Argentina is currently experiencing devastating levels of inflation, running at over 138% annually. This dire economic situation has led voters to consider radical solutions, namely in the form libertarian economist Javier Milei.
Milei shocked the political establishment by coming second in the October 22nd presidential election, progressing to a runoff vote on November 19th against the first-placed candidate, the current Minister of Economy, Sergio Massa. Widely touted as a pro-crypto candidate, his actual policies aren’t necessarily a big win for crypto.
The election results saw center-left ruling coalition candidate Sergio Massa take first place with 36.7% of the votes. However, with no candidate reaching the 45% threshold needed to win outright, Milei’s 30% share was enough to see him through to the next round. The runoff election will now be a head-to-head battle between mainstream Peronist Massa and Milei’s radical free market platform.
A large part of Milei’s appeal lies in his unorthodox politics. Part of that is his vocal support of cryptocurrencies as an escape from peso inflation for ordinary Argentines. He is an outspoken advocate for Bitcoin in particular, seeing it as “money’s return to its original maker: the private sector.”
However, Milei also caused controversy by promoting alleged crypto Ponzi scheme CoinX on his popular Instagram account. The presidential candidate touted the project as a way for Argentinians to escape inflation. He now faces lawsuits from investors who lost money, after hyping the supposed profits of CoinX’s AI-powered automated trading algorithms.
Milei’s stance on crypto is also more complex than it first appears. While he talks up the benefits of digital assets, his key monetary policy is dollarization – replacing the Argentine peso entirely with the US dollar as the national currency. If implemented, this policy could actually lead to reduced crypto adoption in Argentina.
Crypto is so popular there partly because it provides an alternative store of value for ordinary people in the face of high peso inflation and strict currency controls. Easier access to US dollars would remove much of the need for Argentines to use crypto as a protective measure.
The situation contrasts sharply with El Salvador, which introduced Bitcoin as an official legal tender alongside the US dollar in 2021. But president Nayib Bukele has resisted full dollarization, keeping the original Salvadoran colon currency as the country’s other legal tender. Although, it is no longer in circulation.
While Milei sees crypto as just one part of a broader libertarian platform, Bukele is focused on promoting Bitcoin adoption specifically. The radically different approaches have led to very different results – El Salvador’s Bitcoin implementation has struggled with low uptake. A March 2022 survey showed that months after Bitcoin became legal tender, the overwhelming majority of businesses had never taken payment in the digital currency.
Meanwhile, Argentina boasts one of the highest crypto user bases in the world.
Milei’s economic libertarianism means he is unlikely to use the power of the State to intervene and promote crypto adoption either. If he wins, Milei is far more likely to leave Argentinians to decide for themselves how they would like to transact. In 2023, this hands-off approach will inevitably lead to a flight to the US dollar if he takes power. Not exactly a crypto paradise.