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What Is Argentina's Relationship With Cryptocurrency?

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Latin America has become one of the fastest-growing regions for crypto adoption. Data from Mastercard suggests that at least 51% of Latin Americans have used crypto to make a purchase. Blockchain analytics firm Chainalysis also found that the total crypto inflows to Latin America topped $562 billion during 2021–2022—a 40% jump from 2020. 

As more nations in Central and South America struggle with record-high inflation, citizens turn to digital assets to preserve their purchasing power. For instance, Argentina has seen a surge in crypto usage over the past few years. Although Bitcoin (BTC) is yet to become legal tender in Argentina, more people and businesses gravitate toward digital assets. 

Learning more about Argentina's relationship with cryptocurrency can highlight the challenges and opportunities of crypto adoption. Argentina's situation also helps explain why Latin America is becoming more interested in crypto.

Crypto adoption in Argentina 

Survey data from Latin America strongly suggests Argentina has one of the highest crypto adoption rates in the region. For instance, Americas Market Intelligence (AMI) found that 27% of Argentine respondents bought crypto “regularly” as of 2022, increasing 15% from 2021. AMI also found that 98% of Argentines know about cryptocurrency, and one in five residents plans to buy crypto in the future. 

Chainalysis suggests Argentina is one of the fastest-growing cryptocurrency markets. In fact, it ranked Argentina 13th in its 2022 Global Crypto Adoption Index. Researchers at Chainalysis note that stablecoin adoption in Argentina is exceptionally high, allowing Argentineans a refuge from high local inflation. On-chain data over 2021–2022 found that people paid USD-pegged stablecoins, such as Tether (USDT) and USDC or USD for a sizable minority of payments. 

Reports from Morning Consult also suggest Argentines have more faith in crypto assets than residents of other nations. In a 2022 survey, roughly 60% of respondents in Argentina said they had "a lot" or "some" trust that Bitcoin and other cryptocurrencies would perform well in 1–2 years. No other nation in Morning Consult's survey had this degree of optimism in crypto. However, most Argentines still feel that the U.S. dollar and gold are safer long-term investments than BTC.  

Why is crypto adoption so high in Argentina? 

Argentina's record-high inflation is the primary reason locals seek alternative investments such as cryptocurrencies. For decades, the Latin American country has struggled with double-digit inflation rates for its Argentine peso. The annual inflation rate for the peso went from 10.46% in 2010 to 42.02% in 2020. The country’s inflation rate rose to a shocking 94.8% in 2022

As the peso continues to devalue, more Argentines have lost faith in their fiat currency. Morning Consult found that only 35% of Argentines believed the peso would retain its value for 1–2 years, which is the lowest confidence score for all countries surveyed. With trust in the local currency so low, many turn to other currencies. 

For many years, Argentines have relied on the U.S. dollar as an alternative to the peso. Recent estimates from the Banco Central de la República Argentina (BCRA) (Central Bank of Argentina) suggest there's already $230 billion worth of USD stored in the country's financial institutions and households. To combat this overreliance on the external currency, Argentina has introduced new taxes and exchange rates on trading between the peso and USD. Under Argentina's current rules, residents can only buy a limited amount from a bank. The government also introduced a 35% withholding tax on USD transactions as of 2022.

The increased difficulties of transferring pesos for USD have led many Argentines to experiment with digital currencies such as Bitcoin, Ethereum (ETH), and stablecoins. Handling cryptos tends to be more accessible, cheaper, and faster than transferring between fiat currencies. Also, virtual currencies help Argentines avoid the safety risks of buying USD on the black market. 

Besides inflation and new forex rates, many Argentines express concerns over banks freezing their savings and checking accounts. In 2001, Argentina's government severely limited access to bank accounts during an economic crisis known as "Corralito." The impact of these severe measures is still fresh in Argentina's national memory. In fact, AMI's survey suggests 46% of Argentines buy crypto to "avoid government controls." 

What is Argentina's cryptocurrency legislation?

Laws surrounding cryptocurrency are always subject to change, and this section is written to describe the legal environment in Argentina as of date of article publication. Argentina doesn't accept BTC as legal tender but doesn't ban cryptocurrency like China. While the country’s crypto laws are somewhat vague, the government is yet to announce a full-scale ban on this technology. In late 2022, the Argentinian government announced it was forming a "national blockchain committee" to actively look into cryptocurrency regulation in Argentina.  

