Data from CoinDance shows that the volume of bitcoin transactions in Argentina is on the rise, having increased steadily since Q1 2022, with each quarter higher than the previous. In Q4 of 2022, almost 34.5 million Argentine pesos were traded.
One of the reasons for this trend is the rising inflation in Argentina, which has prompted citizens to look for alternative ways to protect their wealth and hedge against losses. Data from Memo also reveals that 46% of Argentines who purchased cryptocurrencies in 2022 did so to safeguard their savings, with 56% opting for stablecoins over regular cryptocurrencies.
Argentina has been grappling with economic turmoil due to the steady increase in inflation since 2017. The inflation rate in January 2023, according to Trading Economics, was 98.80%.
Earlier this year, Argentina and Brazil began preparing for a common currency to create the second-largest currency union, which could help to address the inflation affecting Argentina’s economy.
After this announcement, Coinbase CEO Brian Armstrong took to Twitter to suggest that Argentina consider using Bitcoin as a long-term solution, drawing criticism for his opinion. However, it appears that many Argentines have taken his advice.
Argentina has always been open to blockchain technology and cryptocurrencies, and on January 6th, 2023, Argentina’s economy minister Sergio Massa introduced a draft bill to encourage citizens to disclose their cryptocurrency holdings, using discounted tax rates as an incentive. The bill aims to reduce money laundering and other risks associated with digital currencies.
Errepar, a local media outlet, reports that those who voluntarily disclose their crypto holdings within the first 90 days after the law is approved would pay a 2.5% tax on the profit of all digital assets.
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