The club tries to circumvent the Argentinian central bank by selling a player to São Paulo using cryptocurrencies

BUENOS AIRES — Last week São Paulo Futebol Clube announced the signing of player Giuliano Galoppo from Argentinian club Banfield. News of the transfer, common in the football market, has also gained space in the economy notebooks. The reason is that the payment was made with USD Coin (USDC), a stablecoin, via the Latin American exchange Bitso.

Thales Araújo de Freitas, CEO of Bitso in Brazil, called the transaction “a historic moment for brokerage, for São Paulo and for South American football more broadly”.

And it is no coincidence that the Brazilian club, one of the biggest in the country, has experienced cryptocurrencies in a negotiation. In January, Bitso, Latin America’s first crypto unicorn, became the team’s sponsor, owner of the Estádio do Morumbi.

The announcement sparked particular interest in Argentina, where it was interpreted as an attempt by Banfield to circumvent the country’s current currency restrictions, which require exporters (including players) to convert US dollars into Argentine pesos (ARS ) within five days of the transaction.

The use of stablecoins to escape the Central Bank of Argentina (BCRA) in this case it would make sense because the banking institution does not mention the word crypto asset in its rules.

If Banfield were required by the BCRA to settle the amount received on the official foreign exchange market, it would use the rate of 131 Argentine pesos to the dollar. However, in the informal market, the US currency has a real exchange rate of 300 Argentine pesos.

Dante Disparte, chief strategy officer at Circle, one of the companies behind USDC, tweeted that the digital asset was used “as a means of payment to avoid currency risk”.

In November, Circle and Bitso formalized a partnership to launch an international transfer product, and so far the relationship has been fruitful. THE swap processed $1 billion in cryptocurrency remittances between Mexico and the United States in the first half of 2022 — up 400% from the same period last year — and plans to process $1 billion additional dollars by the end of December.

The operation between the clubs of São Paulo and Banfield may have cost less than in the Swift system, an international platform for the exchange of banking information.

However, the Argentinian club still might not be able to avoid the currency risk, as Disparte said. Indeed, the team will have to convert the total amount of the transaction into Argentine pesos at the country’s official exchange rate, BCRA sources told CoinDesk.

Neither club disclosed values, but the deal was valued at US$8 million by Argentine newspaper La Nación. That’s a significant amount for a team the size of Banfield.

The use of cryptocurrencies also creates other difficulties for the Argentinian team. After trading USDC, the club will be banned for 90 days from accessing the official foreign exchange market to buy players based on the official rate, following a BCRA resolution issued last week.

Banfield, if he keeps his word from the BCRA, will receive 1 billion Argentine pesos after the transaction. However, he would receive 2.4 billion of the official currency of the country if he used the informal exchange, where the rate of the dollar is higher by 130%, because the reserves of the BCRA are exhausted and negative by 4 billion dollars.

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