The crypto adoption spreads in Argentina, even if the central bank tightens the rules

In a crowded pedestrian zone in the center of Buenos Aires, money changers have new competition at the black market. Colorful posters that advertise for online cryptocurrency exchanges stand in addition to the traditional cuevas or "caves", grubly unmarked exchange offices convert the pesos and dollars to double the official course.

Argentina is ripe for cryptocurrency disorders. For decades of distrust of the banking system, high inflation and strict limits, how many pesos can be exchanged in more stable currencies such as the dollar, savers have increasingly pushed towards cryptocurrencies.

Especially younger generations see this to support their savings, since the annual inflation increases to over 55 percent and the extent of state interventions in the economy increases. According to the Chainanalysis index, Argentina recorded the tenth highest acceptance rate of cryptocurrencies worldwide and one of the highest in America last year.

But even if more and more people are registering, the country's central bank brakes out of concerns in connection with an IMF debt compensation contract signed in March of $ 44 billion.

From this month from this month, financial institutions in Argentina can no longer offer cryptocurrency-related services, such as the purchase and sale of crypto via their digital wallets and mobile banking apps or the establishment of a crypto exchange. The decision was made only a few days after Argentina's largest private bank, Banco Galicia, and the online bank Brubank had announced plans to open up to digital assets by enabling users to buy different digital coins via their investment app.

representatives of the central bank said the step to reduce the risks that represents the crypto for the users and "the overall financial system", and referred to concerns about volatility and money laundering.

sources that are close to the decision, the FT announced that the step of the IMF before a quarterly review of its debt program in the amount of 44 billion

According to the conditions of the IMF deal, Washington and Buenos Aires agreed that Argentina would "advise against the use of cryptocurrencies to prevent money laundering, informality and disintering".

Additional IMF funds that are output on Argentina to increase the reserves of the central bank and make upcoming debt payments are checked by the funds quarterly by the fund. Since the goals to reduce inflation and reduce the deficit against the background of the war in Ukraine seem to be extremely difficult to achieve, the cryptoclausel could be a way to show that the organization of Argentina does everything to meet other conditions.

Despite the caution of the central bank, there are signs that crypto prevails. Mauro Liberman, 39, operates a crypto café in the capital of the capital. Crypstation in Puerto Madero offers free advice on how digital currencies work and accepts payments in 30 different virtual coins.

"It is used as a medium every day," said Liberman, the Athena-Bitcoin money machine of the café was behind him. "Before [Crypto] was seen almost exclusively as an investment option."

countries in Latin America are among the most enthusiastic users of crypto. El Salvador was the first nation in the world to make Bitcoin a legal means of payment in September, although it had a bumpy start when the government's wallet developed technical problems. The public assumption was limited.

Since then,

el Salvador has spent tens of million public dollars for buying cryptocurrency - and lost money, which causes concerns how the enormous volatility of these digital coins could affect the finances of a country. Bitcoin, the largest digital asset in the world, sank to the lowest level since the end of 2020, and Tether, a popular stable coin, could not temporarily maintain its connection to the US dollar.

In Argentina, at least seven different crypto exchanges are listed in the country where people can buy Bitcoin. One of the most popular, Lemon, exceeded 1 million users in April after the company introduced a Visa debit card that enables payments in pesos or crypto. Some companies have started paying part of the salaries in stable coins, the value of which is linked to a different currency or another raw material such as gold.

Santiago Siri, founder of Digital Coin Ubi and one of the first crypto enthusiasts of Argentina, said that the unfavorable economic conditions have led to a "massive" adoption rate like never before.

"When we walk through Buenos Aires, it is as if we accidentally traveled to 2034, even the building contractors and taxi drivers save on crypto," said Siri, whose business is supported by Marcos Galperin, the founder of Mercadolibre, Latin America's answer to Amazon.

At the same time, technologies that are developed by Argentinians who are used to past seizures of hyperinflation, state debt failures and currency devaluing are more accessible, he said.

stock exchanges like Lemon are excluded from the new central bank rules. They work as a payment processor and are subject to different regulations, so that the solvency and trade in cryptocurrencies are not affected. In Latin America, Central and South Asia and Africa, more than 80 percent of the cryptocurrencies are worth value that are sent to these regions.

The latest passage of the central bank will ultimately help to slow down the spread of crypto on the stock exchanges, said Andrés Engler, crypto specialist at Coindesk based in Buenos Aires. "That was a signal to the banks. But stock exchanges do not fall under the new guidelines, so the entire cryptocurrency ecosystem continues."