Argentina’s New Government Embraces Bitcoin: A Paradigm Shift in Contractual Use

2024-01-03, 06:12

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Argentina has embraced <a href="/id/price/bitcoin-btc" target="_blank" class="blog_inner_link">Bitcoin</a> as a means to settle financial contracts.

The use of bitcoin in Argentina may lead to its greater adoption worldwide.

Argentine businesses that aim to use bitcoin in contracts should comply with the country’s crypto policy.

Keywords: bitcoin integration, bitcoin adoption, bitcoin regulation, crypto policy, crypto in Argentina, crypto-friendly countries
## Introduction 
Bitcoin is leading the way in terms of global crypto adoption. The United States Securities and Exchange Commission’s [approval of spot bitcoin exchange traded funds (ETFs)](https://www.gate.io/blog_detail/3646/grayscale-suggestion-prompts-sec-s-re-evaluation-of-bitcoin-etfs "approval of spot bitcoin exchange traded funds (ETFs)") is likely to lead to a rise in institutional investment in bitcoin.

A few recent developments have shown that there are countries that are interested in investing in the world’s number one digital asset, BTC. For example, El Salvador launched its Freedom Visa Program while Argentina has legalized the use of bitcoin for contractual settlements.

Today, we discuss [Argentina’s new government stance on using bitcoin and other cryptocurrencies](https://www.gate.io/blog_detail/3419/bitcoin-achieves-record-highs-in-nigeria-argentina-and-turkey-despite-50-price-drop "Argentina’s new government stance on using bitcoin and other cryptocurrencies") for contractual transactions. We shall also analyze the impact of Argentina’s new crypto policy on the global crypto market. 
## Argentina’s New Crypto Policy 
Argentina, the second largest economy in South America, has embraced cryptocurrencies including bitcoin as a means to settle contractual financial obligations. This development came a few weeks after Javier Milei’s presidential election victory.

During his presidential election campaign Milei indicated that he would adopt the use of cryptocurrencies in the country to overcome  the existing economic problems. Presently, the country is grappling with high inflation.

The Argentine government passed the ‘[Bases for the Reconstruction of the Argentine Economy’ decree](https://www.libertaddigital.com/documentos/el-decreto-historico-de-milei-para-derogar-300-leyes-7081774.html "Bases for the Reconstruction of the Argentine Economy’ decree") on 20 December which paved the way for individuals and institutions to use cryptocurrencies to settle financial contractual terms.

Although the decree has not specifically mentioned cryptocurrency, it has a clause that allows debtors to make payments using non-traditional currencies. Diana Mondino, the Minister of Foreign Affairs, International Trade, and Worship made it clear that parties may use cryptocurrencies to make payments for contracts or debts. 
 
On 21 December 2021, in a post translated into English, [Minister Mondino said](https://twitter.com/DianaMondino/status/1737874320322424984?s=20 "Minister Mondino said"), "We ratify and confirm that in Argentina you can agree on contracts in bitcoin.”

She added, “And also any other crypto and/or kind such as kilos of beef or liters of milk. The debtor must deliver the corresponding amount of the designated currency, whether the currency is legal tender in the Republic or not.”

However, the minister did not give full details about the other measures the government will take on cryptocurrencies. This stance, though, resonates with [President Milei’s views](https://www.gate.io/blog_detail/3454/daily-news-btc-supporter-milei-won-the-argentine-presidential-election-the-approval-of-bitcoin-etfs-was-postponed-again-avax-id-and-looks-will-embrace-large-unlocks-this-week "President Milei’s views") on the country’s monetary policy.

On its blog, Grayscale commented on the Argentine President‘s stance on cryptocurrencies. [It said](https://www.grayscale.com/research/market-commentary/market-byte-bitcoin-surges-as-milei-wins-presidency-in-argentina "It said"), “Milei views central banks as “major contributors” to economic instability, and often advocates for alternatives, like Bitcoin, which he sees as modern money and a tool to fight against inflation.”

The blog added, “Milei sees Bitcoin as a crucial tool in countering the inefficiencies and corruptions of centralized financial systems. His perspective has deeply resonated with a segment of the Argentine population, including protest voters and cryptocurrency enthusiasts, who view Bitcoin as a viable alternative to traditional economic structures.”
## Javier Miles’ Crypto Policy 
Basically, Milei views the use of bitcoin and other cryptocurrencies in the country as a means to “return money to its original creator: the private sector.” Since bitcoin has finite supply, Milei takes it as a secure alternative to traditional means of storing value like gold and silver.

For a long time, Milei has been criticizing central banks for cheating people and resulting in economic malaises such as inflation. Incidentally, the inflation rate in Argentina reached 135% during 2023 and there are no signs that it will slow down.

