Argentinians look to stablecoins as peso devaluates. In the face of a peso devaluation of $0.02 to $0.006 in just 18 months and an annual inflation rate of over 30%, Argentina is searching for ways to safeguard its value. But as they are only allowed to buy up to $200 a month in dollars via official channels – with an additional tax of 65 per cent above the official quotation – some Argentines are turning to stablecoins like DAI.
“The adoption of DAI became popular because, being a stablecoin and having a quotation linked to the U.S. dollar, many Argentines have decided to acquire it as an indirect form of dollarization,” crypto exchange Buenbit stated.
This is all taking place amid an overall crypto boom in Argentina, with crypto exchanges enjoying record growth this year. Sebastian Serrano, CEO of Argentinian crypto exchange Ripio, said that the exchange’s stablecoin trading volume grew 20 times in 2020. “This is increasing month by month due to a local need for dollarization and a bullish crypto market promoting a higher adoption. It is a perfect storm,” he stated.
Argentina’s fascination with US dollars has grown stronger in recent decades, guided primarily by high inflationary processes that have pulverised peso value. “We have a relationship with the dollar that is typical of 70 years without a strong local currency. DAI is an alternative to the dollar,” said Matias Bari, CEO of SatoshiTango, an exchange firm that started offering that stablecoin in 2020 and increased by seven its business in Argentina during this year.
Although many stablecoins have grown in Argentina, DAI has been a star in the local market. And that success, according to important crypto players such as Serrano, from Ripio, and Bari, from SatoshiTango, is partially explained by the early relationship that MakerDAO built with the Latin American crypto ecosystem in 2018.
Buenbit began offering DAI in November 2018, when Ripio also included that stablecoin, while it added USDC in August of this year. SatoshiTango, for its part, first made DAI available in March and then incorporated USDC in August.
In Argentina, crypto exchange Bitso recorded a trading volume of 2.3 million DAI in November, while its Mexican business, where the company holds 10 times more clients, counted 883,215 DAI during the same month, according to information published by the company.
“It is a phenomenon,” said Bitso Alpha Director Eduardo Arenas, who added that Argentina has a much higher sophistication in crypto than any other Latin American country, which helps local people to digest more easily what DAI is about.