Argentina has been waging a war on inflation since 2016. The devaluation of the Argentine peso, caused by several factors such as a lack of confidence in the central bank or excessive government spending, has had a negative impact on citizens’ purchasing power.
This has brought 37.3% of the population below the poverty line and many others have had their savings evaporated. Against this backdrop, many Argentines have turned to bitcoin (BTC) and crypto to hedge against 60% inflation despite the market being in the red for several months and the central bank banning financial institutions from working with digital assets.
Related: Argentina’s central bank steps in to block new crypto offerings from banks
An Americas Market Intelligence report cited by Reuters found that “crypto penetration” in Argentina had reached 12%, double that of Peru, Mexico and other countries in the region.
Argentina appears to be adopting crypto faster due to inflation. Diagram created via Canva.
In addition to bitcoin, Argentines are increasingly turning to stablecoins to store value in US dollars, especially as their country imposes tight capital controls on foreign exchange services.
When Ethereum creator Vitalik Buterin visited Argentina in December, he stated that cryptocurrency adoption was increasing in the country and that stablecoin adoption was also growing significantly. He warned that this could change if the US dollar shows serious problems.
More broadly, Argentina appears to be taking a cautious approach to regulating digital assets. In a Youtube interview in 2021, Argentine President Alberto Fernandez said, “There is a huge discussion about cryptocurrencies, it’s a global debate and I have to admit it’s a matter of caution.”
On a lighter note, he also explained that “crypto has an edge” because “it helps curb inflation” and that it’s “in a way a durable asset.”
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