Reddit

Bitcoin

when

USDC

Is Bitcoin’s hype in Argentina real? Discover why its adoption lags and what hurdles stand in its way despite global enthusiasm. 
In <a href="https://crypto.news/tag/argentina/">Argentina</a>, economic woes have reached critical levels, marked by an annual inflation rate soaring at a <a href="https://tradingeconomics.com/argentina/inflation-cpi" target="_blank" rel="noopener">staggering</a> 276% by Mar. 12. 
As the value of the Argentine peso plummets, citizens are seeking refuge in alternative assets. One such refuge is Bitcoin (<a href="https://crypto.news/price/bitcoin/">BTC</a>), as reported by <a href="https://www.bloomberg.com/news/articles/2024-03-19/bitcoin-gains-dim-argentines-dollar-refuge-with-276-inflation" target="_blank" rel="noopener">Bloomberg</a>. 
Bloomberg’s findings reveal that Bitcoin purchases on Lemon, the nation’s premier retail crypto exchange, <a href="https://crypto.news/bitcoin-interest-in-argentina-hits-20-month-high-as-inflation-soars-above-270/">surged</a> to nearly 20-month highs.&nbsp; 
Lemon recorded almost 35,000 transactions in the week ending Mar. 10, doubling the average weekly volume observed in 2023. 
The driving force behind this crypto rush lies in the citizens’ search to shield their wealth amid a recession and soaring inflation, <a href="https://economic-research.bnpparibas.com/html/en-US/Argentina-Shock-therapy-2/13/2024,49345" target="_blank" rel="noopener">aggravated</a> by President Javier Milei’s “shock therapy” economic policies.&nbsp; 
Up until February 2024, Argentina had the largest purchases and holdings of <a href="https://crypto.news/tag/stablecoin/">stablecoins</a> in Latin America over the previous six months, as highlighted in a <a href="https://downloads.ctfassets.net/2tmkdt5ni5qx/2nm1AWmXqyvilK5dqa1uKV/044ca76768b43905a69d2afbad44bdd0/Crypto_Landscape_in_Latam_2H_2023.pdf" target="_blank" rel="noopener">report</a> by Bitso, a Mexican-founded crypto exchange. 
Digital dollars, particularly <a href="https://crypto.news/price/usd-coin/">USDC</a> and <a href="https://crypto.news/price/tether/">USDT</a>, dominated preferences over other cryptocurrencies by nearly fivefold. Argentinians have allocated 60% of total crypto purchases to these stablecoins, with a mere 13% attributed to Bitcoin. 
This trend starkly contrasts with neighboring Colombia, where stablecoins also wield influence, accounting for only 31% of purchases. 
Let’s delve deeper into how crypto is reshaping Argentina’s economic situation and whether the BTC hype is real. 
<h2 class="wp-block-heading" id="strong-the-milei-government-s-crypto-agenda-strong">The Milei Government’s crypto agenda</h2> 
Since President Javier Milei’s rise to <a href="https://crypto.news/bitcoin-advocate-javier-milei-wins-argentine-presidential-race/">power</a> in November 2023, Argentina has taken a new approach to crypto. 
Under the previous administration, Argentina’s crypto holders <a href="https://www.ccn.com/news/argentine-government-removes-tax-on-bitcoin/" target="_blank" rel="noopener">enjoyed</a> a fixed tax rate of 0% for holdings under $100,000 and 15% for amounts exceeding this threshold.&nbsp; 
In January 2024, the government introduced a proposed bill titled the Law of Foundations and Initial Measures for Argentinian Liberty. As part of this initiative, the bill addresses taxation, particularly concerning crypto.&nbsp; 
In particular, individuals in Argentina who disclose their cryptocurrency holdings by Mar. 31 will <a href="https://crypto.news/argentinan-president-advocates-for-cryptocurrency-declaration-in-reform-bill/">enjoy</a> a favorable tax rate of 5%. However, this rate will progressively increase to 15% by Nov. 30. 
Moreover, international cryptocurrency transfers will also be subject to taxation, with rates ranging from 5% to 15%.&nbsp; 
