Etsy, the online crafts marketplace, is banking on Latin America to be a growth catalyst for the e-commerce company with the acquisition of the Brazilian online marketplace Elo7.

Etsy shares jumped 7% Monday after it announced the $217 million deal to acquire Elo7, which Etsy CEO Josh Silverman called "the Etsy of Brazil."

"This is all about growth potential over the medium and over the long term," he said in a "Mad Money" interview. "The opportunity for Brazil's e-commerce sector to grow faster than the U.S., we think, is very meaningful over time."

The e-commerce market in Latin America has a penetration rate of less than 10%. The market could produce about $29 billion of revenue this year and is forecast to grow at a 26% clip annually, according to the market research firm Euromonitor.

Similar to Etsy, Elo7 allows merchants to set up an online shop and sell items to buyers. The site, among the largest online marketplaces in Brazil, boasts of having 56,000 sellers and serving nearly 2 million shoppers.

"Brazil is one of the biggest economies in the world, but its e-commerce sector is still in just the early days of penetration, so we think e-commerce is really poised for growth in Brazil," he said. "It's really well positioned, we think, to capitalize on it, so we think it's a perfect marriage."

The Elo7 acquisition comes weeks after Etsy announced it would purchase London-based marketplace Depop for more than $1.6 billion to expand its presence in Europe.

Depop goes after millennial and Gen Z consumers through social shopping, which leverages technology to replicate parts of the in-person shopping experience.