15 years have passed since cryptocurrencies were born, with the invention of bitcoin, but in much of the world there is still mistrust towards these virtual assets, which have not stopped multiplying.
However, there are a handful of countries where, for different reasons, a significant percentage of the population has adopted these new financial tools.
One of these countries is Argentina.
Although it is difficult to quantify the phenomenon, given that it involves unregulated and decentralized activities, and, therefore, there is no entity that brings them togetherthere are ample indications that many Argentines have adopted cryptocurrencies.
A first clue is in plain sight: cities like Buenos Aires are full of advertisements on public roads promoting sites of exchange crypto (exchange).
But there are also several data from the sector that support its popularity among Argentines.
In 2023, the country appeared in the 15th place in the Global Cryptocurrency Adoption Indexcompiled by the American company Chainalysis, which analyzes the industry based on the transaction volume reported by the different service providers.
Argentina was the second largest market in Latin America, after Brazil.
Meanwhile, one of the most popular buying and selling platforms in the country, Lemon, reported that 4 out of 10 people who downloaded a crypto app in Latin America in 2023, did so from Argentina.
The Argentine company, which together with Binance – the largest digital currency platform in the world – dominates the local market, estimates that there are about 3 million people who use crypto platforms in that country.
This would put crypto investments almost on par with those of the traditional capital marketwhere negotiable securities such as bonds and stocks are bought and sold.
According to data provided to BBC Mundo by Bolsas y Mercados Argentinos (BYMA), which brings together the main players in the stock market, in 2023 there were 3,647,912 accounts with operations.
First crypto registration
Another sign of the growth that cryptocurrencies have had in Argentina was the opening, at the end of March, of the Registry of Virtual Asset Service Providerscreated by the National Securities Commission (CNV).
The president of the CNV, Roberto Silva, told this medium that the registry was created by law, following the recommendations of the Financial Action Task Force (FATF) to prevent money laundering and the financing of terrorism.
“The objective of the registry is to identify the suppliers since they have become obligated subjects“, he explained, in reference to the human or legal persons who have the legal obligation to report to the Financial Information Unit (UIF) about the existence of suspicious operations.
Silva stated that they must register both Argentine crypto services companies and those of foreign origin that direct their operations to Argentine residents, advertise in the country, use a.ar domain, have local subsidiaries or generate more than 20% of their business in Argentina.
Although the organization will only announce the list of crypto platforms when the call period ends, which was 45 days, sources in the sector told BBC Mundo that several dozen companies They have already submitted their application.
The creation of the registry seeks to prevent Argentina from entering the “gray list” of countries at risk of money laundering, something that would complicate the country’s possibilities of negotiating external financing again.
But why has the crypto business expanded so much in Argentina?
An “explosive combo”
The expert in crypto assets and professor of Technology and Business Rodrigo Civiello affirms that Argentina has an “explosive combo” composed of four factors that explain why many citizens have decided to adopt this new financial tool.
1. Inflation of almost 300%
The rapid loss of value of the peso, exceeding double digits per month, makes Argentines look for another reserve currency.
2. The exchange rate “trap”
Restrictions on the purchase of dollars – the most traditional form of savings for Argentines – lead many to look for alternative currencies.
3. High labor informality
Unregistered workers represent close to 50% of the labor market and cannot be paid through a bank account, since they cannot justify their income.
4. Insecurity
“It is a factor that is not taken into account very much,” says Civiello. “But many people who buy dollars don’t want to have them at home. With crypto, even if your cell phone is stolen, if you have the password to your account you can recover it.”
“For all these factors, Argentina is the spearhead“, he tells BBC Mundo.
According to the economic media Bloomberg, in February and March the purchase of cryptocurrencies in Argentina increased so much that even came to replace the purchase of dollars as a form of savings.
“Exchanging pesos for dollars, the main safe haven for decades, has lost some of its appeal in the last two months, as the commonly used parallel exchange rate has strengthened 10% against the dollar, while “Bitcoin has soared almost 60% against the greenback over the same period,” Bloomberg reported.
