Buenos Aires Weather | Cryptocurrencies Prove a Lifeline in Argentina’s Chaotic Economy

A bus with an advertisement for the Buenbit cryptocurrency exchange in Buenos Aires.

Sports stadiums, buses and billboards on highways across Argentina are plastered with advertisements for cryptocurrency exchanges, as the country’s economic instability fuels one of the world’s largest cryptocurrency booms. digital money.

TV and radio hosts are talking about digital coin investment options, and a crypto exchange is currently one of the sponsors of the biggest football tournament in the country.

Workers are increasingly being paid in cryptocurrency to circumvent exchange controls and protect them from currency fluctuations and 50% inflation. Argentina has a higher proportion of employees paid in cryptocurrency than anywhere else, according to Deel, a payroll company that operates in 150 countries.

Driving the trend is a local law that allows companies to pay up to 20% of compensation in kind.

This is a huge advantage due to Argentina’s currency controls. If a company paid $1,000 through the banking system, the employee would receive approximately 109,000 pesos, at the official exchange rate. But if the worker was paid in cryptocurrency instead, that could be changed to the unregulated parallel exchange rate for around 200,000 pesos, or 83% more.

“Crypto sweetens local salaries,” said Matias Dajcz, Global VP OTC at Ripio, a Latin American company that offers services to businesses that pay in cryptocurrency.

Tech companies, in particular, pay a portion of salaries in so-called dollar-pegged stablecoins, as well as other cryptocurrencies such as Bitcoin and Ethereum. The prices of many such coins have fallen in recent months, with Bitcoin falling around 40% from its peak in November, inflicting heavy losses on Argentines who held them instead of converting them into pesos.

Some companies are breaking the rules and exceeding the 20% limit on in-kind salary payments, according to Andrés Ondarra, director of Bitso, an exchange with four million users in the region.

The number of companies paying salaries in digital currency has soared 340% in the past 12 months according to Buenbit, an Argentinian crypto exchange with 600,000 users.

The Central Bank is unhappy with the trend and has warned Argentinians that their cryptocurrency savings are vulnerable to cyberattacks and not protected by deposit insurance.

As part of its $45 billion staff-level agreement signed with the International Monetary Fund this month, Argentina pledged to “discourage the use of cryptocurrencies with a view to preventing money laundering”. money, informality and disintermediation”.

Assets abroad

Cryptocurrencies are also easier to convert into assets in safer jurisdictions overseas, while workers can also get their money faster, rather than having to wait days for transfers to clear.

Small and medium-sized businesses are driving the adoption of digital currency. Germán Giménez, founder of Komuny, an educational start-up with less than 50 employees in the province of Mendoza, said his company pays the majority of staff in cryptocurrency.

“We seek the economic independence of each person,” said Giménez, who says the company has received good feedback from employees.

BitPay, a company that offers crypto payment services to employees in the United States, claims that some North American workers are paid entirely in crypto, which is less common in Argentina. In the United States, payments tend to be made in Bitcoin, Ethereum, and Dogecoin rather than stablecoins.

BitPay says its customers are mostly companies with less than a thousand employees and others with contractors all over the world.

“We have companies that have subsidiaries all over the world and instead of dealing with different fiats, they do it,” said Merrick Theobald, vice president of marketing at BitPay. “It does not cost much to offer this service.”

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by Angélica Serrano-Román & Ignacio Olivera Doll, Bloomberg