Argentina is suffering one of the worst inflation rates in the world, at over 108%. Stablecoin provider Tether sees an opportunity to expand its offering in the country.And make the cryptocurrency available to people badly in need of a hedge in a volatile market. As it builds a presence in South America, can the company overcome skepticism about its financial reporting and the uncertainty still widely associated with crypto trading?
Tether, the stablecoin provider, has just announced a new partnership with KriptonMarket, an on/off ramp solution. The venture aims to promote stablecoin accessibility for users in Argentina, via the Central Market of Buenos Aires, a big player in the Latin American fruit and vegetable trade. Tether’s bold move comes amid intense criticism from regulators and former government officials who question its stability and stated reserves.
Argentina’s Inflation Struggles
The Central Market of Buenos Aires employs 2,000-plus people and sells 106,000 tons of fruits and vegetables monthly from over 600 farms and merchants.
But Argentina currently has the fourth highest inflation rate globally, at 109%, according to Trading Economics figures
On this scale, the South American country is behind only Syria, Lebanon, and Venezuela. Argentina’s inflation rate has above 20% since the middle of the last decade. It also has by far the largest inflation in the G20.
For comparison, its nearest neighbor in the G20 is Turkey (43.68%). A country that has repeatedly refused to raise interest rates. The United Kingdom, which has seen a noted squeeze on living standards, and is one of the worst-performing developed economies, has an inflation rate of just 10.1%.
Argentinians Turn to Crypto
During Argentina’s hyperinflation crisis, more and more of its citizens have to cryptocurrencies like Bitcoin as a
Stablecoins like Tether—which are pegged to another asset, but usually a currency—aim to combat inflation by preserving purchasing power and hedging against currency depreciation.
For some Argentines, the scourge of inflation is too severe to dismiss the benefits of a non-fiat currency.
“Inflation is like watching the value of everything you earn slip through your fingers,” said Carelin Garcia, Project Manager at the Web3 agency EAK Digital. “We’re one of the top countries in the world for crypto adoption, and when you look at the inflation figures, it’s not hard to understand why. Crypto in general, and stablecoins in particular, give Argentinians a ballast against these headwinds.”
“2022 saw the highest inflation rate in Argentina since 1991. It’s only natural that with ever-growing access to technology and digital alternatives, people are trying to find a way to maintain the value of their assets and savings,” Garcia added.
Argentina ranked 13th in Chainalysis’s 2022 Global Crypto Adoption Index. Although, not everyone in the country heeds the siren song of the technology’s benefits.
On May 4, Argentina’s central bank payment providers from allowing crypto transactions. The recent crackdown on crypto has fueled the rise of pro-Bitcoin politician Javier Milei