Although this first cryptocurrency – which remains the most popular in the world – is gaining followers in Argentina, it is not the most used in the country.
According to a report from exchange Mexican Bitso, 60% of Argentines turn to stablecoinsanother type of cryptoassets that are considered safer, since their price is tied to another asset, such as the dollar, which makes them less volatile.
Who uses crypto?
Although the numbers clearly show that Argentina is one of the countries that is adopting cryptocurrencies the most in the world, the truth is that, for the majority of Argentines, they are still something unknown.
Civiello explains that its use, for the moment, seems to occur mainly in some sectors of the population.
But they are not the groups one might think.
“Many imagine that those who use crypto are people who specialize in finance and markets, but the reality is that, although these were the first to use this disruptive technology, now anyone can open an accountwhich takes just five minutes,” he points out.
Youngespecially those who have informal jobs, are one of the groups that use them the most.
Another group that adopted them are the freelancers, workers without a dependency relationship who offer services abroad, says the expert.
In this way they manage to overcome the obstacle that prevents receiving dollars in Argentine bank accounts (it can only be collected in pesos, and all money received from abroad is “pesified” at the official rate, which is lower than the market rate).
A third group that uses cryptocurrencies are immigrants.
“We have a lot of immigration from neighboring countries. To send or receive money from their countries of origin until recently they had to go to a currency transfer service, which charged them a fee of at least 5% and the transfer took between two and five business days. With crypto it is immediate,” says Civiello.
But the perhaps least thought-out sector that has embraced virtual assets is one of the most traditional in the countryand an emblem of Argentina: field.
The agricultural producers, the main generators of dollars in Argentinathey have not only adopted cryptocurrencies as an alternative to purchasing the greenback on the parallel market (here called the “blue dollar”).
A rural producer, who preferred not to give her name, explained to BBC Mundo that these new technologies have even made it possible to take the dollar out of the equation, using the crops themselves – in particular the soy– as a “currency” of exchange.
“In agriculture, an application called Agrotoken is used that gives you one token for every ton of soybeans”, he said.
“Traditionally, the unit of measurement in agriculture is a truck, which is 30 tons of soybeans. Before, if I needed to buy an input that was worth the same as a ton and a half of soybeans, I had to sell an entire truck.”
“Now, just by checking how much soybeans I have stored in silobags in my field, I can ‘tokenize’ the amount of soy I wantand use those agrotokens to buy what I need, through a card associated with my account.”
The system not only allows you to sell only the necessary amount of crop. In addition, it prevents you from having to transport trucks to the cereal factories, since this expensive process is only carried out at the end, once the tokens are collected.
Tokens can even be used as collateral to request loans in some banks.
Regulations
What will happen now that a supplier registry has been created? Could it discourage the use of crypto? And what will happen to the platforms that do not register?
According to the CNV, suppliers that meet the requirements to register and do not already do so They will not be able to operate legally in Argentina.
For the Argentine Fintech Chamber, which brings together technology companies that offer financial services, have “a correct regulatory frameworkwhich promotes innovation and puts the right incentives, while protecting the people who invest in them, is a great opportunity” for the country.
“Today Argentina leads the crypto industry at the regional level, in terms of technological development, companies and adoption. We believe that this regulation of Virtual Asset Service Providers can help complement and consolidate that process, with an appropriate regulatory framework and from the Chamber we are working towards that,” the executive director of the Chamber, Mariano Biocca, told BBC Mundo.
Last February, when the purchase of Bitcoin skyrocketed, the NGO Bitcoin Argentina warned that Reports of cryptocurrency scams quintupleda difficult problem to combat in a deregulated market.
Both the Fintech Chamber and the CNV emphasize that the registry regulates suppliers but not to customersneither nor to the assets themselves.
However, the law that created the registry gives the CNV the powers to regulate ar and supervise the world of crypto, and the body is expected to call a public consultation in the future before deciding how to move forward.
Meanwhile, the growth of cryptocurrencies in Argentina could depend on the ability of Javier Milei’s government to lower inflation, lift the “trap” on dollars, reduce labor informality and improve security, the four main factors that Today they enhance the popularity of digital money.
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