Argentina, a country with an extremely volatile economy has suffered severe drawbacks since the FTX collapse.

Argentina is a country whose relationship with crypto is somewhat inconclusive. As we wrote earlier the country’s digitalization has progressed in localities. At the same time, the country has started regulating and charging innovations which may slow down their further development. One example is a mining tax decree recently issued in Buenos Aires. In addition, to exemplify the ambiguity, Argentina´s first think-tank seminar was launched on December 22 by CITY Entertainment. It promoted topics such as Blockchain, Metaverse, E-commerce, and NFT gaming. The event assembled many important figureheads, intellectuals, and public administrators. Unfortunately, the importance of such events is overshadowed by the nation’s harsh reality: economic crisis.

The crisis, which has beleaguered the 3rd largest economy in Latin America, has lasted for many years. With its annual inflation reaching 100%, the use of local currency, the pesos has been utterly diminished as a monetary reserve.  Ergo, many local investors have sought different ways of saving their money. Crypto had become a safe means of safeguarding money. Crypto, at its peak, was a reliable asset for 12% of adults in Argentina, double the average in Latin America.

Crypto winter has fiercely targeted the country’s adherence to it. Substantially, from April to December, it downgraded usage by 25% of total users. The current lawless crypto environment in Argentina has exacerbated the situation as no official entity can guarantee healthy management of digital tokens and coins.

As the FTX crisis unfolded, the Argentinian markets suffered a severe withdrawal reaction. in that same week, Argentinian investors sold most of their crypto and high-risk investments, opting to buy a more obvious reserve: US dollars. The day after the FTX crash, the currency had risen by around 0.5% and the most important index of the Buenos Aires Stock Exchange S&P MERVAL Index dropped by 3.7%.

Since then the crypto downfall was summed up with a high-interest rates, unsurmountable debt, and a solid dollar, and they all contributed to the dollar blue or libre (de-facto price) reaching its highest pairing price ever - 357 pesos, which is around 23% rise.

ARS to USD “Libre” exchange rate. Source: Infobae

ARS to USD “Libre” exchange rate. Source: Infobae

<aside> ☝ Note: due to government decrees, Argentina currently has around 20 different exchange rates. Among them, some have a higher degree of importance:

1 - dólar blue or libre: the one which people most commonly use. It fluctuates according to demand and market variations (de facto price).

2 - dólar tarjeta: it's a rate that covers buying services or products in the exterior using credit and debit cards, it's also used to charge tourists spending in Argentina (it's usually very detrimental to the consumer, around double the blue dollar)

3 - Dólar soja : the government applies this dollar rate expecting to lower grain and food exporting, therefore downgrading the national prices. This dollar rate is enforced and causes a disturbed relation between the government and farmers. As a consequence of its implementation, while the globally accepted price for each ounce of grain is x, in Argentina, the farmer is obliged to sell it for half the original price, while the government takes the other half.

4 - dólar crypto: the one which each exchange platform applies to sell stablecoins and other digital assets, it's usually paired with the blue dollar.

5 - dólar CCL: it's a kind of dollar that is enforced in some companies. Basically, the customer buys 2 assets or debt securities. One uses pesos and has to be bought in Argentina; the other must be its equivalent bought in an international market. These assets are then transferred to the international account and sold for a number of dollars.

6 - MEP: the MEP rate is very near the blue dollar rate. Recently, the government has a new initiative with Visa and Mastercard where you will be charged the MEP rate if you use a foreign Visa or MC.

Interesting fact: some embassies use Blue rate and some - official. Western Union rate is close to the Blue one.


The bottom line is that Argentina's situation serves as an example of how a fragile economy sustains itself when a high-risk digital crisis happens: mass sales of crypto assets followed by an in-scale purchase of traditional means of holding up money. Ergo, the fundamental question is: will this reaction mirror itself in other countries if a further downfall of crypto unfolds? Will this eventually raise the price of the means which are traditionally used to save money?