Due to inflation rising exponentially, Argentina became a more crypto-friendly nation.
To combat inflation, Argentina has been at war since 2016. The devaluation of the Argentinean peso has had a detrimental effect on people’s ability to buy goods and services and has been caused by a number of causes, including a loss of faith in their central bank and excessive expenditure by the government.
As a result, 37.3% of Americans now live under BPL, and many others have seen their savings evaporate. Despite the market being in the red for many months and the central bank prohibiting financial institutions from functioning with digital assets, many Argentines have resorted to Bitcoin (BTC) and crypto as a method to hedge against 60% inflation.
According to a research by Americas Market Intelligence that was quoted by Reuters, “crypto penetration” in Argentina is already at 12%, making it twice as popular as in neighboring nations like Peru and Mexico.
Argentina Turning To Stablecoins As Well
Argentina’s severe capital regulations on foreign exchange services have led to an increase in demand for stablecoins among the country’s residents as an alternative to Bitcoin for holding value in the US dollar.
Vitalik Buterin, developer of Ethereum, visited the South American nation in December and reported increased cryptocurrency and stablecoin acceptance. He did warn that if the dollar started acting up badly, things may change.
In general, it would seem that Argentina is taking things slow and easy when it comes to regulating digital assets. Argentina’s then-president Alberto Fernandez remarked of cryptocurrencies in a 2021 Youtube interview, “There’s a great conversation about cryptocurrencies, it’s a worldwide topic and I must admit it’s a subject of concern.”
To end on a more optimistic note, he said that “crypto has an advantage” since “it helps curb inflation” and that “in a way, it’s a solid asset.”