Cryptocurrency payment cards have become a refuge from 50% inflation in Argentina.
For almost a century, Argentines have been doing their best to keep their savings out of the reach of a normally skyrocketing inflation, which this year already exceeds 50% year-on-year. And the latest solution that long-suffering savers have found is cryptocurrency payment cards: crypto exchange house Lemon Cash plans to increase its issuance of bitcoin cards to three million units this year.
These cards are debit cards, but instead of being linked to a bank account, they are associated with a bitcoin address and convert the required amount of the cryptocurrency into pesos at each payment. Lemon Cash began offering them in November. The company had initially offered 100,000 cards and, as an incentive, offers cardholders a 2% rebate on what they pay in bitcoins.
While in many places, rewards cards are mere marketing tools, in Argentina, they have a much greater utility: helping mitigate the impact of rising prices. According to Bloomberg estimates, Argentines have the fourth highest inflation rate in the world, after Venezuela, Lebanon, and Zimbabwe. According to data from the Ministry of Economics published on Tuesday, inflation rose by 3.9% monthly in January and already reached 50.7% annually. Economists surveyed by the central bank forecast inflation to get 55% this year.
"Latin America is a good place for these services," Franco Bianchi, marketing director at Lemon Cash, told Bloomberg. Several of these countries have "unstable economies and devalued currencies, and people are looking for access to cryptocurrencies as a refuge." Bianchi said that Lemon Cash also plans to begin offering the cards in Brazil in mid-March. The company is in talks with regulators to obtain licenses to operate in Brazil and expects to extend its services to Peru and Chile during 2022.
Lemon Cash is not the only company offering 'crypto' cards in the region. The digital wallet Ripio also has more than 3 million users, mainly in Argentina and Brazil. In addition, universal Exchange, which was recently launched in Argentina, plans to implement a similar service in Argentina this year. "We will bring a new way to use your 'tokens' in everyday life and get benefits at the time of payment," said Walter Carcamo, CEO of Universal Exchange.
Tension in the government
Precisely bending inflation is the main objective of the agreement with the IMF that the Argentine government closed three weeks ago. But the conditions, which require reducing the high budget deficit that forces the Central Bank to resort to uncontrolled printing of banknotes, have caused substantial cracks in the government coalition. Máximo Kirchner, son of Vice-President Cristina Fernández de Kirchner, resigned as leader of the Peronist parliamentary group in Congress. At the same time, several senators from the social democratic wing of Peronism have threatened to leave the group led by Fernández de Kirchner in the Upper House.
The internal battle between the moderates, closer to the president, Alberto Fernández, and the 'Kirchnerist' radicals, has left the agreement in limbo, as both legislative chambers - each led by a different wing of Peronism - are passing the hot potato to each other with the intention that the other should take on the wear and tear of the debate. The opposition coalition -which also ranges from center-right to center-left- has already indicated its intention to abstain or vote in favor of the bill going ahead.
The significant doubt now is what 'kirchnerismo' will demand to accept its passage, or if the internal rupture in Peronism goes further, with little more than a year to go before the campaign for the general elections of November 2023 begins.