Following the devaluation of its local currency and years of inflation, Argentina now legally recognizes contracts that stipulate Bitcoin as its currency of choice.
Ahead of Christmas, the crypto sector in Argentina has gotten a major win as contracts denominated in Bitcoin have now been legally recognized. This news comes via Argentina’s Minister of Foreign Affairs, Diana Mondino. This also comes as Argenitna’s national currency the Argentine peso has seen a dip in its value.
Bitcoin Contracts Come to Argentina
With the new law, parties in Argentina can create contracts in which Bitcoin is the stipulated currency. This, in turn, benefits those who use cryptocurrency and furthers the legal recognition of these tokens within the country.
“We ratify and confirm that in Argentina contracts can be agreed in Bitcoin,” said Minister Mondino in a statement.
This development is also not entirely surprising. Javier Milei, the current president of Argentina, has made statements criticizing the concept of a central bank, saying that it is a means for politicians to rob the masses. He has also made pro-Bitcoin statements and said that it helps prevent this exploitation.
It also comes at a time when the Argentine peso has been facing a lot of challenges. The currency has seen a 50% devaluation, going from 400 pesos to the US dollar to 800. This is after the president removed several subsidies and said publicly that the next few months would not be easy for the Argentinian public.
All this is on top of the 40% inflation rate that the country has seen in the last decade. It has been observed that cryptos like Bitcoin can serve as a hedge against inflation and many investors use it to protect themselves from the economic conditions within their country. Argentina is known to have some of the highest crypto adoption rates in Latin America so this law will likely benefit a significant chunk of the population.
While Bitcoin is not recognized necessarily as a legal tender, this law protects those who use it for business operations and does a lot to legitimize it in the eyes of the public. We have seen time and time again how a single law can work wonders in supporting the existing crypto scene in a country or attracting new businesses into the space.
Businesses in Argentina that already formally or informally use cryptocurrency can have their contracts legally binding. And, in the case of any disputes, rely on the law to protect their interests. Businesses in Latin America that deal in crypto might also turn their attention towards Argentina for this reason.
We shouldn’t be surprised if Argentina goes on to pass more pro-crypto laws in 2024 and beyond. These will not only benefit the local crypto sector but will also work to establish the country as a major crypto hub in Latin America.