Chainalysis’ Latest Report on Stablecoin Use in Argentina
Crypto adoption in Argentina has grown over the past ten months as the country’s fiat currency continues to lose value. According to a report published on Wednesday by blockchain data company Chainalysis, Argentines have been the biggest stablecoin users in South America, accounting for over 61% of all stablecoin transactions in the region.
According to Chainalysis, the surge in stablecoin use in Argentina, one of the countries with extremely high inflation rates, is fueled by people’s desire to get exposure to the American dollar. The firm’s report highlights the importance of cryptocurrencies in an unstable economy, arguing that these digital assets help citizens take better control of their finances regardless of their countries’ monetary policies.
What Are Stablecoins and Who Issues Them?
Unlike Bitcoin and Ethereum, stablecoins are digital currencies with relatively fixed prices pegged to fiat currencies such as the Euro and USD. They are usually issued by private companies on major blockchains. These firms then hold cash in reserves as collateral.
Stablecoins play an integral part in crypto as they allow people to enter and exit the digital asset markets without the involvement of conventional financial institutions. Notably, the combined daily trading volume of two of the largest stablecoins, USDC and USDT, is usually higher than Bitcoin’s.
Meanwhile, Argentina’s economy remains messy. The country’s year-to-date inflation rate stands at 237%, according to data from the Argentine central bank. Furthermore, over 50% of the population is languishing in poverty.
Last year, when libertarian economist Javier Milei got elected as Argentina’s President, he promised to revive the nation’s economy, but it looks like he hasn’t found a solution yet. Milei is one of the few presidents who have openly shown their support for Bitcoin technology.
Venezuelans Embrace Stablecoins Amid Rising Inflation
Argentines are not the only South Americans using stablecoins to shield themselves against inflation. The people of Venezuela have also embraced crypto. Chainalysis has noted an increase in stablecoin trading among Venezuelans on various exchanges. Interestingly, the Venezuelan government holds the largest amount of crypto among South American countries.
