As Argentina grapples with one of the globe’s most devastating inflation rates, exceeding 108%, Tether, a leading stablecoin provider, is stepping forward with an innovative solution. The cryptocurrency heavyweight is extending its outreach in this South American nation, targeting the population urgently seeking a safe harbor amidst market volatility. However, with lingering doubts over the company’s financial transparency and the pervasive uncertainty associated with cryptocurrency trading, can Tether establish a robust presence in South America?
Tether and KriptonMarket: A Strategic Alliance
In a strategic move, Tether has announced its alliance with KriptonMarket, an acclaimed on/off ramp solution. This promising partnership intends to elevate the accessibility of stablecoin for Argentine users, primarily through the Central Market of Buenos Aires, a key influencer in the Latin American produce trade.
This audacious maneuver by Tether ensues amidst escalating scrutiny from regulatory bodies and former government officials questioning its stability and the integrity of its stated reserves.
The Central Market of Buenos Aires, employing over 2,000 individuals, is a formidable player in the region, marketing 106,000 tons of produce monthly from a network of more than 600 farms and merchants.
Inflation in Argentina: An Unsettling Scenario
According to Trading Economics, Argentina faces an alarming economic predicament, harboring the fourth-highest inflation rate globally, a staggering 109%.
In this unenviable ranking, the South American nation trails only behind Syria, Lebanon, and Venezuela. Moreover, inflation in Argentina has stubbornly remained above the 20% mark since the mid-2010s, setting a disturbing record within the G20 group of nations.
From a comparative perspective, the closest G20 counterpart is Turkey, exhibiting an inflation rate of 43.68%, despite its repeated refusal to raise interest rates. As a stark contrast, the United Kingdom, grappling with an economic squeeze affecting living standards and noted as one of the poorest-performing developed economies, boasts an inflation rate of a mere 10.1%.
The Rise of Crypto Adoption in Argentina
Due to Argentina’s hyperinflation predicament, many citizens have sought refuge in cryptocurrencies like Bitcoin.
Stablecoins, such as Tether, pegged to another asset, typically a currency, strive to offset inflation by maintaining purchasing power and serving as a hedge against currency depreciation.
According to Carelin Garcia, Project Manager at the Web3 agency EAK Digital, the severity of inflation has pushed Argentinians towards non-fiat currencies. She poignantly noted:
“Inflation is akin to witnessing the value of your hard-earned income evaporating before your eyes. Our nation is one of the foremost adopters of crypto globally. Given our inflation situation, the widespread acceptance of crypto and the preference for stablecoins as a bulwark against economic downturns is quite comprehensible.”
Argentina’s Inflation Crisis and the Search for a Solution
The year 2022 witnessed the highest inflation rate in Argentina since 1991. Garcia added:
“With the ever-increasing access to technology and digital alternatives, people are exploring ways to preserve the value of their assets and savings.”
Argentina clinched the 13th spot in Chainalysis’s 2022 Global Crypto Adoption Index. However, it’s noteworthy that not everyone in the country has been swayed by the lure of crypto technology.
On May 4, in a significant development, Argentina’s central bank banned payment providers from facilitating crypto transactions.
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