Argentina has made national headlines with its latest cryptocurrency signing of a local soccer player. Sao Paulo is one of the biggest soccer teams in Brazil and they just bought a player with crypto.
Sao Paulo with the help of USDC, a US dollar-pegged stablecoin have signed the player from Argentine mid-table team Banfield. USDC is issued by US-based Circle Internet Financial.
The transfer of midfielder Giuliano Galoppo from Banfield’s Athletic Club to Sao Paulo Futebol Clube took place with the help of a stablecoin.
This transaction had exceeded $6 million up to $8 million, related to the volatile nature of the exchange in terms of the rate of the Argentine peso.
This transfer had taken place with the help of a collaboration with the crypto exchange Bitso of Mexican origin. Bitso happens to be one of the largest South American crypto exchanges.
This news comes amid Argentina’s economic restrictions due to an economic crisis.
Crypto volatility remains an issue
At the moment, Argentina is going through an economic crisis that has also affected the Argentine sports club. This news is positive as it marks the first crypto signing of a football player.
Thales Freitas, Bitso’s director in Brazil stated,
We are very proud to work with these two clubs for this historic signing of Sao Paulo with all the security, transparency and flexibility that the crypto economy has to offer.
This transfer was successful, but there are some aspects that should be considered with this deal. The current gap between the peso and the dollar is widening and widening.
This could potentially create a situation where footballers signed by international teams can renegotiate their contracts to adjust their wages.
Since volatility can create a problem, constant adjustment of wages will be an unavoidable circumstance.
In addition, the unstable economy in Argentina has helped the adoption of crypto, especially stablecoins. The propensity to use stablecoins has shot up after the surprise resignation of Argentina’s economy minister. The resignation took place early in July.
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An attempt to divert severe currency restrictions
The transaction can be seen as an attempt to circumvent the country’s restrictive currency restrictions. According to current rules, exports must convert the newly acquired US dollars into the local currency Argentine pesos within a period of five days.
The exchange rate is 131 pesos to the dollar. Based on the informal market, the exchange rate is almost close to 300 pesos per dollar. The currency restrictions imposed by the Central Bank of Argentina do not refer to crypto. However, the crypto transaction must still be subject to regulations.
The Argentine central bank sources have stated that Galoppo’s transfer is an export operation. Because of this, it is mandatory for Banfield to liquidate its USDC in the local currency, pesos, using the official foreign exchange market.
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