Cryptocurrency has become increasingly popular in Argentina since late 2019 due to the persistent inflation in the country, resulting in the devaluation of Argentine Pesos (ARS). Last week, the price of Bitcoin (BTC) hit an all-time high in ARS terms, with the BTC-to-ARS exchange rate crossing over 6.59 million ARS. Although the rate has since corrected to around 6 million ARS, it is still up more than 100% year-to-date (YTD).

The Argentine currency has been facing relentless devaluation in recent years due to the decreasing central bank reserves, estimated at a mere $1.3 billion. As a result, people have been seeking alternative ways to store the value of their savings in a safe and secure manner, leading to the increased acceptance of cryptocurrency.

Data from Paxful, a U.S.-based cryptocurrency exchange, shows the largest-ever weekly peer-to-peer volume reached an impressive $30 million in March. Moreover, in 2022, a survey revealed that almost 60% of Argentines believe in Bitcoin's ability to protect their funds in the long run. Major players in the industry such as Coinbase have encouraged the Argentine government to legalize Bitcoin as a legal tender.

In April, the nation took a step toward that direction as its securities regulator, the National Commission of Value (CNV), approved the debut of a Bitcoin-based futures index on the Matba Rofex exchange. This regulated derivative, settled in pesos, gives authorized investors the chance to invest in the Bitcoin markets. Additionally, a bill proposed by the government requires citizens to report their crypto holdings and promises tax incentives if they comply. Finally, in December 2022, an Argentine province expressed its eagerness to launch a dollar-backed stability token.

It is no wonder that cryptocurrency is rapidly gaining momentum in Argentina as an attractive way to safely store value. Despite the fact that ARS recovered slightly since the BTC-to-ARS exchange rate hit its peak rate, it is still subject to high volatility and potential future devaluation. Cryptocurrency, on the other hand, is becoming a viable substitute due to its advantages of being decentralized and not influenced by any government or central bank.



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