Pro-Bitcoin candidate Javier Milei. The pro-Bitcoin president elected Javier Milei. These phrases were repeated everywhere by several news outlets, content creators or social media accounts focused on the Bitcoin space, all encouraging the new Argentine president to adopt policies favoring the growth of the ecosystem in what has long been the one of the leading nations in terms of adoption in the region. But why?
On July 26, 2016, Milei made her first appearance on the Argentine late-night show. Animals Sueltos, hosted by his now friend, journalist and television presenter Alejandro Fantino. There, Milei’s appearance, combined with her shaggy hair, outspoken demeanor and, most importantly, her defense of libertarian ideas, quickly gained a foothold before her presence became commonplace in the national media. Soon after, Milei’s rants also started going viral on the internet.
Milei had spent years writing and speaking about the Austrian economy, but it was television that laid the foundation for his meteoric rise in politics. Milei’s growing popularity also coincided with Bitcoin itself gaining popularity in Argentina and Latin America as a whole. For many Bitcoiners in the region, it is likely that their journey down the rabbit hole, and thus their exposure to the failings of our monetary system, is in part due to Milei’s voice.
It was not shocking then to see Milei referencing the potential of Bitcoin as early as 2017, with most of his statements extolling the technology’s ability to take money back from central banks. Regardless, in 2019, Milei confessed that he I haven’t studied Bitcoin yet in depth. Despite calling Bitcoin an “impeccable concept” in 2021other interviews from last year suggest the Argentine president is still figuring it out.
Since Milei’s views on money, central banking, taxation, the role of government, and so many other facets of economics and politics already align perfectly with Bitcoin philosophy, he It’s no surprise that the community took a liking to his antics as he got closer to Bitcoin. the world stage.
In many ways, Milei’s Bitcoin journey seems very relevant, but it is still incomplete. However, unlike most people, his rise to the presidency means he is now tasked with a much more complex mission: saving Argentina from a hyperinflationary spiral.
The Argentinian problem
The week before the elections in Argentina, Annual inflation reached 142.7% while the economy continues to suffer the consequences of the policies that Milei has denounced for years. This is precisely what motivated the Argentinians’ desire for change and, ultimately, pushed Milei to victory on November 19. That same evening, Milei said his goal was not only to solve today’s problems, but also to get Argentina back on track. becoming the world power it was destined to become in the early 20th century.
Since the election, Milei has coined the phrase “No hay plata» (There is no money) to describe the current budget deficit in which Argentina finds itself. Besides ratifying its commitment to close the central bank, cutting public spending has been one of the key points the new Milei administration has insisted on most. Failure to do so would inevitably lead to hyperinflation, according to Milei.
Additionally, Argentina and Milei will also have to juggle their massive debt to the IMF, which stands at over $31 billion at the time of writing. While Milei promised that Argentina would repay its debt, many pointed to the institution’s warning to El Salvador as one of the reasons why Argentina will not adopt Bitcoin anytime soon.
Speculation about it stems from a non-binding agreement letter of intent sent to the IMF ” by former Economy Minister Martin Guzmán in March 2022, emphasizing that the country would “discourage the use of cryptocurrencies” by implementing stricter anti-money laundering controls. Although banks are strictly prohibited from dealing in anything crypto, this has done little to deter their use, particularly that of USDt, whose ease of use and access has made it popular. one of the essential options to escape the decline of the Argentine peso.
Milei’s other notable policy, dollarization, seems at odds with hyperbitcoinization, but it is most certainly a necessary step to begin repairing Argentina’s economy. At LABITCONF, new Chancellor Diana Mondino declared that beyond dollarization, Milei’s government wanted to remove forced legal tender and favor let people choose their own currency. If the figures are to be believed, many Argentines already prefer “criptodólares” USDt as the locals call them.
During his campaign and as he prepares to take office, Milei said the effects of the previous government’s policies and spending would likely be felt between 18 to 24 months after the start of his mandate. For others, such unpopular statements would have cost them hundreds of thousands of votes; For Milei, this is an extension of the very principles (low time preference) he campaigned on, many of which are what caused the Bitcoin community to look in his direction in the first place.
What Bitcoiners are saying
Milei’s “chainsaw plan” will take time, and fortunately, many bitcoiners understand that if Argentina wants to put more effort into Bitcoin adoption, this will also happen gradually. CEO JAN3 Samson Mow always said that “Milei’s priority should be to stabilize inflation, move towards dollarization and ultimately close the Central Bank”, only then can the government consider what Bitcoin can do for the country.
Despite this, Argentine bitcoiners generally seem more excited about Milei’s broader prospects of victory. For Manu Ferrari, Milei’s commitment to freedom “It’s more than enough for the years to come,” a sentiment shared by most people familiar with the intricacies of Argentina’s dysfunctional economy.
When El Salvador passed its Bitcoin law, the Central American nation set the first precedent for what nation-state adoption could look like. Nonetheless, limiting the scope of Bitcoin adoption to this is, at best, short-sighted. If the free circulation of competing currencies is the goal of the Milei administration, it is worth saying that this policy may already be beneficial for Bitcoin after years of forced currency controls.
A more comprehensive nation-state strategy, which removes capital gains taxes, examines Bitcoin mining, or even considers the sale of Bitcoin-backed securities, will only be viable if Milei succeeds in turning around the economy Argentina. In the meantime, the promise of freedom alone is likely to result in recent anti-crypto measures disappearing as the country adopts more free market policies.
The primary objective of the new government is now to stop the bleeding, which involves implementing several shock measures, all intended to resolve the problem.No hay plata” problem. For the moment, the Milei administration must still control inflation, plan its dollarization process and present its plan to close the central bank. Quite an ordeal for the first libertarian president of Latin America in a country where Mauricio Macri is the only president outside of the left-wing Peronist ideology to ever complete his term.
Bitcoin’s rise to becoming a true asset class has mostly occurred in a laissez-faire environment, while regulation still struggles to keep up with its evolution. This is at least what we can expect from a Milei government that has promised to reduce the many taxes that weigh on Argentina’s daily economy.
With conversations dating back to last year, the JAN3 team hopes to approach Milei and his allies on the topic of Bitcoin in 2024. By then, the world should have a clearer picture of what his vision for Bitcoin looks like. ‘Argentina after the initial deployment of the chainsaw. .
In the meantime, bitcoiners can rest assured that this freedom-loving politician who sees Bitcoin as the second coming of private money has all the tools necessary to fully grasp its meaning and, ultimately, ensure that Argentina adopts it for the long-term good of the country.