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Argentina is seeing a surge in cryptocurrency adoption. The shift towards digital currencies comes as the nation continues to struggle amidst triple-digit inflation rates.
According to a Forbes report, the South American nation is leading in terms of crypto adoption in the western hemisphere. The July 8 report noted that 2.5 million of the 130 million visitors to 55 of the worldās largest crypto exchanges came from Argentina.
Stablecoins in demandĀ
Binance, the worldās largest crypto exchange, has the most visits from Argentina, accounting for 6.9% of the exchangeās total recorded visitors.
Interestingly, the locals have an inclination towards stablecoins like Tether (USDT), according to Maximiliano Hin, Bitgetās head of Latin America. This is in stark contrast to the norm since the most active digital assets in the crypto sector over the past months have been memecoins.
Hin labeled Argentina as an āanomalous market,ā adding that Argentinians tend to buy spot tether and hold it rather than trade crypto assets.
Stablecoins like USDT are designed to retain their value. Being pegged 1:1 to the US dollar, the asset can be used as a shield against inflation without exposing oneself to the inherent volatility of the cryptocurrency market.Ā
Argentinians, struggling to retain their wealth as the nationās inflation rate sits at 276.40%, seem to be going this route. Hin continued:
We donāt see this elsewhere.
However, this trend is nothing new in the Latin American nation. Earlier this year, Mexican-founded crypto exchange Bitso revealed that 60% of Argentine crypto purchases on Bitso were for dollar-based stablecoins USDT and USDC.
The metrics eclipsed even Bitcoin, which is considered an inflation hedge, accounting for a mere 13% of the total purchases.
Back then, Bitso noted that the trend was in response to the āpolitical and economicā situation in Argentina.
Crypto industry in the grey
Despite the growing demand for stablecoins, the nation is yet to introduce regulations that protect investors. Thatās surprising considering that nationās crypto-friendly attitude.
In 2023, President Javier Milei greenlighted the use of Bitcoin in legally binding contracts. Later that year, Milei proposed that cryptocurrencies and various assets, from liquid cash to real estate, fall under a new regularization plan.
This plan offered incentives for early disclosure of such assets. Argentinians declaring their crypto assets by March 31 would benefit from a low tax rate of 5%.Ā
In April 2024, Argentinaās National Securities Commission (CNV) introduced the Virtual Asset Service Provider (VASP) registry. It required crypto entities involved in buying, selling, sending, receiving, lending, or trading cryptocurrencies to register with relevant authorities.
However, the nation still lacks a licensing regime for these entities. According to the Forbes report, even top crypto exchanges like Binance are currently not registered with the CNV.
The post Argentinians are switching to stablecoins amidst triple-digit inflation rates appeared first on Invezz
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