Lebanon allegedly plans to forcibly convert foreign currency holdings to its floundering pound (LBP), once again building a case for Bitcoin (BTC).
Earlier this week, Reuters reported that it had seen a government “blueprint” plan designed to fight the ongoing financial crisis. The plan, the news agency wrote, “projects a 93% devaluation of the Lebanese pound and converts the bulk of hard currency deposits in the banking system to local currency.”
Investors would potentially face enormous losses if the plan were put into action. Reuters continued by stating that “of USD 104bn of hard currency deposits,” the plan’s authors “foresee returning just USD 25bn to savers in USD, with most of what’s left converted to LBP at several exchange rates, including one that would wipe 75% off some deposits.”
And while the government allegedly plans to repay “all depositors,” it will do so over “a 15-year time frame.”
Alex Gladstein, Chief Strategy Officer at the Human Rights Foundation, bemoaned the fact that the world was “watching” as “as thieving bureaucrats loot the currency of a once-proud nation.”
From the Bitcoin community, the message was clear, and went something like this: “Bitcoin fixes this.”
The Castle Island Ventures Partner Nic Carter opined that the Lebanon report was” a tale as old as time,” and could see depositors “given a massive haircut.” However, he stated that it was “only a matter of time until crypto dollarization becomes the default and robs these central banks of their prime weapon.”
The podcaster Neil Jacobs shared a video featuring comments from the Mexican billionaire and bitcoin bull Ricardo Salinas Pliego. The latter stated:
“Everything we have in fiat is 100% seizable by the government. People don’t realize this […]. But that’s a fact.”
— Neil Jacobs (@NeilJacobs) February 2, 2022
Elsewhere, some commentators added that the best way to avoid states reaching into their bank accounts was to convert their funds to crypto that they keep in a hardware wallet.
However, it is not just Lebanese depositors who are now living in fear of what the government will do with their foreign exchange funds.
Nic Carter pointed out the relevance of a January 12 report from the Wall Street Journal (WSJ), which explained that Turkish citizens were “piling” into bitcoin (BTC) and tether (USDT) investments to escape the “plunging” lira.
The WSJ report explained that as “some” Turks felt the government could “force banks” to convert USD deposits into lira, this was “pushing some to exchange bank-held dollars and cash dollars” for stablecoins “according to several Turkish savers.” The WSJ added that per Chainalysis “more than half the trades against the lira in December involved tether.”
Crypto and stablecoin activity has also spiked in Argentina, which has been battling hyperinflation for several months – leading the government to curb USD buying.
Others claimed that wide-scale USDT adoption could lead to the development of “hyperdollarized” economies.
Tether $usdt will likely be the catalyst for a hyperdollarized world(esp third world countries).
Stablecoins as ground-breaking tools already have a huge impact in day to day real world businesses.
Interesting witness of what's happening in Lebanon https://t.co/ut5Tq3l7d9
— Stealth (@Stealthcrypted) December 14, 2021
Disclaimer: These are the writer’s opinions and should not be considered investment advice. Readers should do their own research.