Backfire in Argentina: Citizens Want BTC Over Peso Amid USD Crackdown

Following the ban of crypto purchases with credit card, ’s trading volume reaches an all-time high.
Argentina’s central bank had formally banned consumers from purchasing Bitcoin (BTC) and other cryptocurrency using on Nov. 1. What followed was the very opposite of what the Argentine government had anticipated — over the past two weeks, the country has traded the highest amount of Bitcoins on the peer-to-peer platform , according to data by CoinDance.Argentina’s fragile economyOne of the biggest factors in the high adoption of crypto in the country is the high volatility of the Argentine peso. In just the past five years, the value of the peso against the United States dollar has fallen by over 85%. The residents of the country have traditionally had little confidence in their currency, favoring to convert their spare pesos into relatively stable dollars.The country’s sovereign currency is the peso, which people earn and spend, but it’s the U.S. dollar that defines the value of goods and services. The peso–dollar exchange rate is quoted daily by the media, alongside weather and traffic reports.Looking at the economic situation of Argentina, crypto bull advised the president of Argentina in March 2019 to legalize Bitcoin in order to improve the country’s economic situation. He counseled the president on crypto’s potential to improve the devaluation of the Argentine peso and relieve the associated brain drain. Daniel Popa, CEO of the Anchor stablecoin, told Cointelegraph that despite the volatility of crypto, Argentinians trust it more as a store of value than the peso because Bitcoin cannot be manipulated by the government, adding that:“Unfortunately, bitcoin does not offer predictability, underlining the ongoing need for a universally-accepted stablecoin and financial standard that could be adopted by anyone in the world, including those suffering from the negative economic impacts that stem from war, natural disasters, health crises, and disruptive monetary policies.”Crackdown on forexTo give some historical context, in the 1990s, the peso was pegged to the dollar by the government of President Carlos Menem in an attempt to stifle inflation. The dollar peg damaged exports, pushing the state to take on more debt to remain afloat amid a worsening economic crisis. The peg was lifted in 2002. However, the dollar had already been ingrained in Argentine culture.On Sept. 1, the Central Bank of Argentina had imposed restrictions on U.S. dollar purchases to revive the plunging peso. Citizens’ purchases made in dollars were limited to $10,000 a month, requiring special permissions beyond that limit. The bank also said it would restrict dollar purchases to $200 per month via bank account and just $100 per month in cash, until December.Talking to Cointelegraph about the government’s crackdown on forex, Salomon Ptit Haddad, the head of institutional sales at Enigma Securities, said, “Given the current degree of uncertainty, the BCRA board of directors decided to take a series of measures that seek to preserve the reserves of the Central Bank.” Haddad went on to add:“The Argentine Central Bank can

This post was syndicated from https://cointelegraph.com/news/backfire-in-argentina-citizens-want-btc-over-peso-amid-usd-crackdown and originally written by our friends Sritanshu Sinha at https://cointelegraph.com/feed
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