Interestingly, some cities and provinces have adopted crypto-friendly policies to encourage growth in this industry. For instance, the government of Mendoza province announced that it would accept taxes paid in stablecoins such as USDT. In 2022, the capital and largest city of Buenos Aires said it plans to accept crypto for taxes. The government of Buenos Aires also plans to run validator nodes on the Ethereum 2.0 blockchain in 2023.  

San Luis province has strongly supported crypto adoption in recent years. Recently, officials announced they’ll set aside treasury funds as collateral for a new USD-pegged stablecoin known as "Activo Digital San Luis de Ahorro." They also said the province would sponsor local artists with a forthcoming NFT (non-fungible token) project.  

Although Argentina has relatively relaxed crypto policies, the BCRA doesn't allow national banks to trade digital assets or offer crypto to clients. After Banco Galicia tried to offer crypto trading services in 2022, BCRA’s members banned crypto transfers within traditional financial institutions. 

Regulators in Argentina issued frequent warnings about high-risk crypto assets, especially ICOs (initial coin offerings). Argentina's tax agency also led raids on crypto mining farms in October 2022. However, Argentina has no laws banning licensed residents and companies from mining proof-of-work (PoW) cryptocurrencies. 

How do Argentines use crypto? 

Although most Argentines buy crypto as a long-term investment, residents put their digital assets to work both in Web3 and in everyday life. 

  1. Store-of-value investment: According to AMI's survey data, more than 50% of Argentines buy crypto assets as an "inflation hedge" similar to assets such as gold. Whether Argentines buy Bitcoin, Ethereum, or stablecoins, many believe there's a better chance they’ll retain their value than the peso. 
  2. Remittances: Data from the World Bank suggests Argentina receives around $650 million in remittances each year. Chainalysis researchers discovered more Latin American migrant workers using Bitcoin remittances, especially in nations with less restrictive crypto laws. Now that Argentina can access the Bitcoin Lightning Network on apps like Strike, more migrant workers explore the benefits of cross-border crypto transactions. 
  3. Daily purchases and taxes: More Argentine businesses and local governments accept crypto as a valid form of payment. AMI data also suggests Argentina is a significant market for crypto debit and credit cards. For instance, Mastercard and crypto exchange Binance decided to collectively launch a prepaid crypto debit card nationwide.
  4. DeFi activity: Chainalysis discovered that almost 25% of crypto transactions in Argentina took place on DeFi (decentralized finance) apps. While this is lower than nations such as Chile or Brazil, it suggests more Argentines are ready to experiment with new services such as decentralized exchanges (DEXs), staking pools, and crypto-backed loans

How do people buy crypto in Argentina?

As the demand for digital currencies grows, more crypto exchanges are eager to offer their services in Argentina. Many centralized exchanges (CEXs) such as Coinbase, Kraken, and Gemini offer Argentine clients many crypto services. Crypto app Strike also announced support for Argentina in early 2022. 

Additionally, many buy on peer-to-peer exchanges, where they match with individuals online, agree to terms, and trade directly.

Although CEXs and crypto apps are the most common ways Argentines buy crypto, cities such as Buenos Aires and Rosario also house physical Bitcoin ATMs. On-chain data from Chainalysis demonstrates some Argentines use DEXs like Uniswap for peer-to-peer crypto transfers. 

Wrapping up

Latin American nations such as Argentina have become some of the most enthusiastic cryptocurrency supporters. As the Argentine peso continues to lose value due to inflation, more Argentines believe BTC, ETH, and stablecoins are safer alternatives for long-term savings. Plus, as more businesses and provincial governments accept stablecoins for transactions, locals have more ways to spend crypto. While it's unclear how crypto will affect Argentina's future, it's clear that digital assets will play a significant role in this country's economy. 

At Worldcoin, we believe cryptocurrencies can provide an antidote to issues such as inflation and hyperinflation. And to encourage more people to explore the benefits of crypto assets, we're giving away free DAI stablecoins to anyone who downloads the Worldcoin app. Subscribe to our YouTube channel to learn more.