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Stablecoin Purchases in Argentina Seem to Have Tripled Amidst Economic Crisis

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Investors in Argentina bought two to three times as many stablecoins over the weekend compared to the average, according to the country’s crypto firms. This is following the departure of Argentina’s economic minister, Martin Guzmán, on Saturday amid an economic crisis.

The Argentine peso (ARS), whose purchasing power has fallen over the previous year as inflation has soared, is reportedly under threat of devaluation, according to three major cryptocurrency exchanges.

The peso lost value against the stablecoins DAI and tether after Guzman’s departure by roughly 15% on the platforms of many major local exchanges.

From ARS 245 on Friday to ARS 280 during the weekend, both stablecoins increased in value. Tether quotes on Argentine pesos have dropped after Silvina Batakis was appointed as the country’s new economics minister late on Sunday.

Inflation in Argentina rose by over 60% year after year

Guzmán’s departure is the latest repercussion of a dispute between Argentine President Alberto Fernandez and Vice President Cristina Fernández de Kirchner over the country’s economic course, which led to a 60 percent increase in inflation in May compared with the same month last year.

Additionally, the central bank of Argentina is running low on foreign exchange reserves, which has a negative impact on imports, among other things.

According to the corporation, “many people” used their DAI as collateral to secure loans in Argentine pesos and buy more DAI as insurance against a prospective peso depreciation. The Argentine exchange Buenbit reported a 300 percent spike in trade on Sunday compared to the same day in prior weeks.

According to many local media sources, the government might declare a foreign exchange break on Monday to soothe markets. Most Argentine exchanges boosted the margins between the bid and ask prices to 18%, while normally they are under 2 percent, as a result of the absence of price references for the U.S. dollar over the weekend.

Central Bank of Argentina Asks Banks to Stop Crypto Offerings

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Just days after Argentina’s two banks announced that they had opened up crypto trading to their customers, Argentina’s central bank (BCRA) announced that financial institutions cannot allow their clients to conduct transactions using digital assets.

Banco Galicia, a significant private bank, and Brubank, an all-digital bank, both stated on May 2 that users would be able to trade cryptocurrency through their investing portals on their websites.

However, because crypto assets are not regulated, the central bank has stated that financial institutions in the nation cannot offer this type of service.

“A digital representation of value or rights that is exchanged and stored electronically using Distributed Ledger Technologies (DLT) or other comparable technology,” according to Argentina’s central bank.

Argentina’s banks recently opened up crypto offerings

The central bank statement adds, “The action imposed by the BCRA Board of Directors strives to limit the risks connected with activities with these assets that might be produced for consumers of financial services, and for the financial system as a whole.”

Some Argentines have adopted crypto as a tool to more easily preserve money while dealing with the country’s high inflation rate, as well as the currency restrictions reintroduced by its current president, Alberto Fernández, in 2019.

However, as part of a roughly $45 billion debt restructuring arrangement with the International Monetary Fund, Argentina’s government said in March that it would prohibit the usage of cryptocurrencies (IMF).

The government said in a March 3 memorandum that it would “discourage the use of cryptocurrencies with a view to avoiding money laundering, informality, and disintermediation,” among other actions aimed at bolstering the country’s financial resilience.

The shift in focus from last May might be linked to the International Monetary Fund’s (IMF) $44 billion extended loan plan, which included a condition requiring Argentina to “discourage the usage of cryptocurrencies.”

The central bank’s statement contradicts the plans of the mayor of Argentina’s metropolis, Buenos Aires. Mayor Horacio Rodrguez Larreta revealed plans to digitize the city in late April, including proposals to enable inhabitants to pay their taxes in cryptocurrency and other blockchain initiatives.

Argentina’s Banking Giant Welcomes Crypto Trading

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Argentina’s largest private bank Banco Galicia with a market cap of nearly $1.3 billion, has finally added the option to trade cryptocurrencies on its platform. As per a Monday announcement, the financial firm will allow users to buy and sell Bitcoin [BTC], Ether [ETH], USDC, and XRP.

Banco Galicia has collaborated with Lirium, a Liechtenstein-based crypto product for digital wallets and mobile banking apps.

Sources also revealed that for the time being it is offering users the ability to buy and sell crypto, but not allowing them to withdraw or send crypto, Lirium COO Martin Kopacz said, adding that the bank also offers a custody feature.

