South America: a new crypto currency haven

February 20, 2019   Bitcoin

Last week, an international trade transaction has been concluded between two South American countries, namely Argentina and Paraguay. The former bought $7.100 worth of pesticides and fumigation products from its trade partner. Although it may seem like a trade deal unworthy of anyone’s attention, that event was of historic significance for the world of cryptocurrencies.

The details of the deal

The very fact that Paraguay used Bitcoin (BTC) to pay the Argentine Republic for the mentioned batch of agricultural chemicals silenced many critics of that payment method. The transaction was handled by Bitex, a crypto-banking service that carries out currency swaps between crypto and the G20 fiat currencies. Before the deal between the two neighboring countries, Bitex positioned itself mostly as a service that handles mid-to large scale business-to-business remittances. But now it looks like they can add the intergovernmental payments to their range of offered services.

The purchase of agricultural commodities was performed like any other deal that involves exchanging cryptocurrencies to fiat money.

  • Paraguay transferred the corresponding amount in Bitcoin to Bitex, which was around 1.7 BTC, given the exchange rate at that time.
  • Bitex converted Bitcoin to the national currency of Argentina - the total amount was around 256 thousand Argentine pesos.
  • Argentina has officially accepted the payment and allocated the money on its national accounts.

The Argentine Republic has proven to be particularly supportive of various initiatives that involve cryptocurrencies. The deal with Paraguay has been conducted within the framework of the program called the Exporta Simple (Facilitated Exports) which was officially endorsed by the government of this South American country.

The primary goal of this program is to help businesses, in terms of logistics and transaction handling, to execute trade deals worth up to $15 thousand per contract with the annual cap of $600 thousand. Apparently, the Argentinian officials decided to set a good example to domestic businesses by accepting the payment in Bitcoin. Regardless of their reasoning, this event was of particular significance for the global crypto entrepreneurial community that perceived this deal as the prerequisite to the softening of the position of governments in the developing countries towards doing business in crypto.

Manuel Beaudroit, the co-founder and CMO of Bitrex, expressed his sincere hope that the deal between Argentina and Paraguay would serve as an incentive for governments and businesses beyond Latin America to make a gradual shift towards making cryptocurrencies an integral part of their operations.

Argentina and Bitex to form a strong bond

Last year, Banco Masventas (BMV), one of the biggest banking institutions in the Argentine Republic, announced that they had formed the partnership with Bitex to provide the opportunity for the customers to carry out cross-border payments using cryptocurrencies, mainly Bitcoin. 

The bank has set itself a rather ambitious goal which is to become a fully-fledged alternative to SWIFT by providing the means for fast and inexpensive financial transactions.

According to Jose Humberto Dakak, the bank’s chief shareholder, Banco Masventas wants to become a pioneer of cryptocurrency-based banking services in South America and give the customers more options for receiving and sending domestic and international payments. He believes that partnership with Bitex would make it easier for the bank to implement this idea into practice.                 


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