Argentina Prepares To Pay Wages In Crypto

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Will salaries soon be paid in cryptocurrency? This is what a member of the lower house of the Argentine National Congress wants. Jos Luis Ramn, representative of the Protectora Fuerza Poltica party, has tabled a bill to this effect. This would allow Argentine workers and exporters to receive all or part of their wages in crypto.

The move caused a stir around the world, as South America appears to be turning to alternatives to the dollar and national currencies. Indeed, like Venezuela, Brazil and Uruguay, Argentina experiences significant annual inflation.

Cryptocurrency, soon to be common currency in Argentina?

Cryptocurrency as a bulwark against inflation? It is an idea that is gaining ground. After El Salvador, which adopted Bitcoin as legal tender, Panama announced that it was looking into the issue. And this week, Argentina is leading the way. By offering salary and export payments in digital currencies, not just Bitcoin.

Inflation in South America is a plague. Venezuela is particularly affected, with an inflation rate of 3,000% in 2021. Argentina is not yet at this stage. There, the rate remains around 50%. However, the situation is already problematic. To fight against foreign currency inflows, Law 27 541 was promulgated in December 2019. It allows foreign currency to be taxed at the rate of 30%. However, as Jos Luis Ramn points out, Bitcoin or another cryptocurrency would not be affected by this tax.

In addition, to control the rate of the Argentine peso, currency exchanges are subject to strict control by the central bank. Argentines and businesses are forced to go through official exchange offices. It adds a lot of friction to the exchange. In addition, the latter often practice exchange rates far from the market price. These points are very damaging to the country’s foreign economic and commercial activity.

The use of a cryptocurrency would therefore be twofold. It would make it possible both to avoid taxing citizens and businesses and to facilitate trade. Moreover, the use of cryptocurrency would not have the same impact as the dollar on the sovereignty of the country.

South America turns to digital currencies

This law has yet to be validated by the lower house of deputies. It must also be approved by the Senate before being presented to President Alberto Fernndez. The latter will then have the opportunity to approve it. The number of deputies in Argentina is large and nothing has been done yet. However, this proposal is part of a legal movement in favor of bitcoin and cryptocurrency that affects the entire American continent. The countries of South America and Central America are obviously very favorable to this new means of payment. These countries are grappling with inflation and the US dollar trap. This is a geographic area where the adoption of cryptocurrency is significantly high.

But North America also seems to be turning to digital currencies. Over time, Canada and the United States are developing more and more infrastructure for mining. The legal framework allowing the purchase and possession of crypto-assets in these countries has evolved considerably.

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