Bloomberg Línea — MercadoLibre (MELI) is launching a cryptocurrency in Brazil, the MercadoCoin. As of this Thursday, 500,000 Mercado Libre customers in Brazil will start having access to cryptocurrencies as a loyalty benefit. The cryptocurrency starts off being worth 10 cents on the dollar and will then be subject to market fluctuations.
MercadoCoin will be inside the Ethereum blockchain. Fernando Yunes, Senior Vice President of Mercado Libre in Brazil, said the company developed MercadoCoin as a tool of the platform’s loyalty program. “You get MercadoCoins when you buy products on Mercado Libre, but looking ahead, at some point they will be used outside of Mercado Libre,” Yunes explained.
There is no ballast for MercadoCoin, the cryptocurrency will have a variable quote with supply and demand from users. The amount of cryptocurrency that will be distributed to users will be related to the growth of Mercado Libre’s sales volume.
The management and custody of Mercado Libre tokens will be done by Argentinean fintech Ripio.
“At some point, we will expand to other countries, but we are starting with Brazil,” Yunes said.
Initially, MeLi’s cryptocurrency will not be listed on an external exchange such as Mercado Bitcoin, Coinbase, or Binance. Mercado Libre’s outlook is that by the end of August the entire 80 million user base in Brazil will have access to the cryptocurrency.
The company, which in the second quarter posted record revenues of $2.6 billion, is expanding its investments in cryptos. MeLi already offered these assets through a partnership with Paxos at Mercado Pago, its fintech arm. In Brazil, 2 million users already transact cryptocurrencies on the platform.
According to the company, customers can use MercadoCoin as a store of value, to transact with the cryptocurrency through Mercado Pago - exchanging it for cash if they wish - or as cashback on the platform. The coins will not expire, according to the company.
“It makes sense to get into that crypto ecosystem. Fluctuations occur but we are looking at the long term,” Yunes said.
While users will have the option to pay for products on Mercado Libre with MercadoCoin, sellers will receive payment from the marketplace in local currency.