Cryptocurrency adoption is on the rise in Argentina, with a correlation between the use of stablecoins and the devaluation of the country’s currency, according to a new report.
Argentina has the highest stablecoin usage in the region, with South America’s stablecoin trading volume accounting for 61.8% of all crypto transactions, and Brazil’s Higher than 59.8%. Only Colombia was higher at 66%.
According to Chainalysis, the reason for the surge in the use of these assets in Argentina, a country with one of the highest inflation rates in the world, is that people are using stablecoins to gain exposure to the US dollar. It is said that it is for the purpose of being there.
“[Argentines’]interest in stablecoins is driven by the role of cryptocurrencies in volatile markets and how citizens can better control their financial future by embracing cryptocurrencies, regardless of official monetary policy.” “It highlights what can be done,” the report says.
It added that the decline in the value of the Argentine peso regularly led to an increase in stablecoin trading on crypto exchanges.
Stablecoins are relatively fixed-priced cryptocurrencies, typically pegged to fiat currency (often the US dollar). They are typically powered by private companies that issue digital tokens on many major blockchains and hold dollar reserves to back them.
These are also the backbone of the crypto economy. Data from CoinGecko shows that the two largest stablecoins, Tether and USD Coin, have much higher 24-hour trading volumes than Bitcoin. This is because digital tokens allow you to seamlessly initiate and close transactions without visiting a traditional bank.
Argentina’s economy is in turmoil. Argentina’s inflation rate was 236.7% in the 12 months to August, with more than half of the population living in poverty, according to data from the country’s central bank. Although there are signs that inflation is slowing, the effects of last year are still reeling from the economy.
Argentina elected liberal economist Javier Millay as president last year. The incendiary populist has promised to sort out the country’s finances and previously talked about his interest in Bitcoin.
The Chainalysis report also noted that citizens of Venezuela, another country suffering from hyperinflation, are using cryptocurrencies to avert the country’s economic crisis. The report said the country received or purchased the largest amount of cryptocurrencies out of any other country in the region using centralized exchanges.
Edited by Andrew Hayward
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