A fight over bitcoin rages in Argentina. Bitcoin adoption is booming among the Argentine population, but the government is increasingly resisting. After a bitcoin ban on banks, the central bank is now restricting access to the official currency market to people who have recently bought bitcoin.
According to an announcement from the central bank, people who bought bitcoin with pesos in the previous 90 days are not allowed to use the free currency exchange Mercado Único y Libre de Cambio (MULC), where you can exchange dollars for pesos at the official exchange rate. . The new measure took effect immediately.
The central bank did not explain the decision. Some speculate that it may be a means of limiting arbitrage between official and unofficial exchange rates or perhaps a measure against capital flight. It could also be part of a policy of discouragement.
There are also concerns: Will the Argentine central bank now, perhaps in cooperation with exchanges, keep a register of who has bought bitcoin?
Bitcoin is relatively popular in Argentina. According to the blockchain analysis company Chainalysis, the country ranks tenth globally in bitcoin adoption, and the analysis company Statista places the country at number six.
The weak Argentine economy and the rampant inflation of the Argentine peso probably play a role. Annual inflation in the peso is now higher than 60%, and Argentines’ savings and incomes are falling rapidly.
Confidence in the value of the peso, to the extent that it still existed, is now hard to find. “No one has a strategy, we just live in the moment”an Argentinian trader tells Bloomberg.
Anyone who still wants to save or keep accumulated wealth in Argentina will therefore have to exchange their pesos for something else that is more stable in value. US dollars are often preferred, but to limit capital flight, the Argentine government has set a monthly purchase limit of up to $200 dollars.
Bitcoin is also an increasingly popular choice among Argentines. After all, high inflation is impossible with bitcoin and compared to the loss of value in the peso, bitcoin’s volatility is relatively not that bad.
Furthermore, Argentines know all too well that there are risks associated with bank accounts. Bitcoin, on the other hand, is difficult to confiscate, can be sent all over the world and the transactions are uncensorable – for many Argentines not unimportant characteristics.
Last year, Argentine President Alberto Fernandez showed his receptiveness to the adoption of bitcoin as a means of combating inflation. He did not rule out the possibility that Argentina could follow the lead of El Salvador, which last year recognized bitcoin as legal tender. However, Argentina’s central bank is against it and considers bitcoin “not a real asset”.
The IMF reacted defensively. According to them, a cryptocurrency as a national currency, as in El Salvador, is ‘a step too far’. For a new multibillion-dollar loan to Argentina, the IMF made it a condition that the Argentine government take active steps to discourage the use of bitcoin and other cryptocurrencies.
The Argentine government now seems to be responding to this. Major Argentine banks recently announced that they would include bitcoin in their services due to high demand, but the central bank brushed those plans off the table. It issued a total ban on banks having anything to do with bitcoin or other cryptocurrencies.
The recently introduced measure banning recent bitcoin buyers from the official currency market may be an extension of this.
Whether that will stop the Argentines remains to be seen. After all, in failing economies it is not uncommon for the exits to be closed due to capital constraints when the ship is sinking to prevent a faster sinking. Good for the sinking ship, but questionable for the individual crew.
Perhaps restrictions emphasize the sense that bitcoin offers an exit option: Bitcoin is apparently such a way out that needs to be boarded up.
Bitcoin seems to be more popular in countries with high inflation than elsewhere.