Crypto in Argentina: Is It Helping??

By Michael @ CryptoEQ | CryptoEQ | 5 Jul 2022


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In Argentina, the Financial Information Unit (UIF) defines Bitcoin as a "digital representation of value that can be digitally traded and functions as a medium of exchange; and/or a unit of account; and/or a store of value, but does not have legal tender status in any jurisdiction and is neither issued nor guaranteed by any government or jurisdiction."

Individuals and legal entities are entitled to all rights over their property under the Argentine Civil and Commercial Code (the Civil Code). Civil Code divides assets into tangible and intangible categories. Intangible assets like intellectual property and rights don't have a physical form. Cryptocurrencies are intangible assets that can be owned by individuals and legal entities.

Recent News

This month Argentina, already a top 10 country in crypto adoption, saw the price of U.S. stablecoins rise across exchanges following the resignation of its Economy Minister, Martin Guzman.  The minister's sudden resignation is a concerning sign for an economy already struggling with staggeringly high (~60%) inflation.

According to data from Criptoya, the cost of purchasing USDT with Argentine pesos (ARS) through the Binance exchange is currently 271.4 ARS (a 12% premium). Criptoya  reported a comparable increase in other USD-pegged stablecoins, such as Dai (DAI), Binance USD (BUSD), Pax Dollar (USDP), and Dollar on Chain (USDC) (DOC).

Prior to the impact of inflation in 2016, one dollar could only purchase approximately 14.72 Argentine pesos. Six years later, though, one USD can purchase up to 125.5 ARS with the official exchange rate and ~230 at the "blue dollar" rate.

The additional premium for stablecoins pegged to the U.S. dollar is the result of a law issued on September 1, 2019, known as Decree No. 609/2019, which has made it nearly impossible for everyday Argentine citizens to exchange more than $200 per month at the exchange rate. The policy  was implemented to keep the Argentine peso from plummeting due to the country's suffering economy.

 

Argentina’s Poor History with Money

  • Argentina has experienced multiple periods of hyperinflation in the preceding decades, has a very high tax burden that encourages tax cheating, and has resulted in a very extensive informal sector (25 percent by one estimate).
  • In 2001, during an event known as the Corralito, the Argentine government froze people's dollar accounts within the banking system, abruptly changed the peso to dollar exchange rate, and then confiscated those dollars in exchange for pesos at the newly calculated exchange rate, resulting in a 75 percent loss of value overnight for depositors.
  • The economy struggled from 2001 to 2012 as economic constraints were widely loosened.
  • From 2012 through 2015, President Cristina Kirchner intensified capital regulations, and a substantial dollar illicit market emerged.
  • From 2015 to 2018, President Mauricio Macri reduced capital regulations, and the dollar illicit market collapsed.
  • As Macri lost power in 2019–2020, capital controls were reinstalled. Today, controls are more stringent than ever before.

 

Volatile Attitude Towards Crypto Adoption (in headlines, chronologically)

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Store of Value Options

There are multiple options in Argentina from which to utilize for currency swaps or cryptocurrency purchases. Each comes with their own distinct advantages and disadvantages.

The graph below demonstrates the increase in the inflation rate in Argentina over time:

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Argentina is experiencing YoY inflation of ~60%. The goal is to counteract the substantial increase in YoY inflation in Argentina to mitigate as much loss as possible. There are two main avenues in which to do this.

These are:

  • Direct conversions from ARS to USD
  • Purchase of digital assets or investments

Direct dollar for dollar conversions between the ARS and USD are extremely unforgiving. Exchange rates are generally unfavorable and typically come with major restrictions in how much currency can be swapped at once. The tax rate on these conversions is also notoriously high.

The other option is to acquire store-of-value assets with which to mitigate losses to inflation. There are three different possibilities here through cryptocurrencies with differing risk profiles.

