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Argentinian president tangos with Bitcoin despite central bank warning

Argentinian President Alberto Fernandez has indicated he is open to adopting Bitcoin as legal tender and a central bank digital currency, according to a media report yesterday, just two days after the head of the country’s central bank, Miguel Pesce, described cryptocurrencies as a threat to economic stability.

Fast facts
  • During an interview with media outlet Caja Negra, Fernandez was asked if he would consider an Argentinian CBDC, or even follow in El Salvador’s footsteps and adopt Bitcoin as legal tender. He replied: “I don’t want to go too far out on a limb … but there is no reason to say ‘no.’” He added: “They say the advantage is that the inflationary effect is largely nullified.”
  • According to Bloomberg’s World Misery Index, Argentina is the second-most “miserable” economy in the world, as inflation has skyrocketed over the past two years. Since Fernandez’s predecessor, Mauricio Macri, left office, government data indicates that the Argentinian peso has lost significant purchasing power, with 100 pesos in 2019 being the equivalent of 661 pesos today.
  • Despite recognizing Bitcoin’s potential to act as a hedge against troubles in the global economy and combat the legacy of his predecessor, Fernandez said he was still wary of the cryptocurrency sector “because of how unfamiliar it is, and because it is hard to understand how this fortune materializes. Many people in the world have these concerns, and that is why the project, or the system, has not yet expanded [more than it has]. But it is something to consider.”
  • Although Fernandez remains open to crypto and CBDCs, Pesce appears to be threatening a crackdown on the industry. Speaking at the Argentine Institute of Executives of Finance Digital Finance Forum on August 10, Pesce said Bitcoin was valuable for investors only during short-term hype cycles, and that it was not a financial asset as defined by the country’s National Securities Commission.
  • Pesce expressed the central bank’s intention to regulate Bitcoin payments and crypto exchanges, and its priority to prevent unsophisticated investors from engaging with crypto assets. “We are concerned that [cryptocurrencies] are used to generate undue profits on unsuspecting people,” he said.