Banco Galicia plans to launch the service to all of its customers by mid-May, Kopacz noted.

Stakeholders lending support to Argentina’s biggest crypto development

In order to facilitate crypto trading and custody service, Lirium has partnered with OSL, a Hong Kong-based digital asset trading platform that began operating in Latin America last October.

Lirium is also working with four Argentinian financial institutions that plan to unveil a crypto trading service, Kopacz said, without disclosing dates. Apart from that, Lirium is working on similar integrations in Brazil and Mexico, according to Kopacz.

Reasons behind Argentina’s exponential crypto growth

In frontier markets like Argentina, cryptocurrency has skyrocketed. The nation marred by an unstable financial system and strong government intervention in the country’s economy has driven Argentines to seek solace in digital assets, according to a new report from the BBC.

The highly volatile Argentine peso, the country’s national currency, has been subjected to a range of financial controls that make the everyday citizens’ basic life essentials like buying and investing with the currency, increasingly difficult.

Amid this chaos and uncertainty, cryptocurrency has enjoyed a steady boon. Data from Chainalysis showed that Argentines earned $1.86 billion in cryptocurrency in 2021.

So far, the government has taken a relaxed attitude to the cryptocurrency boom. Recently it rolled out a so-called “innovation hub” to bolster fintech and cryptocurrency startups in a regulated manner.

The latest addition by the country’s largest bank to allow crypto is certainly a good start towards encouraging user adoption.

Bitcoin’s Lightning-focused app Strike hits Argentinian shores

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Bitcoin’s Lightning-powered payment app, Strike, announced its launch in Argentina to offer what it claims to be a superior financial experience in a country that has one of the world’s highest adoption rates for cryptocurrencies. The recent development further advances Strike’s mission of building a ‘more connected financial world.’

According to the press release, Strike would facilitate day-one access to a wide range of use cases such as instant and near-free remittance payments, accepting and sending bitcoin Tips on Twitter, and peer-to-peer transactions. On Strike’s future expansion plans the P.A read,

Strike has begun working with merchants, consumers, and individuals in Argentina, launching initial integrations and activations in San Martin de Los Andes. Since the launch in El Salvador less than one year ago, Strike has quadrupled its Latin American team to expand in Argentina, and it is targeting a continent-wide expansion of its team and of the app. Strike will continue to launch in more countries throughout the year, with a focus on Brazil, Colombia, and other Latin American markets and plans for other regions throughout the world.

Strike would be available on the App Store and Google Play Store in Argentina. Besides that, it also enables anyone with a Twitter account within the accepted countries to receive and to send Tips to anyone. According to the payment firm, this is a cheaper and faster global alternative to traditional bank or card networks. In addition to Argentina, Strike is available in most U.S. states and El Salvador.

El Salvador’s adoption -the first Bitcoin national project

Having said that, the world’s first national Bitcoin project has been El Salvador’s adopting BTC as legal tender back in September 2021. Previously, El Salvador‘s Finance Minister Alejandro Zelaya said that the government is planning to send around 20 bills related to the Bitcoin bonds to Congress for its approval. The bills aim to cover financial markets and investment in securities to provide a legal foundation for issuing the bonds, he told a local TV. “This is to provide a legal structure and legal certainty to everyone who buys the Bitcoin bond,” Zelaya added.

Argentina’s President is interested in Bitcoin but the central bank remains skeptical

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The crypto-verse has garnered interest from several people across the globe. The President of Argentina is the latest one to hop onto the crypto bandwagon.

Bitcoin [BTC] went from being a currency associated with the dark web to one of the most sought-after assets. This transition was lauded by many and the rapid surge in the value of the king coin was one of the primary reasons behind this. Officials of different governments across the globe were initially extremely hostile towards Bitcoin and other cryptocurrencies. However, with time the highest authorities of certain countries have been expressing interest in the crypto market.

Argentina President Alberto Fernandez in a recent interview revealed his inclination towards cryptocurrencies. Crypto assets weren’t his only topic of interest, he also noted that he was willing to explore the prospects of a central bank digital currency [CBDC].

Argentina heading towards the crypto-verse?