While some welcomed this move, critics argue that it unfairly treats the crypto sector compared to the previous taxation rates. 
In December 2023, the government announced that contractual obligations and debts can now be expressed and settled in BTC, <a href="https://crypto.news/argentina-will-accept-bitcoin-for-contractual-agreements-new-minister-says/">signaling</a> a potential avenue for the use of crypto as legal tender. 
<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter">
 <div class="wp-block-embed__wrapper"> 
 <blockquote class="twitter-tweet" data-width="550" data-dnt="true">
 Ratificamos y confirmamos que en Argentina se podrán pactar contratos en Bitcoin.— Diana Mondino (@DianaMondino) <a href="https://twitter.com/DianaMondino/status/1737874320322424984?ref_src=twsrc%5Etfw" target="_blank" rel="noopener">December 21, 2023</a>
 </blockquote>
 <script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script> 
 </div>
</figure> 
In January 2024, Argentina further <a href="https://finance.yahoo.com/news/argentina-sees-first-bitcoin-rental-131950927.html?guccounter=1&amp;guce_referrer=aHR0cHM6Ly93d3cuZ29vZ2xlLmNvbS8&amp;guce_referrer_sig=AQAAAAnbg1Dm52Y8fH5sgKroM2Wd4GSDNu6J7daol4Ko42phf2WvW5dokFpgIoNmhANj4tqVt0UcW0GtHrBXGFWT4PLmvv0UmoOKZ-xfBEXRKkV3d8iNKn8-JRbHCm9gRgNnGNKxRnlSRHpDWyKP-xc46MiYxk7vBvCKHz7g0lFjHExi" target="_blank" rel="noopener">facilitated</a> a rental contract where the tenant pays the landlord in Bitcoin.&nbsp; 
Additionally, the <a href="https://crypto.news/okx-exchange-expands-crypto-operations-argentina/">launch</a> of crypto exchange services by OKX and the <a href="https://www.criptodolar.com/" target="_blank" rel="noopener">introduction</a> of Criptodólar, the region’s first stablecoin by local provider Ripio, suggest growing demand. 
However, challenges persist on the regulatory front. The government’s <a href="https://finance.yahoo.com/news/argentina-imf-bailout-deal-includes-190748787.html" target="_blank" rel="noopener">agreement</a> with the IMF tends to discourage crypto use and complicates the situation. 
<h2 class="wp-block-heading" id="strong-understanding-argentina-s-crypto-surge-strong">Understanding Argentina’s crypto surge</h2> 
With inflation rates soaring at an alarming pace, reaching around 30% per month in recent periods, stablecoins have found their way in Argentina’s day to day transactions. 
According to <a href="https://blockworks.co/news/argentina-resisting-inflation-bitcoin-demand" target="_blank" rel="noopener">insights</a> from Maxi Raimondi, Lemon’s chief financial officer, the demand for both BTC and stablecoins like USDC and USDT has surged over time.&nbsp; 
 You might also like: <a href="https://crypto.news/what-can-the-past-bitcoin-halving-cycles-tell-us-about-its-future/"> What can the past Bitcoin halving cycles tell us about its future? </a> 
Raimondi highlighted that at the onset of each month, as people receive their salaries, many opt to convert their funds into stablecoins to mitigate the impacts of inflation and currency devaluation. He said: 
<blockquote class="wp-block-quote"> 
 “If people buy crypto [like] Bitcoin, it’s really hard to see them selling their Bitcoin. However, if they will buy stablecoins — such as USDC or USDT, or DAI, whatever — they sell those [cryptocurrencies] in order to pay for their bills or [use] the payment service that we do have.”&nbsp; 
</blockquote> 
This preference stems from the ease of converting stablecoins into fiat currencies for daily expenses, bills, and day-to-day transactions. Conversely, Bitcoin tends to be held as a long-term investment, with fewer instances of immediate liquidation, he added. 
