Most Argentine citizens remember the events of the late 1990s, when bank accounts were frozen and almost overnight people's savings evaporated.
After that, the population of the country stopped trusting the authorities. The local authorities of the country have been struggling for many years with high inflation and the devaluation of the national currency - the peso. According to the latest data, the annual inflation rate has reached 72.6%, reaching the highest level in two decades due to rising food and energy prices.
Local residents began investing in cryptocurrencies to protect their savings from declining purchasing power, and employers were allowed to pay up to 20% of an employee's salary in cryptocurrencies.
The decision of the Central Bank of Argentina in May 2022
However, in May 2022, the situation changed radically. The Central bank of Argentina has decided to ban unregulated crypto transactions in traditional banks. The International Monetary Fund (IMF) forced Central Bank officials to make such a decision just a few days after Argentina's largest private bank, Banco Galicia, decided to add crypto trading.
According to the statement of the Central Bank, “financial institutions cannot make or facilitate transactions for their clients in trading digital assets, including crypto assets and those whose income is determined by fluctuations in the value of cryptocurrencies.”
This constitutes a de facto ban, as there are currently no regulated digital assets in the country.
The regulator explains the adoption of such a decision by the fact that it is aimed “at reducing the risks associated with cryptocurrency”, both for investors themselves and for the “entire financial system” of the country.
According to the Central Bank of Argentina, banks should focus their efforts on financing the real economy, not digital assets.
Prior to the decision of the Central Bank the Banco Galicia and digital bank Brubank SAU stated that they started to offer services for trading digital assets, including major cryptocurrencies such as bitcoin, ether and the USDC stablecoin.
In 2017, Argentina received $44 billion in financial assistance from the IMF. This is the largest aid package ever.
The institution recently approved a debt restructuring deal, provided that Argentina “will prevent the use of cryptocurrencies in order to prevent money laundering” and “further ensure financial stability.”
At the same time, Argentines are constantly faced with restrictions on foreign currency transactions and huge inflation of the national currency, which forces them to use digital assets more and more.
The development of cryptocurrencies and bitcoin is also facilitated by relatively cheap electricity, which makes bitcoin mining profitable and attractive for many citizens of the country.
For many cryptocurrency users in Argentina, even a relatively young and unpredictable digital currency is preferable to the extremely volatile and falling price of the peso.
Residents of Argentina are increasingly using cryptocurrency due to an unstable economy and a falling peso, and thanks to OWNR Wallet, you can now buy cryptocurrency for pesos - ARS with your credit/debit card.