• Argentine government talks about cryptocurrencies’ risks amid hyperinflation.
• Citizens of Argentina seek investment alternatives.
Argentina, a country going through significant economic turmoil, is the latest to warn about cryptocurrencies risks. Due to the increased volatility and speculation of the cryptocurrency market, the Argentine government has chosen to speak about them. The warnings are aimed at active investors and citizens motivated to join the crypto sphere.
Announcement about cryptocurrencies risks
The national securities commission and the country’s central bank released a statement Thursday to alert cryptocurrency traders. Although many financial authorities and governments have notified about the danger of cryptocurrencies, the Argentine government does it without basis.
Ironically, a country with a troubled economy, a history of currency devaluations, inflation, and internal conflicts has chosen to have a score with cryptocurrencies. However, Argentina is not the only country in Latin America going through an internal crisis.
According to the statement, cryptocurrencies can cause considerable economic losses to their investors, including bankruptcy. It is also included that cryptocurrencies are not for legal use. Therefore, Argentines are asked to use them wisely.
Internal problems in the Argentine Government
Although the cryptocurrencies risks are not a surprise to anyone, Argentina touches the subject as if it has no internal conflicts. The country has been in recession for the last four years, where the Argentine peso, its local currency, has lost 80% of its value. By 1989, hyperinflation hit the Argentine currency, and the default of sovereign debt in 2001 caused a lot of devaluation.
It is an excellent idea for Argentines to store their money in Bitcoin, knowing what the cryptocurrencies risks are but hedging against inflation. But these citizens also exchange their local currency for US dollars, even though exchange controls are strict.
Government agencies also clarify that cryptocurrencies risks are not in levels of use and acceptance in Argentina. Although, they also observed that the speed at which the cryptocurrency increases in value makes them adopt a precautionary measure.
The crypto market in Argentina had multiplied ten times more since 2020, when the Bitcoin fever exploded. Maximiliano Hinz, director of Binance in Latin America, speculates that cryptocurrency transactions in Argentina have grown to high never-seen-before levels.
Argentine regulators believe that cryptocurrencies are a means of fraud and to finance terrorism. Although the authorities are not totally wrong in this statement, the crypto market has grown a lot and requires understanding. Today investments in cryptocurrencies such as Bitcoin are insured and mostly regulated by the American authorities.
Argentine investors are not likely to stop trading even after the statement release. In fact, this might increase cryptocurrency trading in a country going through their toughest period of unchecked hyperinflation.
Cryptocurrencies can prevent Argentines from losing the value of their money regardless of the volatility of digital currencies.