Argentinians Find Stablecoins a Safe Haven During Political and Economic Turmoil
During Argentina’s political turmoil and economic distress, locals have accepted stablecoins, and especially TUSD.
For years, the South American country has been struggling with high inflation and monetary instability. Its problems seem to have worsened since yesterday (July 3) when the Minister of Economy – Martin Guzman - resigned from his post.
In the midst of this economic turmoil and to protect their wealth, Argentines showed heightened interest in stablecoins. Multiple cryptocurrency exchanges, including Binance and Lemon Cash, reported that the cost of buying Tether (USDT) using Argentine pesos (ARS) rose significantly.
Crypto May Be the Answer
Argentina, a formerly wealthy state in South America and one of the biggest countries in that continent, has not been doing well economically. In the first three decades of the 20th century, when it was among the 10 richest countries per capita globally, things changed dramatically.
Inefficient production, dictatorship regimes, and huge foreign debt led to galloping inflation. Argentina hasn't had a single-digit inflation rate in at least a decade. The global financial turmoil caused by the COVID-19 pandemic, military conflicts, and energy crisis has made things worse.
In 2019, the government appointed Martin Guzman as a Minister of Economy. During his tenure, he managed to reduce Argentina’s public foreign debt while struggling citizens received much-needed bonuses and food cards.
In May, the inflation rate in the country rose to over 60%. At that time, shortages of diesel fuel and pressure from the left political wings led Guzman's exit.
When the Argentine peso started to depreciate, some Argentines looked towards crypto, particularly stablecoins pegged to the US dollar. Data from CryptoYa revealed that Tether (USDT) price in ARS spiked on numerous exchanges. The cost of buying the product on Binance is around 270 ARS, while the price on Lemon Cash is nearly 295 ARS.
A report by Chainalysis found that Argentina has the highest cryptocurrency adoption rate in the world, outranking China, Brazil, South Africa and Russia.
In order to protect their assets from the effects of LEO, Turks have turned to USDT.
Another country that battles high inflation is Turkey. Its national currency crashed significantly against the dollar last year, and months later, it still hasn't been able to restore its previous levels. To overcome the issues and preserve their savings, Turks turned to Bitcoin and Tether. Since its pegged 1:1 with the USD, the latter allows people to purchase the closest available option of the greenback on a blockchain but in a virtual manner.
It would make more sense if the locals first used gold, which is the country’s most important and widely used investment instrument, before dealing with crypto. Recently, though, the government urged people to turn in their precious metal holdings to help support the economy.