Speaker 1: I'm Stacy Marie Ishmael, Managing editor of Crypto for Bloomberg News,
Speaker 1: and this is Bloomberg Crypto, a daily Bloomberg IHOT podcast.
Speaker 1: It's Monday, March thirteenth. I'd argue that one of the
Speaker 1: most interesting things about crypto is that you can see
Speaker 1: it as a sentiment indicator for how people feel about
Speaker 1: their banks and how they feel about their governments. Diehard
Speaker 1: bitcoin believer, probably not the biggest fan of central banks,
Speaker 1: Probably someone very worried about the effects of inflation, Probably
Speaker 1: someone who doesn't like the government telling them what to do.
Speaker 1: Enter Argentina. One of the countries with the highest rates
Speaker 1: of inflation in the world, one of the countries with
Speaker 1: a government that makes it very challenging to move money
Speaker 1: in and out of the country, and one of the
Speaker 1: places with the biggest populations of crypto enthusiasts. These facts
Speaker 1: are absolutely related. Argentina's inflation rate is currently hovering close
Speaker 1: to one hundred percent, yes, one hundred percent. In this environment,
Speaker 1: digital currencies are perceived as a safer bet than the
Speaker 1: peso if you're looking for an asset that will hold
Speaker 1: its value. My colleague Natcho Oliveradal reported on a recent
Speaker 1: study that found that nearly two thirds of the nation's
Speaker 1: crypto investors use digital currencies as a way to protect
Speaker 1: their savings. This popular enthusiasm for digital tokens has not
Speaker 1: surprisingly faced pushback from the country's central bank. And now,
Speaker 1: as the dust settles from the collapse of FTX and
Speaker 1: the global crypto industry is, as they like to say,
Speaker 1: trying to rebuild, Argentine regulators are considering tightening oversight even further.
Speaker 1: NATO is a Bloomberg reporta and a trained economist based
Speaker 1: in Buenos Aires. He joins me now to discuss Welcome
Speaker 1: to the podcast. Tell our listeners a little bit about
Speaker 1: the coverage that you've been doing of crypto and Argentina.
Speaker 1: Why is crypto so popular among your you know, among
Speaker 1: folks in the country. Argentina is one of the nine
Speaker 1: countries with the highest adoption of cryptocurrency. According to the analysis,
Speaker 1: the cryptocurrencies became very attractive, very successful way to avoid
Speaker 1: capital controls. Argentina has had strong capital restrictions during age
Speaker 1: of its last twelve years. Argentine only come by dollars
Speaker 1: in the capital market at a price that's one hundred
Speaker 1: percent more expensive. They can't make transfers abroad or from
Speaker 1: abroad freely. If an Argentina makes transfers in dollars from abroad,
Speaker 1: the central bank will convert these dollars into pasos at
Speaker 1: the official exchange rate and the person will lose half
Speaker 1: of his money. Argentines have learned to live this way
Speaker 1: in recent years, and that's why they have sold for
Speaker 1: an infinite number of mechanisms to bypass government restrictions and
Speaker 1: avoid losing money due to regulations. That's interesting because it
Speaker 1: sounds like what you're saying is they're trying to use
Speaker 1: crypto to get access to US dollars that they wouldn't
Speaker 1: otherwise be able to have. Yes, because by buying and
Speaker 1: selling cryptocurrency, Argentines can get out of the peso avoiding
Speaker 1: government rules. They also cancel dollars at a higher exchange
Speaker 1: and can move their money out of the country free.
Speaker 1: The Argentine's expectations about the paso, it's so poor that
Speaker 1: today all of them prefer bitcoin or any other cryptocurrency
Speaker 1: or where the paso inflation here reaches one hundred percent
Speaker 1: per year. So the story in pasos is not a
Speaker 1: good option. So if I'm understanding the two trends that
Speaker 1: you've identified here correctly. You have, on the one hand,
Speaker 1: people facing real restrictions on their ability to move money around,
Speaker 1: especially from Argentina to other countries or from other countries
Speaker 1: to Argentina. And you have the fact that the paso
Speaker 1: seems to be, because of inflation, an even less reliable
Speaker 1: store of value than highly volatile crypto Tooken white bitcoin. Yes,
Speaker 1: but typically Argentine's use bidcoin either and stable coins. Stable
Speaker 1: coins in this country are popular because Argentine's thinking dollars.
Speaker 1: The companies can currently promote the purchase of stable coon
Speaker 1: as a digital dollars, which is not exactly like that,
Speaker 1: but Argentine's think that by buying stable coins they can
Speaker 1: circument restrictions and have the dollars that the government does
Speaker 1: doesn't allow them to buy. It doesn't sound like that
Speaker 1: would be super popular with the government, though, if you
Speaker 1: have a majority or a large number of people in
Speaker 1: the country being like, how can we work around these restrictions.
Speaker 1: What's been the reaction of the central bank the last
Speaker 1: year the Argentine Argentina's Central Bank email a statement in
Speaker 1: which it provided traditional financial institutions from offering their clients
Speaker 1: or customers transactions with digital assets, including cryptocurrency, are going
Speaker 1: that they were risky. It is now that in those
Speaker 1: days there were different positions on this issue, even within
Speaker 1: the central Bank, but finally banks had to stay out
Speaker 1: of the crypto ecosystem. Now something else is happening. Relators
Speaker 1: start to get involved in crypto issues and are frequently
Speaker 1: talking with the main players of the crypto ecosystem. Now,
Speaker 1: the capital market, the Relator and the local Money lander
Speaker 1: In Agency are working to start regulating the sector in
Speaker 1: the first half of this year. So is it that
Speaker 1: they were always going to crack down on crypto because
Speaker 1: people were trying to use stable coins like you mentioned,
Speaker 1: to evade these capital controls or did some of this
Speaker 1: become more urgent for the government after, for example, the
Speaker 1: collapse of FTX. The Argentina's government changes behavior after the
Speaker 1: fs event. The country's local Relator is a studying launching
Speaker 1: requirements on crypto companies, such as proof of solvegncy. Official
Speaker 1: officials and relators planned to demand that crypto companies have
Speaker 1: similar requirements as others in capital markets, such as knowledge
Speaker 1: of the customers transparency about their activities. Also Argentina's government
Speaker 1: is seeking to strengthen relation before of a visit by
Speaker 1: the global money launder, which is expected for a September
Speaker 1: coming up. More from Bloomberg reporto Natural Olivera dol on
Speaker 1: how the Argentine crypto ecosystem is shaping up post FTX.