Meanwhile, despite reports of a surge in Bitcoin purchases, the numbers pale in comparison to the overall population. The claim of “highest volume in 20 months” may be sensationalized, as the absolute numbers are still <a href="https://www.reddit.com/r/Bitcoin/comments/1bj2h4x/argentines_are_buying_bitcoin_instead_of_us/?share_id=z6EKNSHHTLVz77MBhMJ0r&amp;utm_content=1&amp;utm_medium=ios_app&amp;utm_name=ioscss&amp;utm_source=share&amp;utm_term=1" target="_blank" rel="noopener">modest</a>, some Reddit users note.&nbsp; 
In a country of 48 million people, the reported 34,700 weekly Bitcoin purchases may seem minuscule. Moreover, Bitcoin’s value adjusts alongside the peso when the latter strengthens, mitigating its role as a hedge against currency devaluation. 
<h2 class="wp-block-heading" id="strong-bitcoin-adoption-in-argentina-a-reality-check-strong">Bitcoin adoption in Argentina: a reality check</h2> 
Despite the hype surrounding Bitcoin, its adoption in Argentina paints a different picture. 
As <a href="https://www.reddit.com/r/Bitcoin/comments/15v5b5u/bitcoin_argentina/?share_id=6MTXWHoqWuZ5aL3eYOw3_&amp;utm_content=1&amp;utm_medium=ios_app&amp;utm_name=ioscss&amp;utm_source=share&amp;utm_term=1" target="_blank" rel="noopener">shared</a> by users on Reddit threads, Bitcoin’s usage in day-to-day transactions within Argentina is minimal. Few, if any, stores accept Bitcoin as a form of payment, making it impractical for anyone seeking to utilize their Bitcoin holdings.&nbsp; 
There are several reasons for Bitcoin’s limited adoption in Argentina.&nbsp; 
Firstly, there are significant hurdles to overcome regarding regulatory restrictions and practicality. Users report mandatory know-your-customer (KYC)&nbsp; requirements on most exchanges, including Bitcoin ATMs, limiting anonymity and accessibility. 
 You might also like: <a href="https://crypto.news/institutional-adoption-of-crypto/"> Institutional adoption of crypto is growing. What can boost it further? </a> 
Moreover, Bitcoin’s fluctuating value, coupled with Argentina’s volatile economic environment, makes it impractical for everyday transactions.&nbsp; 
Unlike in more stable economies, where Bitcoin’s price fluctuations may be less pronounced, the risk associated with holding or transacting in Bitcoin is perceived as too high in Argentina. 
Moreover, options are limited for those seeking to exchange their Bitcoin holdings for local currency. While there are “cuevas” (informal exchange venues) where crypto-to-peso transactions take place, these often require KYC and may not offer favorable exchange rates.&nbsp; 
Instead, the focus among crypto users in Argentina seems to be on stablecoins. Users report that many exchange USDT for USD “blue notes” (unofficial exchange rate) for stability over the volatility associated with Bitcoin. 
<h2 class="wp-block-heading" id="strong-the-road-ahead-strong">The road ahead</h2> 
While there is considerable excitement surrounding Bitcoin, its integration into everyday transactions in Argentina could still be a distant dream. Regulations and economic conditions will play key roles in shaping Argentina’s crypto story, determining its course amid ongoing economic uncertainty. 
 Read more: <a href="https://crypto.news/from-donations-to-decisions-how-crypto-pacs-target-senate-races/"> From donations to decisions: how crypto PACs target Senate races </a>

Decoding Argentina’s Bitcoin frenzy: reality vs rumor

Table of Contents

crypto.news

Other articles published on Mar 28, 2024

Crypto community mixed reactions to SBF’s 25-year sentence

Glassnode Data Shows Bitcoin at Crossroads: Time to Hold or Take Profit?

Shiba Inu’s Uptrend and Cardano’s Trading Opportunity: Here’s What SHIB and ADA Technicals Show

Analyst Discovers BlackRock RWA Wallet: Here Are the 11 Tokens They Are Buying

Prisma Finance faces $11.6 million security breach

Decentraland Price Prediction 2024-2033: Is MANA Running Out?

Join our free newsletter for daily crypto updates!