A battle over bitcoin is raging in Argentina. Bitcoin adoption is booming among the Argentinian population, but the government is increasingly resisting. After a bitcoin ban for banks, the central bank is now restricting access to the official currency exchange market for people who recently purchased bitcoin.

According to a central bank announcement, people who have purchased bitcoin with pesos in the previous 90 days will not be allowed to use the free currency exchange market Mercado ????nico y Libre de Cambio (MULC), where one can exchange dollars for pesos against the official le exchange rate. The new measure took effect immediately

The central bank did not explain the decision. Some speculate that it may be a means of limiting arbitrage between the official and unofficial exchange rates or perhaps a measure against capital flight. It could also be part of a disincentive policy.

There are also concerns: will the Argentine central bank now, perhaps in collaboration with exchanges, keep a register stating who has bought bitcoin?

Argentina

Bitcoin is relatively popular in Argentina. According to blockchain analysis firm Chainalysis, the country ranks 10th globally in terms of bitcoin adoption and research firm Statista ranks the country number 6.

The weak Argentine economy and the sky-high inflation of the Argentine peso probably play a role. The annual inflation of the peso is now higher than 60% and the savings and income of the Argentines are therefore rapidly losing value.

Confidence in the stability of the peso, if there was any, is now hard to find. “Nobody has a strategy, we just live in the moment ,” an Argentine retailer tells Bloomberg.

Anyone who still wants to save or maintain saved wealth in Argentina will therefore have to exchange his or her pesos for something else that is more stable in value. US dollars are often preferred, but to limit capital flight, the Argentine government has set a maximum monthly purchase limit of $200 dollars.

Bitcoin

Bitcoin is also an increasingly popular choice among Argentines. After all, high inflation is impossible with bitcoin and compared to the loss of value of the peso, the volatility of bitcoin is relatively low.

Moreover, Argentines know only too well that there are risks associated with bank accounts. Bitcoin, on the other hand, is difficult to confiscate, to send worldwide and the transactions are uncensorable – not unimportant properties for many Argentines.

Politics

Last year, Argentine President Alberto Fernandez showed himself receptive to the adoption of bitcoin as a means of inflation. He did not rule out that Argentina might follow El Salvador’s example, which recognized bitcoin as legal tender last year. However, the Argentine central bank opposes it and considers bitcoin ‘not a real asset’.?? ?? ??

The IMF reacted defensively. A crypto currency as a national currency, such as in El Salvador, is “a step too far” according to them. For a new billion-dollar loan to Argentina, the IMF made it a condition that the Argentinian government makes an active effort to discourage the use of bitcoin and other cryptocurrencies.

discourage

The Argentinian government now seems to be responding to this. Major Argentine banks recently announced that they would include bitcoin in their services due to high demand, but the central bank brushed those plans off the table. It issued a blanket ban on banks from having anything to do with bitcoin or any other cryptocurrency.

The newly introduced measure barring recent buyers of bitcoin from the official currency exchange market could be an extension of this.

Whether it will stop the Argentines remains to be seen. After all, in failing economies, it is not uncommon for the exits to be closed through capital constraints when the ship sinks, to prevent faster sinking. Good for the sinking ship, but questionable for the individual crew.

Perhaps restrictions in that sense emphasize that bitcoin offers an exit possibility: Bitcoin is apparently such an exit that must be closed.

In countries with high inflation, bitcoin appears to be more popular than elsewhere.