Argentina has become a more crypto-friendly country in terms of adoption as a result of rising inflation.
Argentina has been fighting an inflationary war since 2016. The Argentine peso’s depreciation has reduced citizens’ purchasing power due to a variety of issues, including a lack of faith in the central bank and government expenditures.
This has pushed 37.3 percent of the population into poverty, while many others’ funds have vanished into thin air. Against this context, many Argentines have turned to Bitcoin (BTC) and cryptocurrency as a hedge against 60% inflation, despite the market being in the negative for several months and the central bank prohibiting financial institutions from dealing with digital assets.
According to an Americas Market Intelligence research quoted by Reuters, “crypto penetration” in Argentina has reached 12 percent, more than doubling that of Peru, Mexico, and other nations in the area.
In addition to Bitcoin, Argentines are increasingly resorting to stablecoins as a means of keeping wealth in US dollars, especially since their country imposes tight capital controls on foreign exchange services.
When Ethereum developer Vitalik Buterin visited Argentina in December, he claimed that cryptocurrency acceptance and stablecoin adoption were both increasing significantly. He warned that this could change if the US dollar had major issues.
Argentina looks to be treading lightly when it comes to digital asset legislation. In a 2021 Youtube interview, Argentine President Alberto Fernandez said, “There’s a huge discussion about cryptocurrencies, it’s a global debate and I must confess it’s a matter of caution.”
On a more positive note, he added that “crypto has an edge” since “it helps curb inflation” and that “in certain ways, it’s a solid asset.”