- Argentina has surpassed Brazil to lead Latin America in the adoption rate of cryptocurrencies.
- Argentines turned to cryptocurrencies due to high inflation and strict currency controls.
- President Javier Millay's pro-crypto stance is attracting large-scale investments from crypto companies.
Argentina currently leads the rate of cryptocurrency adoption in Latin America. The country recently overtook neighboring country and soccer rival Brazil to become the region's top digital currency user. The reason behind the rapid increase in crypto holders in this country does not come from a good financial situation, but the country is an example of what digital currencies can do for struggling economies. It is forming as much as possible.
Argentina moved more than $91 billion between June 2023 and June 2024, according to Chainalisys data. Additionally, stablecoins appear to be Argentines’ preferred digital currency, accounting for 68% of total cryptocurrency movements in the country. Bitcoin accounts for 14.7% of cryptocurrency transactions, other altcoins account for 13.4%, and Ethereum only accounts for 10%.
Why Argentina is turning to cryptocurrencies
For more than a decade, Argentina has been dealing with one of the world's most volatile economies. Its home currency, the Argentine Peso (ARS), has fallen by a staggering 90% against the dollar, making it one of the world's fastest-declining fiat currencies since 2010.
The country currently records an annual inflation rate of 209%. The highest inflation rate over the past 365 days was a staggering 263.4% year-on-year. Needless to say, this level of uncontrollable inflation is enough to destroy an economy, and even ordinary citizens can suffer if they hold a currency that depreciates significantly within a year.
This led to the “dollarization” of Argentina's economy, with people rejecting the peso in their daily lives and instead transacting in foreign U.S. dollars.
The shift to cryptocurrencies began after the government introduced measures to limit the purchase of US dollars per person to $200 per month. This is a big difference from the previous $10,000 limit. Also, the decline in formal job creation has led to more people receiving their salaries “unofficially” in cryptocurrencies rather than pesos.
Argentina's approach to cryptocurrencies is also one of the core reasons for the growth of cryptocurrency adoption in the region. According to ChainAnalysis data, Latin America has the second-highest year-over-year growth rate in the world after sub-Saharan Africa.
Can Bitcoin become legal tender in Argentina?
The current president, Javier Millay, ran an extremely pro-crypto campaign in 2023. Bitcoin's value rose more than 3% on election night. During the campaign, Millais promised several measures to increase the uptake of cryptocurrencies by the public, including the formal adoption of “dollarization” in the economy.
He also emphasized that “Bitcoin allows money to return to its creators, the private sector,” going so far as to say he would abolish Argentina's central bank in favor of BTC.
As such, many speculated that under Millei's rule, Argentina might follow El Salvador's lead and adopt Bitcoin as its legal tender. Indeed, this transformation will be extremely complex compared to El Salvador's size and position in the global economy.
However, President Millais has taken several steps to further promote the spread of digital currencies. This year, the country approved the use of Bitcoin to bind legal contracts between businesses. Argentina also allows tenants to pay rent with Bitcoin.
This move to promote cryptocurrencies has not gone unnoticed. Some of the world's biggest crypto companies have started investing in Argentina, including Binance, which sponsors the national soccer tournament, and Tether has invested more than $100 million in Argentine agriculture. are investing.
Although the move to adopt BTC as legal tender seems far away, Argentina's domestic adoption and acceptance of cryptocurrencies not only lays the foundation for a more decentralized world, but also the We've built a great use case for how it works as a hedge against inflation. .
