Argentina’s high inflation fuels crypto adoption

Inflation in Argentina hit 58% in April 2022 – up from 55.1% the previous month

Argentina flag with bitcoin                                 
Argentina flag with bitcoin – Photo: Alamy
                                

Residents of Argentina are increasingly turning to bitcoin (BTC) and other cryptocurrencies as the South American country suffers from high inflation rates.    

Inflation in Argentina hit 58% in April 2022, up from 55.1% for the previous month. The increase in prices and goods has meant 37.3% of the country’s population is below the poverty line.

According to Reuters, a report by Americas Market Intelligence has found that “crypto penetration” in April in Argentina was at 12% double that of Mexico and Brazil.  

Argentina’s central bank ‘discourages’ offer of crypto assets  

This is despite the Central Bank of the Argentine Republic (BCRA) informing financial entities this month that they are not allowed to facilitate clients to carry out operations with cryptos.    

This rule was ordered by the BCRA’s board of directors in an attempt to “mitigate the risks associated with operations with these assets”.

In May 2021, the BCRA along with the country’s National Securities Commission (CNV), published an alert to inform people about the “implications and risks that crypto asset may entail”.   

Limits on foreign exchange

The country has also placed a $200 (£158) monthly limit on foreign exchange (Forex), which has also helped to boost crypto adoption. Additionally, the local fiat currency, the Argentine peso, has depreciated 14% this year against the US dollar.

Two Argentinian crypto exchanges – Lemon Cash and Buenbit – have told Reuters that their user base has shot up this year.  

Stablecoins are also being used increasingly as a way of storing value in the US dollar due to the limits placed on forex.

Vitalik Buterin, co-founder of ethereum (ETH), visited Argentina in December 2021 and had a private meeting with former Argentinian President Mauricio Macri during a crypto event in Buenos Aires.

At the time, Macri tweeted that ETH was one of the “most innovative” decentralised technologies of the century.

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