Two of the largest banks in Argentina have started offering crypto trading services to the public as users keep flocking to digital assets to protect their net worth amid the country’s elevated inflation.

Banco Galicia, Argentina’s largest financial institution by market capitalization, has tapped the services of Lirium – a Liechtenstein-based crypto wallet provider – to allow customers to trade Bitcoin (BTC), Ethereum (ETH), and stablecoins.

Meanwhile, Brubank, one of the country’s most popular digital banks, have also announced that it is allowing customers to buy cryptocurrency with the assistance of Lirium.

The two banks have listed digital assets under their “investments” category as Argentinians keep turning to the crypto realm to protect their assets against the continuous erosion of the purchasing power of the country’s official currency – the peso.

The Chief Operating Officer for Lirium, Martin Kopacz, told CoinDesk that the service will allow account holders to buy and sell a selected number of crypto assets but they will not be able to withdraw them to other wallets or transfer them to third parties for now.

According to multiple surveys, the adoption of cryptocurrencies in Argentina has been increasing and users are starting to advocate strongly for more access to this up-and-coming market.

Data from blockchain analytics firm Chainalysis indicated that Argentinians earned around $1.9 billion from their crypto dealings in 2021 while the percentage of businesses in the country that currently accept crypto assets to settle transactions have been on the rise as well.

Meanwhile, a survey from Americas Markets Intelligence indicated that at least one in ten residents of the country have made at least one kind of transaction with cryptocurrencies, this being one of the largest percentages of adoption among South American nations.

Why are Argentinians increasingly turning to the crypto ecosystem?

High inflation and strict currency exchange restrictions are the top reasons why Argentinians are increasingly turning to the crypto world to protect their net worth and make transactions.

For 2022, economists are estimating that inflation in the country could surge to as much as 74% if the current uptrend in prices continue.

The government has imposed strict controls to limit access to foreign currencies in an effort to contain an escalation in the price of the US dollar against the peso and avoid a drain of the nation’s foreign currency reserves.

However, these measures have backfired as Argentinians have turned to the black market and this has resulted in the creation of multiple informal markets for the North American currency.

According to various sources, at least 19 different US dollar prices are currently used as reference for the country’s residents. Some of them include the “dolar oficial”, “dolar blue”, and “dolar BCRA”.

In light of this situation, Argentinians can turn to cryptocurrencies such as stablecoins – i.e. USDT or USDC – to convert their pesos into hard currency as a way to protect their assets against the negative impact of inflation.

Cryptocurrency exchanges such as Binance offer seamless peer-to-peer (P2P) platforms that allow users to exchange the local fiat currency for crypto assets by using a combination of the platform’s digital wallet and their domestic bank accounts and payment solutions.

As a result, the adoption of cryptos in the country has surged and may continue to scale up if more banks start offering crypto trading services.

Regulators and the Government Embrace Cryptos But Cautiously

Recently, the mayor of Buenos Aires – Horacio Rodriguez Larreta – told the public that the province will start accepting tax payments in cryptocurrencies.

Meanwhile, in December last year, the country’s central bank alerted the investment public about companies offering “extraordinary profits” resulting from cryptocurrency investments.

Finally, in a press release published on May 2021, the Comisión Nacional de Valores (CMV) – the country’s top financial regulator – stated that cryptocurrencies were not considered “legal tender” and that even stablecoins were considered “highly volatile” instruments that could generate losses for investors.

Despite these warnings, the country continues to hold a positive view about the crypto ecosystem and its prospects.

Crypto assets are highly volatile unregulated assets. Your capital is at risk.