Argentina has the highest cryptocurrency adoption rate in the Western Hemisphere, according to a recent report from Forbes.
Facing extremely high inflation over decades that has markedly devalued its national currency peso, Argentina has turned to alternative investments like cryptocurrencies.
SimilarWeb’s data compiled by Forbes shows that 2.5 million visitors from Argentina accessed 55 of the world’s largest cryptocurrency exchanges, which is about 1.92% of total visitors worldwide. Additionally, Argentina accounts for 6.9% of total visits to Binance, the leading cryptocurrency exchange in terms of trading volumes.
Cryptos To Survive
Unlike the trend of investing in meme coins seen in major markets such as the U.S. and the UK, Argentines predominantly purchase and hold stablecoins like Tether (USDT).
Normally, people buy cryptocurrencies to trade or use them for other purposes. They might buy Bitcoin hoping it will increase in value or use Ethereum to pay for something online. However, in Argentina, many people buy USDT and then choose not to do anything with them, said Maximiliano Hinz, head of Latin America at Bitget.
This trend in Argentina suggests that people desire to hold USDT to store their wealth in something more stable, particularly amid the country’s record-high inflation.
Argentina has been grappling with extremely high inflation, with annual rates reaching nearly 300% as of April 2024. The rate decreased to 276% in May, the lowest since January 2022 and the fifth decrease in a row.
Despite some improvements, Argentina’s annual inflation remains extremely high, at over 275%. This stubborn inflation has weakened the country’s peso, which becomes worth less as prices rise.
The Joys of Fiat Currency
With the peso’s value constantly eroding, people lose confidence in it and look for alternative ways to store their wealth.
The widespread adoption of cryptocurrencies in Argentina is also backed by the country’s leadership. President Javier Milei is a staunch supporter of cryptocurrencies, particularly Bitcoin. He has made pro-crypto policies a key part of his agenda since being elected president of Argentina in November last year.
Milei has recently advocated for free competition of currencies. He wants to give citizens the freedom to choose their preferred monetary units, including Bitcoin, WTI, and BTU.
However, Milei has not gone as far as making Bitcoin legal tender in Argentina, as El Salvador has done under President Nayib Bukele. El Salvador is also the first country to legalize Bitcoin.
According to recent reports, high-level officials from both countries’ regulatory bodies, including Argentina’s National Securities Commission (CNV) and El Salvador’s National Digital Assets Commission (CNAD), have held meetings to exchange insights and explore potential collaboration agreements.
The discussions focused on El Salvador’s pioneering experience in adopting Bitcoin as legal tender and Argentina’s efforts to learn from this experience to enhance its own crypto adoption and regulation strategies.
Control Freaks
Despite Argentina’s openness to cryptocurrencies, the country has faced challenges in regulating the crypto industry. The CNVhas yet to register any of the top crypto exchanges, including Binance.
The lack of regulation has been ongoing despite efforts to introduce registration requirements for crypto firms in April 2024. Argentina still struggles to provide secure and regulated cryptocurrency services in the nation.
The new regulations regarding Bitcoin face criticism due to its unnecessary compliance in requiring both companies and individuals involved in digital assets to register with the government.
Still, Argentina is a promising market for Bitcoin and cryptocurrency adoption. As one of the fastest-growing cryptocurrency markets, Argentina ranks 13th in Chainalysis’ 2022 Global Crypto Adoption Index.
Reports from Morning Consult indicate that Argentines have more confidence in crypto assets than people in other countries. This is likely due to Argentina’s high inflation, which has led to only 35% of Argentines believing the peso will hold its value for the next 1-2 years.
