- The Argentinian government wants to suppress cryptocurrency in order to preserve its failing fiat currency
Argentina’s Financial Information Unit (FIU) has announced that they are aiming to put tight controls on crypto trading in the South American nation, claiming that these measures are justified since crypto is fueling crime and money laundering. However, the government’s true motives for attacking crypto have to do with the collapse of its national fiat currency, the Argentinian Peso (ARS).
In 2019, the ARS was already very weak with over 50% inflation and that was before the coronavirus wrecked the global economy. Now, the Argentinian government has defaulted on its national debt, which will fan the flames of hyperinflation.
Argentinians have responded by rushing into Bitcoin in order to protect their funds from hyperinflation, and this is the real reason why the government wants to suppress the crypto trade. Essentially, the government fears that the outflow of funds from ARS into crypto will accelerate the collapse of the national fiat.
Indeed, other countries that dealt with severe hyperinflation, such as Iran and Zimbabwe, took similar measures to ban crypto in order to protect their failing fiat currencies. However, history has proven that banning crypto has no potential to save a national fiat currency, it just damages the country’s citizens by putting them in a bad position where they have no good way to protect their funds from hyperinflation.
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