Argentina has made it to national headlines with their recent most signing of a local football player with cryptocurrency. Sao Paulo is one of the largest soccer teams in Brazil and they just bought a player with crypto.
Sao Paulo with the help pf USDC, a US dollar-pegged stablecoin has signed the player from mid-table Argentinian 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 happened with the help of a stablecoin.
This transaction had exceeded $6 million up to $8 million, tied to the volatile nature of the exchange in terms of the rate of 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 in the middle of Argentina’s economic restrictions owing to a economic crisis.
Crypto Volatility Remains An Issue
At the moment, Argentina is undergoing an economic crisis which has also affected Argentinian sports club. This news is a positive one as it marks the first crypto signing of a soccer player.
Thales Freitas, Bitso’s director in Brazil stated,
We are very proud to work with these two clubs for this historical signing of Sao Paulo with all the safety, transparency and flexibility that the crypto economy has to offer.
This transfer happened successfully, however, there are some aspects which should be considered about this deal. The current gap between pesos and dollars are widening and rising up.
This could potentially produce a situation where football players who are signed by international teams can re-negotiate the contracts in order to adjust their salary.
Since volatility could create an issue, the constant adjustment of salaries will be an unavoidable circumstance.
Additionally, the unstable economy of Argentina has helped with adoption of crypto, specifically stablecoins. The inclination towards using stablecoins have shot up after the surpsing resignation of Argentina’s economy minister.. The resignation happened early in the month of July.
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An Attempt To Divert Stringent Foreign Exchange Restrictions
The transaction could be looked at as an attempt to divert the country’s restrictive foreign exchange restrictions. According to the present rules, the exports must convert the newly acquired US dollars to the local currency of Argentinian pesos within a period of five days.
The rate is at 131 pesos on the dollar. Going by the informal market, the exchange rate is almost close to 300 pesos per dollar. The foreign exchange restrictions imposed by Central Bank of Argentina does not reference crypto. The crypto transaction however shall still be subjected to regulations.
The Argentine Central Bank sources have stated that Galoppo’s transfer is an export operation. Due to this, it is compulsory for Banfield to liquidate their USDC in local currency, pesos, with the help of the official exchange market.
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Featured image from Wallpaper Flare, charts from TradingView.com
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