Crypto in Argentina

In October 2023, Argentina is going to hold presidential elections. It is quite possible that the South American state will get a crypto enthusiast as its next leader, Javier Gerardo Milei. The politician believes that Bitcoin could become a payment method in Argentina. In his view, crypto is what returns the monetary power from centralized organizations like the Central Bank to the private sector.

The fact that there is such a candidate signifies a considerable number of supporters of crypto in the country in general. In this article, we will find out what the situation is like in Argentina.

What is the economic situation in Argentina?

It is hardly surprising that the population of this country is searching for some alternative means of payment and saving their assets - the annual inflation rate was over 70% in 2022. This is not the first (or even worst) case of growing inflation in the country. However, present-day economic uncertainty which started in 2020 with the global pandemic, shows no signs of going away.

Currently, over 36% of the population of Argentina is considered poor. Some people resort to barter to get the goods they need ignoring the national currency. The unfavorable state of the economy is caused by the fiscal deficit which leads to the Central Bank of the country printing more money worsening inflation.

In a situation like this, it is logical for the people of Argentina to turn to cryptocurrencies as one of the alternatives. That is why the rate of adoption of crypto is rather high there: the state took 13th place across the world in 2022.

There are also some positive aspects that help the popularity of Bitcoin, for example, relatively cheap electricity which allows people and companies to mine crypto.

How is crypto regulated in Argentina?

From a legal point of view, crypto is not considered to be subject to regulation applied to the capital markets, because it is not issued by any state. However, in case there is a suspicion that the asset is fraudulent, the National Securities Commission has the power to interfere.

Cryptocurrencies are not banned in Argentina, which is why operations with them are legal for individuals and companies, however, in May 2022 the Central Bank prohibited financial institutions to carry out transactions connected to crypto assets. This happened just four days after two large banks started to offer crypto trading.

Additionally, there is an anti-money laundering act that specifies some individuals and organizations that are required to report all the transactions that involve crypto.

When it comes to all other market participants, the government only released a few documents stating the risks of investing in digital assets.

Crypto projects from Argentina

The overall attitude of the authorities to crypto seems rather positive. The state also participates, for example, the energy company YPF, which is owned by the state, provides power to a crypto-mining company. 

The power is received from the gas left as a result of oil production. It is both profitable and sustainable because otherwise the gas would have been wasted. The company plans on increasing the volume of power generation. This already led to some mining companies relocating to Argentina.

Another big initiative came from San Luis province - it is planning to launch a dollar-pegged stablecoin backed by the entity’s funds with guaranteed 100% liquidity. The same bill which describes this initiative also expresses the support of local artists who want to explore the NFT domain.

Private projects include, for example, Ripio, a platform for trading crypto which also has a credit instrument allowing users to lend and borrow assets using smart contracts. The company’s mission is to cover the growing demand of the emerging markets of Latin America (read about crypto in Brazil here).

Conclusion

Given the economic situation in Argentina, it is no wonder that people and businesses alike turn to crypto despite its high volatility. Cryptocurrencies might be the answer in the situation of instability and lack of trust in the authorities not only for this country but also for many others. Argentina already has a few large and ambitious projects, so we can expect a lot more developments in the future.