Soaring Inflation Pushes People Towards Cryptocurrencies
Binance, the world’s largest cryptocurrency exchange, claimed that more and more people are turning to crypto investing due to rising inflation.
Maximiliano Hinz, who leads the company’s Latin American operations, said Reuters that people were looking for currencies like Bitcoin to hedge against inflation and the rising cost of living.
As an example, Hinz cited crypto investments in Argentina, which he said was now one of the main markets for Binance, alongside Brazil and Mexico. Annual inflation in Argentina is 90%, and Hinz claimed that many of its citizens poured savings into Bitcoin, despite a much-publicized crash in its value. El Salvador made headlines earlier in the year for adopting bitcoin as legal tender, although cryptocurrencies have lost around 50% of their value since then.
Hinz did not provide any statistics on the number of people investing in cryptocurrencies, or where most came from. Inflation, however, is rising across the world. In the UK, inflation is expected to reach its highest level since 1982, according to the Office for National Statistics (ONS). The consumer price index reached 9.1% in June, the highest level in the G7 group. It is also suggested that it will only get worse for Britons as households are set to come under even more pressure with rising petrol prices.
Hinz’s comments came at the same time as the United Nations trade and development body, the United Nations Conference on Trade and Development (UNCTAD), called for measures to curb cryptocurrency in developing countries. The body warned that these are volatile assets that can lead to social risks and that the benefits are overshadowed by the threats they pose to domestic resource mobilization and the security of monetary systems. Another area of concern for UNCTAD is that cryptocurrencies can enable tax evasion and evasion through tax haven-type loopholes.
“In this way, cryptocurrencies can also hamper the effectiveness of capital controls, a key instrument for developing countries to preserve their policy space and macroeconomic stability,” an UNCTAD spokesperson added. .
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