- Stablecoin company Reserve has suspended operations in six Latin American countries
- The Rpay app is currently unavailable following regulatory issues
- The company’s CEO hopes to relaunch the app later this year
Stablecoin company Reserve, popular in Latin America, has been forced to halt services in six countries including Venezuela due to regulatory challenges. The US-based company has faced increasing challenges in obtaining the right licensing for the product, leading to executive Gabriel Jiménez needing to reassure users and investors that the company is actively working towards developing a more sustainable operational framework in Latin America.
Rpay Popular in Venezuela
Reserve, which was founded by American entrepreneur Nevin Freeman and backed by notable figures like Sam Altman and Peter Thiel, has gained popularity for its proprietary stablecoin tied to the US dollar. Reserve offers an app called Rpay which enables users to transfer between fiat currency and its stablecoin. The app garnered significant traction in Venezuela, with approximately 500,000 users utilizing it for peer-to-peer transactions, alongside around 26,000 merchants accepting Reserve as a payment method.
Reserve’s presence in Venezuela also led to the formation of a dedicated community of volunteers who contributed to the company’s growth in exchange for rewards. The strategy implemented in Venezuela was devised by Gabriel Jiménez, the CEO of Rpay and a former developer involved in Venezuela’s government-backed cryptocurrency program, Petro.
Regulators Step In
Despite its success, Reserve faced challenges from Venezuelan crypto regulators, who attempted to prohibit the promotion of the app, and the US government, which imposed restrictions on US-based financial firms serving Venezuelan government employees.
Jiménez recently informed Rpay users that the suspension of local currency deposits and withdrawals would be implemented in six Latin American countries—Argentina, Colombia, Peru, Venezuela, Ecuador, and Panama—within 30 days.
Reserve has plans to introduce a new model in partnership with US banking institutions in the final quarter of 2023, but doubts remain about the availability of the model in Venezuela as it necessitates collaborations with local banks. Furthermore, the company will have to navigate challenges posed by unfriendly regulatory authorities in Venezuela which recently implemented a temporary ban on cryptocurrency mining.
