The call comes in the face of new government-imposed restrictions on the US dollar. The use of DAI as an alternative is gaining popularity among Argentines.
Argentine citizens are seeking alternatives to protect themselves from devaluation and inflation, whilst the government continues to impose restrictions. This situation makes the process of dollarization increasingly complicated.
In this context, the exchange Satoshi Tango is promoting the “digital dollar”, which is a set of assets grouped under the name of stablecoins. They represent an option to escape from the traditional financial system, allowing users to safeguard value.
Satoshi Tango launched a call for users to dollarize their savings through stablecoins (or anchored cryptocurrencies). In the case of this exchange, it refers to the use of the stablecoin DAI.
DAI, which is backed by Ether (ETH), offers an alternative to preserve value, without depending on banks. It is not necessary to have a bank account, it is easier to store and protect than cash, and it is easily transferable worldwide.
Renowned Argentine bitcoiner Franco Amati welcomes Satoshi Tango’s challenge. He mentioned the disadvantages of the option to dollarize through DAI. For example, he explains that the main risk arises in the security that smart contracts and safeguard keys can guarantee when operating on centralized exchanges.
More Restrictions
Since May 25th, the access to US dollars has been more limited in Argentina, since the National Securities Commission (CNV) has provided a “parking”. This is the minimum allowed period of 5 business days to buy bonds or shares with pesos, to then settle them in a foreign currency and make transfers to foreign entities.
The MEP dollar (or stock market dollar) and the CCL dollar (or counted liquidation dollar) emerged as alternative measures for citizens to access US dollars. As it was “politically and socially unsustainable” to allow Argentines to buy US dollars freely, with the released capital and financial account, the government established exchange rate controls.
In mid-May, the Central Bank issued an analysis justifying the continuity of exchange rate and capital controls. The rising price of the US dollar due to devaluation does not discourage the demand for foreign currency. On the contrary, it accelerates it, causing damage to the purchasing power of wages.
For the Central Bank executives, controls on the capital and financial account of the balance of payments are necessary. They consider that they can contribute to the country’s economic recovery and comprehensive development.
In this way, the Government of Argentina tries to reduce the gap between these alternatives (MEP dollar and CCL dollar), concerning the official US dollar. The market expects more pressure on the informal US dollar since many citizens see it as the only way to access the fiat currency without restrictions.
The interest that cryptocurrencies are generating in Argentina is increasingly evident. The country’s economic problems are the main factor why the trading volume on LocalBitcoins has increased in recent months.
By Willmen Blanco
