Bitcoin Is Going Through the Roof in Argentina While the Government Imposes New Taxes

Argentina’s Senate approved an extraordinary one-time wealth tax to fight the coronavirus pandemic by seeking to boost government revenue and targeting millionaires with assets of more than 200 million pesos ($2.5 million). At the same time, the country still faces a 35% inflation.

Argentinean Senate Approves New Taxes, While Bitcoin Keeps Skyrocketing Against the Argentine Peso

According to El Pais, the measure, citing opposition parties’ statements, could “slow down the investments” in a country whose fiat currency, the Argentinean Peso (ARS) is highly devalued against bitcoin (BTC). The law aims to tax between 1% and 3% of the wealth of taxpayers.

As of press time, BTC/ARS is hovering around the 1,500,850 level, off from the 1,594,196 area (all-time high) reached early December 2020. It is worth noting that this price is not based on the parallel dollar (known as “blue dollar”) that circulates in Argentina, but the official dollar price.

Back in July 2019, BTC was trading at 491,000 ARS, yielding over 185% in a single year so far. If the quotation is made with the blue dollar, bitcoin is currently treading waters at 2,712,438 ARS, according to local exchange Ripio.

The parallel dollar is the only free exchange rate governed by supply and demand forces in the country. Although its purchase and sale in the country are illegal, the surging of the quotation is related to the depreciation of the ARS: a currency that faces economic troubles, inflationary turmoil, oversized emissions, and hopeless forecasts from experts, giving enough room to BTC to surge across the board.

On December 5, 2020, a Bloomberg report noted that the gap between the official and market-based exchange rates narrowed since October due to the government’s adoption of more “orthodox measures to boost exports.”

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