Argentina experiences a surge in inflation, with the National Institute of Statistics and Census reporting a 7.7% increase in March 2023. This number is higher than the 6.6% registered in February, primarily due to an increase in education and food and beverage prices. Argentina now registers an inflation level of 104.3% year-over-year, the highest in Latin America according to regional estimations. Analysts are concerned about the evolution of this variable, as even government price control programs have been unable to slow it down. Argentine economist Soledad Pérez Duhalde stated that “the inflation data for March is terribly negative news. Inflation is rampant in Argentina, and without a program and without anchors it will be very difficult to break this trend.”
The government of El Salvador issued its first digital assets licenses, allowing cryptocurrency exchanges and custody providers to issue digital securities in a regulated environment. Bitfinex Securities El Salvador, a newly incorporated company operating independently from the well-known cryptocurrency exchange Bitfinex, received the first license. Paolo Ardoino, Bitfinex CTO, stated that this milestone will enable companies to tap into the digital market to raise capital and access a market of over $1 trillion with a peak of $3 trillion. Two more licenses were granted to E4, a company founded by Strike founder Jack Mallers, and Ditobanx, a Salvadoran startup.
The Venezuelan cryptocurrency corruption probe continues, which allegedly involves the use of cryptocurrency linked to oil sales. Reports suggest that the existence of Sunacrip, the Venezuelan cryptocurrency watchdog, is at risk. Former employees of the institution explained that all available personnel had been laid off without justification, leading to speculation about the future of the institution. Additionally, the logo of the institution has been retired from the building where its offices were. As a consequence of this probe, all registered Bitcoin mining farms were ordered to stop operations on March 15, with miners complaining about significant losses resulting from this decision.
These developments in Latin America have significant implications for the region’s economic and political stability. The surge in inflation in Argentina could lead to social unrest and political instability, as seen in previous periods of high inflation. The issuance of digital assets licenses in El Salvador represents a significant step towards the mainstream adoption of cryptocurrencies in the region. However, the ongoing corruption probe in Venezuela highlights the challenges of implementing and regulating cryptocurrencies in a country with a history of corruption and economic instability.
As the region continues to grapple with economic and political challenges, the adoption and regulation of cryptocurrencies could provide a much-needed alternative to traditional financial systems. However, it is crucial to ensure that these developments are accompanied by robust regulatory frameworks and measures to prevent corruption and illicit activities. Only then can cryptocurrencies truly contribute to the region’s economic growth and stability.