They are:

  • Buy and hold Bitcoin
  • Buy and hold altcoins
  • Buy and hold stablecoins

 

Crypto Exchanges

To initially acquire cryptocurrency assets in Argentina, there are a few different crypto exchange options. Each exchange comes with different limitations and available coins to purchase.

The best exchanges available in Argentina are the following:

  • Binance
  • Bitex.la
  • Satoshitango

 

Coinbase

Crypto-to-crypto only

 

Binance

Binance is one of the largest cryptocurrency exchanges in the world, spanning an immense number of countries and offering trades on a large variety of digital assets. Binance is generally considered readily credible and is trusted by over 28 million users worldwide.

Binance unfortunately comes with a major downside for Argentinians. The only service offered is peer-to-peer swaps. This means that individual users exchange crypto based on their own stipulations directly.

Swapping ARS on-chain for any cryptocurrency asset available is costly and difficult. Generally, only small denominations are available for each swap (generally $2,500 or under in USDT). Swaps are also pricing in between a 55-65% markup on the actual conversions themselves.

 

Bitex.la

This exchange is headquartered in Argentina and offers both individuals and corporations services on cryptocurrency exchanges, swaps, and storage. Bitex.la allows trading on a variety of different cryptocurrencies which include all of the following:

  • Bitcoin (BTC)
  • Ethereum (ETH)
  • Tether (USDT)
  • Binance Coin (BNB)
  • US Dollar Coin (USDC)
  • Dogecoin (DOGE)
  • Polkadot (DOT)
  • Bitcoin Cash (BCH)
  • Uniswap (UNI)
  • Chainlink (LINK)
  • Dai Stablecoin (DAI)
  • Sushiswap (SUSHI)
  • FTX Token (FTT)
  • Yearn Finance (YFI)

 

While Bitex.la offers a satisfactory number of high level cryptocurrency assets, the exchange itself comes with its own risks. The exchange itself has an estimated user base of only 34,000, making it very small amongst similar exchanges. Scam Advisor gave the website a fair score of 75% as it comes with a valid SSL and domain address.

While total fees for utilizing the platform are unknown, trading fees come with a 0.25% mark up per trade. For a complete consultation and price breakdown, quotes must be requested from the exchange itself.

 

Satoshitango

The best available cryptocurrency exchange is Satoshitango, a Latin American exchange with a reputable track record and a number of available services. Satoshitango originally started as a cryptocurrency card service and pivoted towards an exchange. 

The exchange has a much larger user base than Bitex.la (exceeding 800,000 users), but it does come with slightly higher trading fees that range between an estimated 0.5% - 1%. Satoshitango supports wire transfers and comes with the ability to conduct large cryptocurrency purchases, making it a more efficient option than Binance.

Satoshitango has good availability of cryptocurrency assets, listing the following tokens:

  • Bitcoin (BTC)
  • Ethereum (ETH)
  • Litecoin (LTC)
  • Ripple (XRP)
  • Bitcoin Cash (BCH)
  • Cardano (ADA)
  • Dai Stablecoin (DAI)
  • US Dollar Coin (USDC)
  • Tether (USDT)
  • Dogecoin (DOGE)
  • Uniswap (UNI)
  • Chainlink (LINK)
  • Solana (SOL)
  • Stellar (XLM)
  • Polkadot (DOT)
  • Avalanche (AVAX)
  • Decentraland (MANA)

 

BuenBit

Advantages

  • You can trade cryptocurrencies for either dollars or Argentine pesos.
  • Buenbit does not charge commissions.
  • Available to individuals and businesses.
  • The organization complies with all applicable laws.

Disadvantages

  • It is currently only accessible in Argentina.
  • You are only permitted to trade with three cryptocurrencies.
  • A KYC verification is required.
  • There must be a bank account in the user's name.

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Michael @ CryptoEQ
Michael @ CryptoEQ

I am a Co-Founder and Lead Analyst at CryptoEQ. Gain the market insights you need to grow your cryptocurrency portfolio. Our team's supportive and interactive approach helps you refine your crypto investing and trading strategies.


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