Since President Milei’s election in October 2023, he warned Argentines of “shock therapy” to the country’s economy and he wasn’t wrong, for better or for worse. The Argentine Peso subsequently declined massively since Milei’s warning, with inflation topping 276 per cent in May.
This has had a major impact on the people of Argentina as they are not only dealing with hyperinflation, but more than 50 per cent live below the poverty line, according to research by Observatorio de la Deuda Social of the Universidad Católica Argentina.
But Milei’s answer to many of the country’s financial worries revolve around crypto, in particular Bitcoin. In the October edition of SBC Leaders magazine, Payment Expert spoke to industry stakeholders about where Argentina’s crypto experiment could lead.
The President reaffirmed this belief last June, supporting not just Bitcoin but multiple digital currencies in a bid to modernise its economy. Milei believes that higher adoption rates will bring power back to the private sector and enhance financial inclusion and – so far – he may be right.
That’s because adoption rates for crypto have soared, making Argentina one of the leading countries in the world when it comes to adoption.
According to Statista, the number of crypto users in the Argentine market is projected to reach 11m by 2025, 24 per cent of its entire population. User penetration is also expected to grow to 24 per cent by the end of 2024 and growth is forecast to continue into next year.
But what is the value of holding crypto as opposed to the Argentine Peso, besides shelter from the national currency’s enduring high inflation?
Favouring stablecoins
Jordan Walker, Co-Founder of Bitcoin Collective, a Bitcoin education and events platform, says: “Bitcoin and crypto adoption isn’t solely down to high inflation but this is a significant factor. The economic conditions don’t just make it difficult for people to save, it also makes basic day-to-day transacting hard as prices can change within a matter of hours.
“We tend to see many emerging market populations with high inflation turn to Bitcoin and stablecoins [a cryptocurrency such as Tether, which is designed to hold a steady value pegged to a currency such as the US dollar or a commodity such as gold], especially to preserve their wealth.
“If anything, it tells us that Argentines are looking for a way to get their wealth out of the Peso and the best current solutions, which are easily accessible, are stablecoins and Bitcoin.”
Assessing Argentina’s burgeoning crypto market, Walker pointed out that Argentines have been favouring stablecoins, in particular Tether. Stablecoins have been hailed as crypto’s best answer as a form of payment, but Walker also notes that consumers are willing to store Bitcoin and use Tether, for instance, as a more stable function for any payment needs.
He explains: “Although the US dollar gets criticised for devaluing and losing purchasing power over time, it is stable when you compare it to the Peso.
“Bitcoin is more like a savings account and Tether acts more like a current account. It feels like the priority for a lot of people in Argentina is first to get their value out of the Peso for the short term into a safe haven, then Bitcoin is more for long-term saving as it is still a volatile currency.”
Control and speed
Crypto payments come with a myriad of both positives and negatives. From no attached fees on the benefits side, and the lack of regulation and heightened fraud risk on the downside.
Some gaming companies like Yolo Group have begun to build up crypto infrastructure in Argentina and the rest of the Latin America market. These firms hope to find opportunity in the region’s leading adoption of crypto and desire for innovation.
Yolo Group Head of Cryptocurrency Chris Acworth cites a range of benefits for gaming bettors to use crypto payments, while also acknowledging the risks involved.
“I’d say the primary benefits are control and speed,” says Acworth. “When you hold crypto in your own wallet, you truly have control of it in a way that you don’t with fiat currency in a bank. In countries like Argentina where currency controls and inflation are real-life problems, you can’t overstate its importance. Banks are slow and expensive, crypto isn’t.
“The speed of transactions is also a really key one, particularly with online gaming. With crypto, you’ll have your winnings in your custody within seconds. We’ve seen players land huge jackpots worth millions of dollars on Sportsbet.io and Bitcasino.io, and withdraw almost instantly. That’s just not possible with fiat.
“In terms of risk, the primary one is a question of responsibility. With crypto, you are in charge of the security of your wallet. There’s no helpline to call if you lose or forget the private key. It’s the only way to ensure absolute control, but it does mean you need to be careful and form your own security procedures.”
The question of regulation
It is important for a gaming group like Yolo to assess the changing economic landscape of the markets it is present in, but it is also essential that it accommodates shifts in consumer preferences by providing appropriate payment methods.
There are, however, barriers that will stop countries like Argentina from fully embracing the full scope of crypto, with the most apparent hurdle being regulation.
Argentina has tried to address this. President Milei’s government has progressed with regulation talks over the past several months, enforcing the $100,000 tax cap for registered crypto assets, a move which Roberto Silva, President of the National Securities Commission, stated is the first step in an anticipated regulatory crypto bill.
But will Milei’s tenure in office outlive his somewhat radical crypto plans? Acworth believes that come 2027, the next Presidential election will prove pivotal in realising Argentina’s goal of becoming a leader in the sector.
“If Milei’s government is pro-crypto, it is currently more focused on stripping back [financial] regulation rather than introducing more [crypto-focused regulation],” he says. “To complicate things further, it wouldn’t be a surprise to see another dramatic political shift when Argentines next go to the polls in 2027. So looking in the mid-to-long term, it’s really hard to predict the regulatory future for crypto. The youth are all for it, so all it needs is time.”
“When it comes to real-life adoption,” he concludes. “I think Latin America can already make a strong claim to being a global leader. I’m not talking about people simply holding or trading crypto, but rather those who use it for genuine use cases.”
Whether you disagree with Milei’s crypto utopia or not, it is hard to argue that he has helped position the country to become a destination for some of the sector’s largest companies, such as Binance and Bybit, to set up shop.
A question dating back to crypto’s inception remains, however – when will citizens begin to ditch fiat for digital currency, and in Argentina’s case if the Peso begins to rally back, will the country revert back to tradition and forgo potential innovation? Only Milei and the Argentine people hold these answers.