Speaker 1: We'll be right back. Has the collapse of FTX changed
Speaker 1: or affected the popularity of crypto among the people themselves?
Speaker 1: Are they more concerned about risks or do they still
Speaker 1: think it makes sense given the capital controls you described,
Speaker 1: given the inflation rates close to one hundred percent. Argentina's
Speaker 1: users were heavily affected by the FTS meldown, with some
Speaker 1: of the large local crypto exchanges seen withdrawals of as
Speaker 1: much as twenty five percent of the deposits. The most
Speaker 1: affected by the by this event was Lemons, which is
Speaker 1: the Argentina's large exchange in number of users. Lemon had
Speaker 1: investment in Alamera, the fts found and the panic is
Speaker 1: spread in social networks. We don't know which is the
Speaker 1: size of the proportion of investment the Argentines had in FTX,
Speaker 1: but the industry admit at the end of February that
Speaker 1: there may be more exchanges affected. So one of the
Speaker 1: stories that you and your colleagues have reported on is
Speaker 1: the fact that Argentina has one of the highest percentages
Speaker 1: of people who want to get their salaries paid in crypto,
Speaker 1: which very much relates to what you describe before about
Speaker 1: people wanting options that are not the piso. How easy
Speaker 1: is it to get a salary in crypto in Argentina.
Speaker 1: Argentina has a higher proportion of employees getting paid in
Speaker 1: cryptocurrency than anyone having a salary in pasos in Argentina
Speaker 1: is a punishment or misfortune. Taxes inflation reduced the salary
Speaker 1: in Latin America. It was the first presentation of the
Speaker 1: artists in Latin America received by Argentines, which is today
Speaker 1: well below the average for the region. The government takes
Speaker 1: away thirty five person or more from the gross wages,
Speaker 1: so that seven out of ten Argentines are unsatisfied with
Speaker 1: their salary. The average salary in Argentina is less than
Speaker 1: three hundred dollars. It's well below the five hundred dollars
Speaker 1: in Brazil or the age one hundred and fifty dollars
Speaker 1: in Chile. This means that Argentinian people preferred cryptocurrency over others,
Speaker 1: especially since they can't take them out of the country
Speaker 1: and keep them saved from government threats. Local legislation allows
Speaker 1: local companies up to twenty percent of payment in time.
Speaker 1: This way, many companies improved salaries by offering cryptocurrencies. It's
Speaker 1: so interesting to hear you say that, because in most
Speaker 1: other places, when we've spoken to folks and they're like, yeah,
Speaker 1: we in Miami, people are really interested in getting paid
Speaker 1: in crypto, and then they're like, oh, but they're super
Speaker 1: not allowed. So you know this, it seems like there's
Speaker 1: an interesting difference between on the one hand, the government
Speaker 1: wanting to crack down more on crypto, but on the
Speaker 1: other hand, there's this loophole that is still allowing people
Speaker 1: to get at least some of their salaries in bitcoin
Speaker 1: or other tokens. So it sounds to me like folks
Speaker 1: in Argentina are dealing with a combination of local effects
Speaker 1: capital controls, really high inflation rates, incoming potential regulation, and
Speaker 1: also the broader international crypto winter. Do you see in
Speaker 1: your reporting any signs that local enthusiasm for crypto is
Speaker 1: going up or down in twenty twenty three. In the future,
Speaker 1: then system in Argantina is convinced that this will be
Speaker 1: the year of blockchain projects and the physical events that
Speaker 1: day center when I through meda apparent in the ecosystem,
Speaker 1: I believe then more than half of the crypto started
Speaker 1: ups will disappeared due to the scarcity of quidd but
Speaker 1: the projects that give good blockchain based solution will survey
Speaker 1: a speculation is so where it is the time for
Speaker 1: the projects. Great natur Thank you so much for joining today.
Speaker 1: I really appreciate the chance to have you on the show.
Speaker 1: I'm so excited that you made it. Thank you for
Speaker 1: our Stacey. That was Bloomberg Reporto Natural OLIVERA. Dol You
Speaker 1: can find more of his reporting on the Bloomberg terminal
Speaker 1: and on Bloomberg dot com. For more, be sure to
Speaker 1: check out our twice weekly newsletter, Bloomberg Crypto. This is
Speaker 1: Bloomberg Crypto, a daily podcast from Bloomberg and iHeartRadio. For
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Speaker 1: questions or suggestions for the show to Crypto at Bloomberg
Speaker 1: dot net. The supervising producer of Bloomberg Crypto is Vicky Vergelina.
Speaker 1: Our senior producer is Janet Babin. Our producers are Mohammed
Speaker 1: Faroup and Sharon Barrero. Our associate producers are Ty Butler
Speaker 1: and Moses on Them. Desta wander Ad is our engineer.
Speaker 1: Original music by Leo Sidron. I'm Stacy Marie Schml. We'll
Speaker 1: be back tomorrow.