MercadoLibre (Nasdaq: MELI), Latin America’s leading e-commerce technology company, has purchased a small amount of Bitcoin, as per a filing yesterday with the US Securities and Exchange Commission (SEC).
“A South American company protecting itself in terms of currency,” noted MacroScope, a pseudonymous trader popular in crypto circles on Twitter.
The Argentine company is incorporated and publicly traded in the United States and operates online marketplaces dedicated to e-commerce and online auctions. It did report losses in South America stemming from an overall poor economy but did not directly appropriate the losses with its purchase of Bitcoin.
MercadoLibre said it had purchased Bitcoin, the world’s largest cryptocurrency by market cap, as part of its treasury strategy.
“As part of our treasury strategy this quarter we purchased $7.8 million in bitcoin, a digital asset that we are disclosing within our indefinite-lived intangible assets,” it said in the filing.
“We had foreign currency losses of $15.1 million, mainly attributable to the additional cost of accessing US dollars through an indirect mechanism in Argentina due to restrictions imposed by the Argentine government for buying US dollars at the official exchange rate,” the firm added in another part,
Argentina, fiat, disappointment, and Bitcoin
Argentinians have, in the past few months, turned to Bitcoin in huge numbers as their nation reels under an economic crisis. As CryptoSlate reported earlier this week, local residents look for new ways to offset inflation, and crypto exchange account signups are said to have increased tenfold.
The country’s GDP has declined by roughly 10% in 2020 while the economy has been in recession since 2018. Citizens are said to have historically invested their money in U.S. dollars in a bid to offset the inflation, but the latter has been spurring inflation fears of its own and Bitcoin has emerged as the safe choice.
As such, MercadoLibre joins the likes of business analytics firm MicroStrategy, electric carmaker Tesla, Chinese photo-editing app Meitu, and a few other publicly listed companies who have chosen to invest in Bitcoin over the past year.
A common narrative among the above—they have picked up billions of dollars worth of Bitcoin—is that of protecting against the inflation of fiat currency and choosing a deflationary asset to park funds instead.
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