50 popularity. An estimated 54% of users believed in its global potential, whereas 49.1% thought it was more stable than the banking system. Of those surveyed, 30.5% said they had not yet invested in cryptocurrency due to a lack of understanding (Paxful, 2020). These statistics highlight that many of the factors contributing to financial exclusion, including high inflation and currency controls, have been significant motivation to the individuals choosing to invest in cryptocurrencies. Supporting education to demonstrate how cryptocurrencies can address these factors will be critical in expanding their impact for citizens not currently comfortable with the technology. Ultimately, the growth of fintech solutions and cryptocurrencies specifically addresses the three primary factors that contribute to financial exclusion in Argentina: perpetual high inflation, currency controls, and the large informal economy. First, fintech provides individuals with alternatives to the perpetual inflation of the ARS, such as cryptocurrencies. From stablecoins, such as DAI, to more volatile digital commodities, such as Bitcoin, consumers are able to store their savings in a more dependable asset. Next, fintech removes the looming threat of currency controls. As cryptocurrencies are decentralized by nature, there is no central institution that can limit what individuals are able to do with their money. This helps individuals trust that they can maintain control over their assets and not be as susceptible to shocks and economic crises. Finally, mobile payment methods improve financial inclusion for those who participate in the informal economy. Whether it is allowing them to set up a bank account digitally with lower fees, invest in cryptocurrencies, or use mobile payment apps, there are a variety of fintech solutions that provide greater financial inclusion for those in the informal economy. Fintech and blockchain represent tremendous opportunities for economic growth and financial stabilization in Argentina. Advancing the Future of Fintech Fintech has the potential to usher in a new age of economic stability in Argentina. In order for this to be possible, these emerging technologiesmust be handled properly to ensure the best possible outcomes for individuals as well as the country as a whole. First, it is important that the government and the BCRA use their regulatory power to protect individuals in the fintech space while promoting innovation. Up to this point, Argentina has adopted an approach similar to the US and EU, where light regulation has been introduced to encourage transparency and protect the consumer. In Argentina, digital currencies are not recognized by the BCRA as legal tender; however, they are not entirely prohibited, as in Ecuador and some other Latin American neighbors (BCRA, 2020). To allow new companies to innovate while still protecting consumers, regulation in the fintech space has been focused on payment services and lending, which together make up approximately 46% of the Argentine market. This regulation has sought to hold the fintech sector to similar standards as other financial services. However, it is not comprehensive to the entire industry and instead regulates specific issues scattered throughout the Argentine legal framework (Mora et al., 2021). As the fintech space continues to evolve, Argentina will need to decide on how fintech will be regulated while balancing innovation and protecting consumers. One common argument for stronger regulation of cryptocurrencies is that they enable the financing of illegal activities. World leaders often are quick to make this assumption when discussing regulations regarding cryptocurrencies. For example, Janet Yellen, the US Secretary of the Treasury, stated in a Senate Finance Committee hearing, “I think many cryptocurrencies are used at least in a transaction sense, mainly for illicit financing. And I think we really need to examine ways in which we can curtail their use, and make sure that money laundering doesn’t occur through those channels” (Lennon, 2021). This negative sentiment poses a threat to innovation in this space by suggesting overly stringent legislation. Chainalysis, a company that uses the transparent nature of blockchain to find insights in cryptocurrency transactions, reported in 2020 that the percentage of cryptocurrency used to finance criminal activity fell from 2.1% in 2019 to 0.3% in 2020 (Chainalysis, 2021). Clearly there is a disconnect
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