CRYPTO ADOPTION

In connection with a series of crypto-related articles, we take this opportunity to approach the crypto boom in Argentina, in the region and in the world through some news and reports selected to that effect, aiming to get the latest insights on this topic. As said before, FinTechs in general but crypto startups in particular had a booming increase these years, even during the pandemic, for many reasons we have been explaining.

In 2021, the specialized media Chainalysis appointed Argentina as the leading country in crypto adoption. We recommend to resort to iProUp release on the Global Index of Cryptocurrencies Adoption 2021, that evaluates 154 countries. This situation is partly due to the increasing number of people interested in crypto investments and also because allows an easy and smooth access to the “dollar” based on simple transactions and on the purchase of stable coins against the dollar, without the concerning and expensive storage of paper money.

In international markets, crypto users duplicated in a 6 months’ period globally, as reported by the specialized media Cointelegraph. Among other reasons, news on decentralized finance (DeFi) projects boosted crypto adoption. Ethereum implemented costs reduction for transactions through the EIP-1559 upgrade (Ethereum Improvement Proposal) and Cardano offers the possibility to create smart contracts on blockchains.

As reported by BAE Negocios in its article on the increasing number of virtual wallets in Argentina, they identify three main reasons, among others: inclusion, lack of innovative financial products and the growth of the FinTech ecosystem. Further to the “gas” of forced digitalization attributed to the pandemic, the result is a great population only able to operate digitally. The use of virtual wallets and digital money increased 340% in 2021 and July had a peak of 18% in transactions’ increase with 225.000 new users per month.

This upward trend can be attributed to the friendly access to virtual wallets (Payment Services Suppliers or “PSP”), super bonuses or discounts and intuitive and quick transactions. The traditional banking system lacked reaction to adapt to the pandemic, reason why an increasing number of people elected to use PSP or, at least, as a complement to bank transactions.

The other thrust is institutional: FinTechs create a great interoperability ecosystem with their own Clearing House and jointly work with the National Securities Commission (CNV), the Central Bank (BCRA)and other National Ministries. Due to this institutional activity new instruments emerged such as Immediate Electronic Payment, Immediate Debits, Electronic Check, Uniform Virtual Key (“CVU” for its Spanish acronym), etc.

We wonder how the PSP will be regulated in the future depending on the services offered compared to banks. Other concerning issue is who acts as enforcement authority and the control scope.

Other news report on the increasing crypto adoption within the sports universe (covered in other release) and some sectors have started to accept payments in cryptocurrencies as for example jewelry stores, the car industry and the real estate market, as reflected by iProUp. The growing number of savers who safeguard their capital in this type of assets and due to the interoperability they have, paved the way to crypto acceptance by these traders (even for saving plans or real estate developments). We recommend to enter the link and to see the graphics on transactions methodology. The experience reported by the parties involved is quite interesting as well.

Other sectors involving minor tickets amounts have also replicated this tendency: a tires’ dealers stores of the Metropolitan Area of Buenos Aires (with 11 branches) started to accept Bitcoin, as reported by Clarín, using Binance Pay. The food industry also endorsed to the move: La Delfina, a well-known restaurant of the seaside town of Villa Gesell, also accepts payments with the same platform, as commented by Sector Informativo.

Tourism is another central hub for crypto adoption as the case of San Martín de los Andes, Neuquén. This touristic city down in Patagonia is considered as the adopted home of Lemon Cash wallet. The growing incidence of Lemon Cash over the local economy gave rise to the first national Crypto Valley that comprises over 200 stores and shops accepting crypto payments through their wallets. This successful model reflects how cryptocurrencies (even stable coins) can be used on a daily basis for basic chores, benefiting both citizens and merchants through the interaction of traditional and crypto economies. This regional innovation sets a turning point in the future economy ahead.