As inflation rips through Argentina’s economy, the nation appears to be turning its gaze toward cryptocurrencies as a financial haven.
Particularly, with inflation soaring to as high as 276% per year, according to a report, Argentina is now witnessing a massive turn in the monetary strategy as citizens chase after stability, even if it comes from digital assets.
In a recent report, Forbes analysts noted a record increase in the use of digital currencies, which have been driven primarily by harsh economic realities. The uptick is more than just a trend; it’s a growing necessity as Argentines seek alternatives to protect their wealth.
A Refuge in Digital Currencies
According to the Forbes analysis, Argentina is the Western leader in crypto adoption. Citing data from Similarweb shows that of the 130 million visitors to the world’s 55 largest exchanges, 2.5 million of those traffic came from Argentina.
Not only that, but Argentina also ranks the highest percentage of Binance traffic (a major cryptocurrency exchange). According to SimilarWeb data, 6.9% of all traffic from Binance originated from Argentina, which highlights the country as a considerable player in the crypto space.
Furthermore, facing diminishing purchasing power, the local population is shifting to stablecoins such as Tether (USDT), according to a Forbes report. Notably, unlike volatile cryptocurrencies, stablecoins offer a semblance of stability, pegged directly to more stable foreign currencies like the US dollar.
Bitget has observed a particular characteristic of the Argentine market, as the exchange’s head of Latin America, Maximiliano Hinz, noted that they are all buying USDT in Argentina, and nothing else has been done. In Hinz’s words:
Argentina is an anomalous market where many people buy USDT and don’t leave room for much else. We don’t see this elsewhere. Argentines buy spot Tether and don’t do anything with it.”
This behavior underscores the primary use of cryptocurrencies in the country—not as vehicles for speculation but as foundations for financial security.
Argentina’s Crypto Landscape
Notably, Argentina’s adoption of cryptocurrency appears to have intensified following the appointment of Javier Milei as president. Milei’s administration has shown favorable attitudes towards digital currencies, marking a potential pivot point for broader economic strategies.
For instance, the Cardano Foundation has recently forged a strategic partnership with Entre Ríos, a key province in Argentina. This collaboration represents a significant milestone, positioning Cardano to integrate seamlessly into Argentina’s dynamic crypto environment.
Entre Ríos, in turn, gains a proficient ally in its pursuit of widespread blockchain adoption. Meanwhile, Argentina’s path to complete crypto adoption hasn’t been without its hurdles. Instead of tax-free use, new legislative developments have seen a backtrack on earlier promises of tax exemptions for cryptocurrencies.
Interior Minister Guillermo Francos explained that removing fiscal incentives from the ‘Bases and Starting Points for the Freedom of Argentines’ bill was necessary to expedite its passage.
Featured image created with DALL-E, Chart from TradingView