Analysts Say Crypto Adoption Surged in Argentina as Economy Weakens

Despite the biting inflation in Argentina, the country has witnessed a significant increase in crypto adoption.

In a recent announcement, a Forbes analyst observed that crypto adoption in Argentina has increased by triple digits. Despite failing to overcome the spiraling inflation, Argentina leads the South American country in crypto adoption. 

The analyst noted that the high inflation rate in the country forced the Argentine to explore alternative options to hedge against inflation. A recent report shows that Argentina’s inflation soars by 276% annually.

Crypto Adoption Increase in Argentina

The inflation environment in Argentina has slowed economic development in the region. However, since Javier Milei ascended to office, Argentina has imposed control measures to hedge inflation. 

Months after becoming Argentina’s President, Javier implemented several measures to restore economic stability. President Javier has led Argentina to slash government expenditures and stick to a considerable budget. 

The self-proclaimed “anarcho-capitalist” laid off 50,000 public servants and terminated new public work contracts. President Milei abolished the existing subsidies on fuel and transport.

The Milei administration’s effort to curb Argentina’s inflation has seemed to bore the desired fruits as more investors express interest in expanding to the region. Besides the attractiveness of the Argentina market, the crypto adoption has skyrocketed. 

Forbes confirmed that crypto adoption in South American country corresponds to the global population of Argentina, which is living in Western countries. The analyst observed that 55 fast-paced crypto exchanges receive 130 million daily visitors, of which 2.5 million are of Argentine origin.

Argentine Prefer Stablecoin to Local Currency

The analyst used Similarweb to assess the number of visitors to a specific website. Evidently, Binance remained the market leader with the highest number of daily visitors. The analyst noted that 6.9% of Binance’s visits resided in Argentina. 

In the report, the Forbes team noted that Argentines preferred investing in stablecoin over memecoin and other altcoins. The Argentines were no longer interested in ongoing memecoin hype. 

Citing a statement from the Bitget head of Latam Maximiliano Hinz, the analyst noted that stablecoins such as Tether (USTD) were more prevalent in Argentina. The executive mentioned earlier that Argentina is more interested in USDT investments than other digital coins. 

Reflecting on Bitget analysis, Hinz concluded that Argentines prefer fiat-backed crypto to ordinary tokens since they are less volatile. He noted the Argentine act was anomalous while investing in  USDT.  

Milei Administration Developing Clear Regulation on Crypto Assets

Even though the country lacks comprehensive regulation for digital assets, Hinz noted that investing in USDT in Argentina was more viable than holding to the local currency.

Under Milei’s leadership, Argentina is expected to improve the attractiveness of the crypto industry. In 2023, the Argentine government announced Bitcoin as an official currency for completing legal contracts.

The acceptance of Bitcoin as a legal tender aligned with President Milei’s economic reforms to address the country’s hyperinflation. To address the weak economy, Argentina has been improving financial inclusivity and accessibility to certain financial products.

Driven by the desire to stimulate economic growth, the Argentine legislators focused on developing clear digital asset regulations. In April, the Argentine lawmakers greenlighted the registration requirements for crypto firms and exchanges.

Compared to other countries in Latam, the Forbes team noted that Argentina has struggled to develop clear regulations for crypto assets. Reviewing the Comisión Nacional de Valores (CNV), the regulators indicated that none of the best-performing crypto exchanges can legally operate in Argentina.

This implies that exchanges such as Binance, Kraken, and Coinbase operate without valid registration in Argentina. In an interview with Hinz, the official admitted that there is no licensing requirement in the Latam region where Bitget operates.

The regulatory gaps for digital assets in Latin America obliged the Argentine policymakers to visit other Bitcoin-friendly countries such as El Salvador. The primary objective of the trip to El Salvador was to learn about the country’s Bitcoin journey and crypto regulations.

During the trip, the Argentine and Salvadorian government officials shared insights on crypto use cases across multiple industries and other crypto-related activities.