According to the National Institute Of Statistics And Census, year-to-year inflation in Argentina is 142,7%. The country’s struggling economy is one of the main drivers of the election of the libertarian and Austrian-school economist Javier Milei as the new president on November 19. Inflation is also one of the key reasons Argentinian citizens use alternatives to access dollars like stablecoins. In this context, due to his appeal to eliminate the Central Bank in his country, Milei is associated with Bitcoin and cryptocurrencies.
But right now, Milei’s opinion about Bitcoin is neutral. “The problem that I see in cryptocurrencies is that they don’t have legal tender status, and they also don’t have value in their assets,” Milei explained at a conference in 2022. But also, in an interview with Clarin in 2022, Milei said that Bitcoin is the “natural answer” to the Central Bank “scam.” “Bitcoin represents the turnaround of money to its original creator: the private sector,” he detailed.
The president-elect is inclined to dollarize the economy before proposing a Bitcoin law a la El Salvador. As reported by Infobae in 2021, according to the Banco Central de Argentina head, Miguel Pesce, Argentinians hold almost 200 billion in USD bills, meaning around 10% of the total USD cash in circulation. Argentinians are used to dollars.
But there’s a 200 USD personal limit to acquire through the local banking system at the official rate, and the demand is bigger. That’s why there’s an informal market outside of the public infraestructure, with a more real rate. This peso to dollar rate is know as Dólar Blue.
Due to rampant inflation and easy access, Argentina is also one of the most active markets in terms of cryptocurrency.
In this market, the USD TetherUSDT stablecoin is the preferred alternative to exchange pesos through global platforms like Binance or local options like Lemon Cash or Belo. Known as “cryptodolares” stablecoins have a higher rate than USD dollar bills different than 100 bills, and a lower spread against the Dólar Blue reference than lower denominated USD bills.
The Crypto Community Expects A Positive Impact
According to Chainalysis, Argentina is the second largest market in Latin America, just behind Brazil, and a top-20 market globally. Companies, startups, unicorns, and the local market have several players, with an estimated over 5 million users nationwide. The community’s expectations around Milei and the impact his election will have in this marker are mixed, with a slightly positive inclination.
“A lot of epic has been built around the fact that the president-elect is a bitcoiner. Personally, I do not consider this to be necessarily true, even though he is a clear defender of the Austrian-school”, Mujeres en Bitcoin director, Daiana Gómez told me in an interview. To her, the dollarization plans that Milei delivers could boost greater Bitcoin adoption due to the dollar’s inflationary nature.
There are also chances that, without fully dollarizing, the Milei administration could ease access to currencies, opening the market to free currency competition. “Given his liberal mindset, it can be assumed that the use of Bitcoin, cryptocurrencies, and many other assets will gradually increase during his administration,” SatoshiTango CEO Matias Bari explained in an interview.
“His idea of reducing state power suggests that the current regulations on the purchase of assets like the U.S. dollar or cryptocurrencies might be lessened,” Bari underscored.
Open access to dollars could slow crypto adoption as demand focuses on it. But despite this idea, the Global Manager of Strategic Alliances at Cryptomarket, Guillermo Escudero, thinks that a more unrestrained market is positive for the crypto economy. “We see that the crypto market should advance in good terms with a more liberal position by this government,” he stated in an interview.
The president-elect is supposed to take the Casa Rosada on December 10. Only after that date will his crypto-related policies be clear, but so far, the focus in his recent interviews has been the fiscal balance.