Argentina’s Senate approved an extraordinary one-time wealth tax to fight the coronavirus pandemic by seeking to boost government revenue and targeting millionaires with assets of more than 200 million pesos ($2.5 million). At the same time, the country still faces a 35% inflation.
Argentinean Senate Approves New Taxes, While Bitcoin Keeps Skyrocketing Against the Argentine Peso
According to El Pais, the measure, citing opposition parties’ statements, could “slow down the investments” in a country whose fiat currency, the Argentinean Peso (ARS) is highly devalued against bitcoin (BTC). The law aims to tax between 1% and 3% of the wealth of taxpayers.
As of press time, BTC/ARS is hovering around the 1,500,850 level, off from the 1,594,196 area (all-time high) reached early December 2020. It is worth noting that this price is not based on the parallel dollar (known as “blue dollar”) that circulates in Argentina, but the official dollar price.
Back in July 2019, BTC was trading at 491,000 ARS, yielding over 185% in a single year so far. If the quotation is made with the blue dollar, bitcoin is currently treading waters at 2,712,438 ARS, according to local exchange Ripio.
The parallel dollar is the only free exchange rate governed by supply and demand forces in the country. Although its purchase and sale in the country are illegal, the surging of the quotation is related to the depreciation of the ARS: a currency that faces economic troubles, inflationary turmoil, oversized emissions, and hopeless forecasts from experts, giving enough room to BTC to surge across the board.
On December 5, 2020, a Bloomberg report noted that the gap between the official and market-based exchange rates narrowed since October due to the government’s adoption of more “orthodox measures to boost exports.”
Is This the End of the Argentinean Peso in the Latin American Nation?
This is given in the context of the recent stance from the Director of the Central Bank of Argentina (BCRA) on fiat, Carlos Hourbeigt, who stated in a recent presentation before the Argentine Chamber of Fintech that “the common enemy is the cash.”
He has been promoting “Transferencias 3.0,” an upcoming national payments network that aims to replace the Argentinean peso in cash, and which will be monitored by the Central Bank and three companies from the financial sector, including Prisma, Red Link, Interbanking, and Coelsa.
Despite the interest of the BCRA in replacing cash in the country, the local cryptocurrency community has taken this stance with some skepticism. Camilo Jorajuría, an Argentinean legal consultant and expert in bitcoin and blockchain affairs, made the following comment through his Twitter account on the digital wallet promoted through Transferencias 3.0, raising concerns on privacy:
The desire of regulators, local and global, is the Chinese model. Maximum population control with zero privacy. Only bitcoin fixes this.
Crypto Adoption Keeps Surging in Argentina
A study published by Chainalysis on September 3, 2020, analyzed the current status of cryptocurrencies in Latin America, highlighting Argentina as one example of how its depreciation in the national fiat has been boosting crypto adoption significantly so far this year.
The report also adds that restrictions on the amount of U.S. dollars that Argentineans can buy per month fuel the need for buying cryptocurrencies across the nation, as such barriers limit their options to secure savings.
Do you think the recent tax measures will only help to further boost crypto adoption in Argentina? Let us know in the comments section below.
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