El Salvador’s crypto-friendly move has left an array of other countries under the pressure of doing the same. While the Argentina President affirmed that the country wouldn’t “go too far out on a limb,” he pointed out that there are no other reasons to say “no” to it either.

Argentina’s inflation issue has been alarming and has persisted for the longest time. While the government deals with that, the inclusion of crypto into its system could go either one of the ways.

Additionally, speaking about the crypto industry, Fernandez stated,

“There is caution because of how unfamiliar it is, and because it is hard to understand how this fortune materializes. Many people in the world have these concerns, and that is why the project, or the system, has not yet expanded [more than it has]. But it is something to consider.”

Alongside this, the head of Argentina’s central bank, Miguel Pesce suggested that cryptocurrencies could pose a threat to the stability of the existing economic system. He also shot down rumors about the country’s plunge into the CBDC space.

Argentine National Congress member seeks crypto payments for certain workers

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Argentine National Congress member José Luis Ramón has been urging the government to pay certain workers in crypto.

As the world has been diving into digitalization by embracing crypto, several lawmakers have been driving their respective governments to make crypto-friendly laws. Even though several countries have outrightly banned crypto, a few others continue to embrace them. The crypto activity in Argentina has always been high, considering the high inflation rate in the region. Therefore, the Argentinian government continues to incline towards the crypto-verse.

Taking a massive plunge into the crypto industry, the member of the Argentine Chamber of Deputies, José Luis Ramón, revealed that he had presented a bill before the government to allow some workers in the country to be allowed to pay in crypto.

Argentine lawmaker embraces crypto

Even though most US regulators remain hostile towards the crypto industry, the Mayor of Miami made advancements in incorporating crypto into the system. Mirroring a similar notion, a member of the lower house of the Argentine National Congress put forth a bill that allows any person working as the exporter of services to garner payments in crypto.

In a recent tweet, Ramón wrote,

“The idea is that [workers] can strengthen their autonomy and retain the purchasing power of their remuneration. This initiative stems from the need to promote greater autonomy and governance of wages, without this implying a loss of rights or exposure to situations of abuse within the framework of the employment relationship.”

While this bill needs to earn the approval of both the Argentine Senate as well as the Chamber of Deputies, the President of the country, Alberto Fernández, will be a part of this towards the end for the final approval.

Additionally, the workers can choose between an array of options. Workers can either have their salary paid entirely or partially in crypto.

The Central and Southern parts of America seem to be going all-in on the adoption of crypto. El Salvador emerged as a prominent hub for crypto this year.

Argentina Border Crossing Process Affected as Bitcoin Scammers Take Off with Sensitive Information

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Scams and frauds have become prevalent in the cryptocurrency industry, with the community taking precautions against the devastating consequences they can have. Over the last few years, the world of virtual assets has done its best to combat this pariah, but even then, one or two major issues are still emerging.

The latest scam to rock the financial and decentralized world was a ransomware attack that halted Argentina’s border crossing for four hours. According to reports, the hackers demanded Bitcoin to lift the curb that they had put on the national system.

What makes this ransomware attack different from other instances is the fact that this was the first time a national process was interrupted for the sake of money. Argentina’s official immigration agency, the Dirección Nacional de Migraciones first reported the Netwalker ransomware attack on August 27th after which the discussion has been about paying the $4 million ransom. 

The agency added:

“Being approximately 7 a.m. of the day indicated in the paragraph above, the Directorate of Technology and Communications under the Directorate General Information Systems and Technologies of this Organization received numerous calls from various checkpoints requesting technical support. The Comprehensive Migration Capture System (SICaM) that operates in international crossings was particularly affected, which caused delays in entry and exit to the national territory”

Further details revealed that the organization did not consider it as an ordinary situation and that the event was evaluated against the infrastructure of the Central Data Center and Servers Distributed. The attack targetted the organization’s MS Windows-based files such as ADA SYSVOL and SYSTEM CENTER DPM. Sources have revealed that the $4 million ransom first started out as $2 million, which was jacked up because of the delay in payment. The attackers demanded the ransom to be paid in bitcoin, almost worth 55 BTC. 

 The website run by the scammers can be viewed on Tor with a link to a “Stolen Data” page. Here, users can view a screenshot of the content stolen from the Argentinan agency as proof. Investigative agencies are still trying to deal with the threat with many claiming that the hackers had covered every last step.