Amid a climate of economic instability, Argentinians who are based in the country but work for companies abroad are finding clever ways to get paid in foreign currency, avoiding the high taxes the government has imposed on the US dollar.
During the COVID-19 pandemic, the rise in popularity of remote jobs created new opportunities abroad for many Argentinians who were unemployed or looking for better wages — but that came with a hitch.
In an effort to control inflation rates and strengthen the coffers of the central bank, the government imposed an obligation to exchange all dollars legally entering Argentina into pesos at the official exchange rate of 65 ARS to the US dollar in March 2020. The measure effectively halved wages earned abroad in USD.
Partly because of these restrictions, a black market in coins has formed on the streets of downtown Buenos Aires and throughout Argentina.
These black market rates are considered by some to be the “true value” of the coins since the government rate is masked behind multiple taxes. This “blue dollar”, as the black market rate is known, fluctuates in a crude respect of supply and demand, and the government has said that “its rise does not concern them”.
To give an idea of the difference, currently the official government rate is close to 160 Argentine pesos (ARS) to the dollar (USD), while the black market rate is around 290 ARS to the dollar.
Consequently, many Argentines employed to work remotely for foreign companies started linking their PayPal or Payoneer accounts to cryptocurrency exchanges such as Binance, Ripio or Lemon. Then, with their USD deposits, they buy stablecoins like USDT or USDC, which are pegged to the value of the US dollar and have a rate similar to the local USD black market rate. From there, they exchange these stable currencies for Argentine pesos.
“As of 2020, I don’t legally buy USD,” Emiliano, a 27-year-old web developer who works for a Florida-based startup, told Argentina Reports.
“I use a method to buy USDT with USD, and once I have USDT on Binance, there are buyers to convert it to pesos,” he said. “Many friends convert USDT to dollars to cash, cuevas already do those transactions.”
“Cuevas,” Spanish for caves, is the name given to the physical locations where black market dollar sellers operate. Some have now expanded to exchanging cryptocurrencies for Argentine pesos, effectively becoming the last link in the chain that allows Argentine workers to bring their dollars into the country and avoid taxes.
Realizing that Argentina could potentially see a mass exodus of local talent for better wages abroad, in July the government created a pathway to legally bring USD earned abroad into the country. With a limit of US$1,000 per month, workers are no longer required to exchange those dollars for pesos as long as they have the right documents and don’t go over the limit.
While the move is beneficial for some, others choose to stick to crypto-peso transactions as they are billing their employers over the $1,000 limit or simply want to stay under the government’s radar. “It’s more convenient to exchange USDT to dollars in cash, it doesn’t make sense if you can hardly withdraw it [from the bank]”, said Emiliano.
Some foreign companies pay their Argentine employees a small percentage of their wages legally in pesos and the rest in USD to an account abroad, according to the web developer. In this way, they make it easier for workers to justify certain movements of money in their accounts to the Argentine Federal Revenue Administration (AFIP), the country’s tax agency.
Argentina Reports was unable to find an official estimate of the amount of USD flowing into Argentina through the cryptocurrency exchange scheme, or the amount of tax revenue lost to the government. Argentina’s Federal Revenue Administration (AFIP) did not respond to a request for comment from this reporter.
Cryptocurrency exchange companies that are legally established in Argentina are required by law to inform the AFIP of every cryptocurrency transaction they make, but many people choose other foreign exchanges that do not have this agreement with the Argentine authorities.
According to Chainalysis’ Global Crypto Adoption Index, Argentina has the 13th highest rate of cryptocurrency adoption in the world, dropping three spots from its 10th ranking last year.
Despite this, the country “has a total cryptocurrency market worth $68.8 billion,” Kim Grauer, director at Chainalysis, told local media outlet iProUP last year. With steady growth since 2019, Argentina is second only to Brazil in cryptocurrency adoption in the region.
The government is fully aware of these types of transactions and, despite imposing the $1,000 per month limit, it is now working on projects – such as ‘Monotech’ – to encourage a new billing system and exchange rate for tech companies and freelancers with easier access to US currency.
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