Argentina has become an increasingly crypto-friendly country amid fears of rising inflation, the study shows. Cryptocurrency penetration in the country has reached 12%, double that of Peru, Mexico, and other countries in the region.
Since 2016, Argentina has been struggling with inflation caused by several factors. Distrust of the central bank or government overspending and the depreciation of the Argentine peso had a negative impact on the purchasing power of citizens. This pushed 37.3% of the population below the poverty line, and many others quickly ran out of savings.
Against this backdrop, many Argentines have turned to various cryptocurrencies, including Bitcoin. This has become an effective way to hedge against almost 60% inflation, Reuters reports. The rise in cryptocurrency interest comes even as the crypto market has been falling for several months, and the Argentine central bank is banning financial institutions from dealing with digital assets.
“The local environment is pushing people to protect their capital in cryptocurrencies and so we see growth speeding up,” said Mauro Liberman, one of the founders of the cafe in Argentina where the bill can be paid in digital money. “Throughout Latin America the growth potential is enormous,” he said, adding that most local users were buying it as a way to hoard their savings. “It is an avalanche that won't be stopped.”
Americas Market Intelligence released an April report that shows cryptocurrency penetration in Argentina has reached 12%, double that of Peru, Mexico, and other countries in the region.
The Argentine government is taking a cautious approach to regulating digital assets. In a Youtube interview in 2021, 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,” via Cointelegraph. He also stated that cryptocurrency has an advantage because it helps keep inflation in check and that in some ways it is a stable asset.
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Eva Fox joined Tesmanian in 2019 to cover breaking news as an automotive journalist. The main topics that she covers are clean energy and electric vehicles. As a journalist, Eva is specialized in Tesla and topics related to the work and development of the company.