Stablecoin Issuer Circle Talks Partnership with Lemon to Help Users Dodge Inflation in Argentina

Circle, the second largest dollar stablecoin issuer with USDC, has posted a case study on a partnership with Lemon – a crypto exchange in Argentina.

Typically, stablecoins are mostly used as on/off ramps for digital assets. Stablecoins are largely digital representations of fiat but can also represent other assets. While used today on crypto exchanges, they can also be viewed as a new form of payment rails that can reduce friction and cost while providing a high degree of security and privacy – if regulated effectively.

Another key use of a stablecoin is the ability to park funds in a currency that is not being devalued at an accelerated rate. Many countries suffer from inflation (worse than in the US), and some endure long periods of hyperinflation – a crushing economic situation in too many countries.

In Argentina, inflation is currently topping 160%. Effectively, you do not want to hold Argentinian pesos because as soon as you have coins or notes in your hand, the value is going down rapidly. If you live in the US or Europe, it can be difficult to fathom living in a country like this. But for people who live in Argentina, it has become the norm due to socialist policies and profligate spending of past administrations.  This compels the population to jump through all sorts of hoops to maintain value – one of the best ways is to hold US Dollars. If you are wealthy, this can be a simple process, but for the masses, it can be more difficult. Lemon has created a method for anyone to park their money in dollars so they can avoid most of the inflation – by partnering with Circle. As there is no bank account necessary, users can deposit pesos and quickly transfer to dollars.

Circle states:

“Many Argentinian workers receive their paychecks in Argentine pesos. Converting those pesos to US dollars would be a desirable way to retain the value of their hard-earned money, but it’s not feasible to open US dollar bank accounts because of government capital controls.”

Another characteristic of offering dollar-based stablecoins is that it helps to ensure the greenback remains the world’s reserve currency. This is a good thing for the US economy.

Argentina recently held an election that saw a Libertarian-leaning economist take the helm. Hopefully, he will be able to eliminate the excesses of the past, but it will not be easy. In the meantime, creating an account where you can hold dollar stablecoins like USDC is a simple way to battle Argentinian hyperinflation.