Since 2016, Argentina has been immersed in a war against inflation. Caused by multiple factors, such as a lack of confidence in the central bank or excessive government spending, the depreciation of the Argentine peso has negatively affected the purchasing power of citizens.
This has brought 37.3% of the population below the poverty line, and has left many others with their savings vanishing into thin air. In this context, many Argentines have resorted to Bitcoin (BTC) and to cryptocurrencies as a way to hedge against 60% inflation, despite the fact that the market has been in the red for several months and the central bank prohibits financial institutions from trading digital assets.
In a report of Americas Market Intelligence (AMI) quoted by Reuters, it was found that the “penetration of cryptocurrencies” in Argentina had reached 12%, double that of other countries in the region such as Peru or Mexico.
In addition to Bitcoin, Argentines have increasingly turned to stablecoins as a means of storing the value of the US dollar, especially as his country imposes strict capital controls on exchanges.
When the creator of Ethereum, Vitalik Buterin, visited Argentina in December, stated that cryptocurrency adoption in the country was on the rise and that stablecoin adoption was also growing significantly. He warned that this could change if the US dollar started to show serious problems.
On a broader scale, Argentina appears to be taking a cautious approach towards regulating digital assets. In a 2021 interview on Youtube, Argentine President Alberto Fernández said: “There is a great discussion about cryptocurrencies, it is a global debate and I must confess that it is a matter of caution.”
In a more optimistic tone, he also stated that “Cryptocurrencies have an advantage” because they “help contain inflation” and that, “in a certain sense, they are a stable asset”.
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