In a recent X post, translated into English, [President Milei said](https://twitter.com/DylanLeClair_/status/1726386447429537861?ref_src=twsrc%5Etfw%7Ctwcamp%5Etweetembed%7Ctwterm%5E1726386447429537861%7Ctwgr%5E22083c4bebb1cae5bfd3bae8e52f1010d76979b0%7Ctwcon%5Es1_&ref_url=https%3A%2F%2Fbitcoinmagazine.com%2Fmarkets%2Fargentinas-bitcoin-friendly-presidential-candidate-javier-milei-wins-election "President Milei said"), “The central bank is a scam, it is a mechanism by which politicians cheat the good people with the inflationary tax. What bitcoin is representing is the return of money to its original creator: the private sector.”

However, President Milei has not yet proposed to make bitcoin a legal tender in the country. Currently, he has advocated for the dollarization of the economy to curb the ever rising inflation. What is clear at this point is that Milei has been looking for various financial options for the country in a bid to slow down inflation.
## Feasibility of Integrating Bitcoin into Contractual Transactions
On the face of it, it is very simple to integrate bitcoin payments for contractual transactions. Nevertheless, there are certain challenges the country may face. For example, the volatility of bitcoin may make the calculations of taxes difficult for the government.

Read also: [Understanding Smart Contracts: Read, Write, and Audit](https://www.gate.io/learn/articles/understanding-smart-contracts-read-write-and-audit/878 "Understanding Smart Contracts: Read, Write, and Audit")

The nature of taxes also differs based on the types of contracts the parties will be involved in. For instance, it may be easy for companies to pay employment taxes on a timely basis. The challenge only comes if the employees come from different countries where there are variations in taxation laws.

It is important to note that Argentina is in the process of creating a new taxation law which may account for crypto payments. One of the tax proposals is that any crypto holders should declare their crypto assets to the authorities within 90 days of the enactment of the new law.

In the meantime, the government is also working on bitcoin regulation that covers key issues like [anti-money laundering](https://www.gate.io/bitwiki/detail/159/anti-money-laundering "anti-money laundering") and prevention of frauds in the crypto sector. Probably, the greatest challenge the Argentine government faces is to set clear regulatory guidelines required to create security and stability in the digital sector.

Also, President Milei’s crypto policy goes against the dictates of the International Monetary Fund that discourages the use of cryptocurrency. In fact, the IMF has advised the country to avoid using cryptocurrencies. If the country adopts the use of crypto assets, the IMF may stop its financial assistance to the country.  
## Transformative Impact of Argentina’s Decision Making
If Argentina, the second largest South American economy, uses bitcoin on a large scale other crypto friendly countries may soon do the same. The country’s approval of the use of bitcoin in contracts could be the first step towards adopting cryptocurrencies as a means of payment for goods and services.

As such, Argentina is going to be a study case for other countries that may wish to use cryptocurrencies in their economies. The successful implementation of the crypto in Argentina policy may entice other countries facing similar economic woes like inflation to adopt cryptocurrencies to increase their financial options. 
## Opportunities and Challenges When Leveraging Bitcoin in Contracts  
Businesses that aim to leverage bitcoin in contracts should learn to navigate various issues related to digital assets. For example, they should learn how to secure their cryptocurrencies through suitable digital wallets.

They also need to comply with the country’s bitcoin policy and taxation laws. Issues related to money laundering and misappropriation of funds often affect businesses that use cryptocurrencies.

On the other hand, bitcoin integration for settling financial obligations has several benefits. Specifically, making payments using cryptocurrencies is cost-effective, fast and convenient. Again, they can easily make cross-border payments for goods and services.

Read also: [BTC Price Prediction & Forecast for 2025, 2030](https://www.gate.io/price-prediction/bitcoin-btc "BTC Price Prediction & Forecast for 2025, 2030")
## Conclusion 
Argentina has legalized the use of bitcoin and other cryptocurrencies for settling contractual financial obligations. However, the country has not yet published the various measures to implement that crypto policy. If the country succeeds in using cryptocurrency in contracts other countries may institute similar policies in the future. 
## Bitcoin FAQs 
### Why BTC price rise?
The price of bitcoin has been rising due to the news of the expected approval of spot bitcoin ETFs in the United States. Also, the approaching 2024 halving event is the other catalyst for its price rise.
### Is it a good time to buy bitcoin?
Many analysts believe that it is the best time to <a href="/id/how-to-buy/bitcoin-btc" target="_blank" class="blog_inner_link">buy Bitcoin</a> since we are a few months away from the halving event. Usually, the price of bitcoin rises a few months before and after the halving event. The approval of spot bitcoin ETFs in the United States may lead to a BTC price surge as well.
### How to buy bitcoin?
It is best to buy bitcoin at cryptocurrency exchanges. Gate.io is a leading crypto exchange where you can buy bitcoin using wire transfer, credit/debit cards and P2P. It is also very secure to store your bitcoin at Gate.io.

<div class="blog-details-info">
<div>Author:** Mashell C.**, Gate.io Researcher
<div class="info-tips">\*This article represents only the views of the researcher and does not constitute any investment suggestions.
<div>\*Gate.io reserves all rights to this article. Reposting of the article will be permitted provided Gate.io is referenced. In all cases, legal action will be taken due to copyright infringement.
</div>

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