Argentina’s Central Bank Warns of ‘Significant Financial Losses’ from Crypto Investing
The people of Argentina are actually investing in crypto to hedge themselves against the devaluation of its fiat currency peso, which has lost 80% of its value in the past four years.
The Argentine central bank and securities regulator released a joint statement Thursday warning the people about the problems associated with crypto investing.
Cryptocurrency “can cause significant financial losses for its holders, including the possibility of losing the totality of the resources invested,” said the statement. It then goes on to remind potential investors that digital assets aren’t legal tender.
The warning comes from a country that is struggling with currency turmoil and sovereign defaults. One of the biggest economies in Latin America has a history of currency devaluations and hyperinflation, making the citizens' savings worthless.
Its fiat currency, the peso, has lost more than 80% of its value in the past four years. Because of this, despite strict controls on exchanging pesos for US dollars, Argentines largely keep their savings in USD.
Despite the risks, crypto trading isn’t at “significant levels of use and acceptance” in the country, said the government bodies in their statement.
Argentines have been shifting their focus on cryptocurrencies in the light of the decline in the economy that saw the number of crypto users in the country rising in the last 12 months, as per AFP.
Maximiliano Hinz, the head of Binance in Latin America, had reported a tenfold increase in active crypto trading accounts in the region. Hinz estimated that there were about 2 million registered trading accounts in the country.
Bitcoin and crypto have been serving as an inflation hedge against the backdrop of money printing by central banks.
In Nigeria as well, where the regulators have been letting the fiat currency weaken through multiple currency regimes, people are turning to BTC.
You either support self-sovereignty of your hard earned money or you support a system that continues to oppress and empoverish.
There is no in-between.
Anti-cryptocurrency advocates: what is your solution to Michael and the millions of others who have been unfairly burdened? https://t.co/JiEmIiejnT
— Joe McCann ◎ (@joemccann) May 20, 2021
Besides the currency issues, Santiago R Santos of Parafi Capital also noted that crypto is the answer to remove innovation aversion and wealth distribution.
In Mexico, “wealth is very concentrated,” and the few controlling families don’t invest in innovation.
“Enter crypto where capital moves at the speed of information & finds the best talent across global open-source communities. Crypto is shattering this local inefficiency,” he said. “The Internet-connected the world with information. DeFi is connecting the world with capital.”