.