Boom in the use of stablecoin in Argentina

In Argentina there is a real boom regarding the use of stablecoin.

A recent study by Chainalysis dedicated to Latin America reveals it. 

The long post they published on Wednesday on their official blog reports data that from this perspective puts Argentina on par with Brazil, despite having four and a half times fewer inhabitants.

The situation in Argentina and the boom of stablecoin

The key to understanding in this case is inflation. 

For more than a year now, the annual inflation in Argentina has even exceeded 100%, and for more than three years it has always remained above 50%.

The last time it was below 20% was actually in 2015.

The Chainalysis report highlights that such a situation pushes Argentinians to search for alternatives, compared to their local currency (the Peso), and to protect themselves they often turn to the black market to purchase foreign currencies, particularly United States dollars (USD). 

The dollars sold on the black market in Argentina are called “blue dollar”, and they are not exchanged at the official exchange rate. In fact, on the official market, it is difficult to purchase dollars in Argentina, and so some decide to explore the world of stablecoins pegged to the US dollar. 

The report by Chainalysis 

Chainalysis states that it has examined the monthly trading volume of stablecoins with Argentine Pesos (ARS) on a major Latin American exchange, Bitso. 

From this analysis, it emerged that the decreasing value of the peso against the dollar has consistently increased the monthly exchanges of stablecoin.

For example, when the value of ARS fell below $0.004 in July 2023, the monthly value of stablecoin trades rose to over 1 million dollars the following month. And when in December it fell to $0.002, the value of stablecoin trades exceeded 10 million dollars the following month.

During 2024, the monthly trading volume of stablecoins in Peso rose again to a peak of over 60 million dollars in March, before starting to decline slightly. Even in June, the monthly volume was about 50 million dollars. 

Note that during 2022 this monthly volume was close to zero. 

Argentina is also by far the country in Latin America with the highest volume of transactions in stablecoin as a percentage of the total volume of crypto transactions.

From this point of view, it is the only one to exceed 60% (61.8%), while the second country in this special ranking turned out to be Brazil with 59.8%. The general average turned out to be only 44.7%, with Bitcoin in second place with 22.3%. In Argentina, however, the percentage of volumes transacted in BTC falls below 15%.

Furthermore, it is also a leader in the region in terms of the absolute value of cryptocurrencies received, with an estimate of 91.1 billion dollars, even surpassing the 90.3 billion dollars of the much larger Brazil.

Transactions in stablecoin in Argentina

One of the most significant data points regarding the analysis of this boom in Argentina is the one concerning the average amount of transactions in stablecoin. 

In fact, transactions in stablecoins under $10,000 in Argentina are growing at a more sustained pace compared to any other asset, and according to Chainalysis, this suggests that Argentinians view stablecoins as a means to mitigate the effects of inflation and currency devaluation. 

In the report they write: 

“Their interest in stablecoins highlights the role of cryptocurrencies in unstable markets and how citizens are able to take better control of their financial future by embracing cryptocurrency, regardless of official monetary policy”.

Latin America

Latin America was found to be responsible for 9.1% of global crypto transaction volumes between July 2023 and June 2024, with nearly 415 billion dollars received in cryptocurrencies. From this perspective, it even surpassed East Asia, despite having far fewer inhabitants. 

It also turned out to be the second fastest-growing region this year, with a year-on-year growth rate of about 42.5%, second only to that of Sub-Saharan Africa. 

However, the report highlights that in Latin America, the majority of traded volumes come from institutional and professional investors (entities that conduct transactions over $10,000), and that centralized exchanges (CEX) are the most popular service. 

This also means that the Argentine boom is specific to the country and not shared by all the other countries in the region. 

The report also reveals that four of the top 20 countries in the Global Adoption Index are located in Latin America: Brazil (9th), Mexico (13th), Venezuela (14th), and Argentina (15th). 

So not only is the particular situation in Argentina causing the use of stablecoins to spread widely in the country, but the crypto sector is also growing somewhat throughout Latin America.